8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 11, 2018 (August 13, 2018)

PGT Innovations, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-37971	20-0634715
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1070 Technology Drive North Venice, Florida		34275
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (941) 480-1600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

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.  ☐

Item 2.01 Completion of Acquisition or Disposition of Assets.

This Amendment No. 1 to Current Report on Form 8-K/A (“Amendment”) is being filed by PGT Innovations, Inc. (the “Company”) solely for the purpose of amending and supplementing Item 9.01 of that certain Current Report on Form 8-K originally filed by the Company with the Securities and Exchange Commission (“SEC”) on August 13, 2018 (the “Original Form 8-K”) in connection with the acquisition by the Company of all of the equity interests of GEF WW Parent LLC, a Delaware limited liability company and a parent company of WWS Acquisition, LLC d/b/a Western Window Systems (“GEF WW”), and WWS Blocker LLC, a Delaware limited liability company (“Blocker,” and, together with GEF WW, “Western Window Systems”) pursuant to the terms of a definitive purchase agreement dated as of July 24, 2018 (the “Purchase Agreement”) by and among the Company, Coyote Acquisition Co., a Delaware corporation and a wholly owned subsidiary of the Company, GEF WW, Blocker and various entities that collectively owned all of the equity interests of GEF WW (collectively, the “Sellers”). As indicated in the Original Form 8-K, this Amendment is being filed to provide the information required by Item 9.01(a) and (b) of Form 8-K, which was not previously filed with the Original Form 8-K, and is permitted to be filed by amendment no later than 71 calendar days after the date the Original Form 8-K was required to be filed with the SEC.

Item 8.01. Other Items.

The information contained in Items 9.01(a) and 9.01(b) is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial statements of businesses acquired.

The audited consolidated balance sheets of Western Window Systems as of December 31, 2017, 2016 and 2015 and the audited consolidated statements of operations, members’ equity and cash flows of Western Window Systems for the years ended December 31, 2017 and 2016, the five-month period ended December 31, 2015 (Successor) and the seven-month period ended July 31, 2015 (Predecessor) are filed as Exhibit 99.1 hereto and are incorporated herein by reference.

The unaudited condensed consolidated balance sheet of Western Window Systems as of June 30, 2018 and the unaudited condensed consolidated statement of operations and cash flows of Western Window Systems for the six months ended June 30, 2018 and 2017 are filed as Exhibit 99.2 hereto and are incorporated herein by reference.

(b) Pro forma financial information.

The unaudited pro forma condensed combined consolidated balance sheet of the Company as of June 30, 2018 and the unaudited pro forma condensed combined consolidated statements of operations of the Company for the year ended December 30, 2017 and the six months ended June 30, 2018 are filed as Exhibit 99.3 hereto and are incorporated herein by reference.

(d) Exhibits.

Exhibit No.	Description
23.1	Consent of RSM US LLP, Independent Auditor
99.1	Audited consolidated balance sheets of Western Window Systems as of December  31, 2017, 2016 and 2015 and audited consolidated statements of operations, members’ equity and cash flows of Western Window Systems for the years ended December 31, 2017 and 2016 and for the five-month period ended December  31, 2015 (Successor) and the seven-month period ended July 31, 2015 (Predecessor)
99.2	Unaudited condensed consolidated balance sheet of Western Window Systems as of June  30, 2018 and unaudited condensed consolidated statements of operations and cash flows of Western Window Systems for the six months ended June 30, 2018 and 2017
99.3	Unaudited pro forma condensed combined consolidated balance sheet of the Company as of June  30, 2018 and unaudited pro forma condensed combined consolidated statements of operations of the Company for the year ended December 30, 2017 and the six months ended June 30, 2018

This Current Report on Form 8-K, together with the exhibits attached hereto (collectively, this “Form 8-K”), contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange

Act”) and the Private Securities Litigation Reform Act of 1995. These “forward-looking statements” involve risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statements. Such forward-looking statements generally can be identified by the use of forward-looking terminology, such as “may,” “expect,” “expectations,” “outlook,” “forecast,” “guidance,” “intend,” “believe,” “could,” “project,” “estimate,” “anticipate,” “should” and similar terminology. These risks and uncertainties include factors such as:

• our ability to successfully integrate the Western Window Systems operations into our existing operations and the diversion of management’s attention from ongoing business and regular business responsibilities to effect such integration;

• the effects of increased expenses or unanticipated liabilities incurred as a result of, or due to activities related to, the acquisition of Western Window Systems;

• the risk that the anticipated cost savings, synergies, revenue enhancement strategies and other benefits from the acquisition of Western Window Systems may not be fully realized or may take longer to realize than expected or that our actual integration costs may exceed our estimates;

• disruption from the acquisition of Western Window Systems making it more difficult to maintain relationships with customers or suppliers of Western Window Systems;

• our level of indebtedness, which increased in connection with the acquisition of Western Window Systems;

• adverse changes in new home starts and home repair and remodeling trends, especially in the state of Florida, where the substantial portion of our sales are currently generated and are expected to continue to be generated, and in the western United States, where the substantial portion sales of the Western Window Systems operations are generated, and in the U.S. generally;

• macroeconomic conditions in Florida, where the substantial portion of our sales are generated, and in California, Texas, Arizona, Nevada, Colorado, Oregon, Washington and Hawaii, where the substantial portion of the products of Western Window Systems’ operations are sold, and in the U.S. generally;

• raw material prices, especially for aluminum, glass and vinyl, including, price increases due to the implementation of tariffs and other trade-related restrictions;

• our dependence on a limited number of suppliers for certain of our key materials;

• sales fluctuations to and changes in our relationships with key customers;

• in addition to the acquisition of Western Window Systems, our ability to successfully integrate businesses we may acquire, or that any business we acquire may not perform as we expected at the time we acquired it;

• increases in transportation costs, including due to increases in fuel prices;

• our dependence on our impact-resistant product lines and contemporary indoor/outdoor window and door systems, and on consumer preferences for those types and styles of products;

• product liability and warranty claims brought against us;

• federal, state and local laws and regulations, including unfavorable changes in local building codes and environmental and energy code regulations;

• our dependence on our limited number of geographically concentrated manufacturing facilities;

• risks associated with our information technology systems, including cybersecurity-related risks, such as unauthorized intrusions into our systems by “hackers” and theft of data and information from our systems, and the risks that our information technology systems do not function as intended or experience temporary or long-term failures to perform as intended; and

• the other risks and uncertainties discussed in our other filings with the SEC.

Statements in this Form 8-K that are forward-looking statements include, without limitation, our expectations regarding: the assumptions and estimates made in the unaudited pro forma financial statements, including with respect to the valuation of assets for the purposes of purchase price accounting and allocation and the realization of the expected benefits of the acquisition of Western Window Systems, including the ability to sell products of the Western Window Systems operations profitably in the near term or at all in the repair and remodel market and in PGT Innovations’ core markets, and the ability to sell PGT Innovations’ products in Western Window Systems’ core markets profitably or at all. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 8-K. Except as required by law, we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances after the date of this Form 8-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	PGT Innovations, Inc.
Date: September 11, 2018	By:	/s/ Brad West
		Name: Brad West
		Title: Sr. Vice President and Chief Financial Officer

EX-23.1

Exhibit 23.1

Consent of Independent Auditor

We consent to the incorporation by reference in Registration Statement Nos. 333-196048, 333-166075, 333-146719, and 333-135616 on Form S-8 of PGT Innovations, Inc., of our reports dated March 23, 2018 and March 20, 2017 relating to the consolidated financial statements of GEF WW Parent LLC and Subsidiaries appearing in this Current Report on Form 8-K/A.

/s/ RSM US LLP

Phoenix, Arizona

September 10, 2018

EX-99.1

Exhibit 99.1

Independent Auditor’s Report

To the Members

GEF WW Parent LLC and Subsidiaries

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of GEF WW Parent LLC and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2017 and 2016, the related consolidated statements of operations, changes in members’ equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GEF WW Parent LLC and Subsidiaries as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

Phoenix, Arizona

March 23, 2018

1

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2017 and 2016

	2017		2016
Assets
Current assets:
Cash	$	3,319,610	$	4,485,060
Accounts receivable, net		8,018,609		6,985,317
Inventories, net		10,667,926		7,702,863
Prepaid expenses and other assets		621,605		428,415
Total current assets		22,627,750		19,601,655
Equipment and leasehold improvements, net		14,615,842		10,683,446
Intangibles, net		49,725,809		56,377,198
Goodwill		38,844,006		38,844,006
Product certifications, net		217,402		100,281
Other assets		198,206		193,528
Total other assets		88,985,423		95,515,013
Total assets	$	126,229,015	$	125,800,114
Liabilities and Members’ Equity
Current liabilities:
Current portion of note payable	$	3,025,640	$	1,723,500
Accounts payable		5,910,501		6,337,705
Accrued expenses		2,218,533		3,067,660
Deferred revenue		2,877,969		4,103,232
Total current liabilities		14,032,643		15,232,097
Note payable, less current portion		38,450,026		41,135,764
Other long-term liabilities		2,412,715		1,118,391
Total noncurrent liabilities		40,862,741		42,254,155
Total liabilities		54,895,384		57,486,252
Commitments and contingencies
Members’ equity:
Members’ capital		60,431,316		61,938,122
Members’ accumulated earnings		10,902,315		6,375,740
Total members’ equity		71,333,631		68,313,862
Total liabilities and members’ equity	$	126,229,015	$	125,800,114

See notes to consolidated financial statements.

2

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended December 31, 2017 and 2016

	2017			2016
Net sales	$	100,158,533		$	89,762,595
Cost of goods sold:
Materials		38,647,117			34,068,765
Labor and benefits		11,712,950			11,797,776
Shipping		7,715,018			5,219,021
Other manufacturing costs		6,285,480			5,345,679
Total cost of goods sold		64,360,565			56,431,241
Gross profit		35,797,968			33,331,354
Selling, general and administrative expenses		27,402,707			22,391,588
Income from operations		8,395,261			10,939,766
Other expense:
Interest expense		(4,300,029	)		(4,317,584	)
Net income	$	4,095,232		$	6,622,182

See notes to consolidated financial statements.

3

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY

Years Ended December 31, 2017 and 2016

	Members’ Capital			Members’ Accumulated Earnings			Total
Balance, December 31, 2015	$	65,591,410		$	(668,768	)	$	64,922,642
Distributions		(3,653,288	)		–			(3,653,288	)
Incentive unit compensation expense		–			422,326			422,326
Net income		–			6,622,182			6,622,182
Balance, December 31, 2016		61,938,122			6,375,740			68,313,862
Distributions		(1,506,806	)		–			(1,506,806	)
Incentive unit compensation expense		–			431,343			431,343
Net income		–			4,095,232			4,095,232
Balance, December 31, 2017	$	60,431,316		$	10,902,315		$	71,333,631

See notes to consolidated financial statements.

4

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2017 and 2016

	2017			2016
Cash flows from operating activities:
Net income	$	4,095,232		$	6,622,182
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		2,029,733			735,058
Amortization		6,651,389			6,651,390
Amortization for product certifications		61,416			72,051
Amortization of debt discount and deferred financing fees		254,205			251,665
Loss on disposal of equipment		44,932			62,845
Bad debt expense		191,164			40,961
Inventory provision		(100,000	)		60,000
Noncash incentive unit compensation expense		431,343			422,326
Changes in working capital components:
Accounts receivable		(1,224,456	)		(2,947,759	)
Inventories		(2,865,063	)		(1,791,897	)
Prepaid expenses and other assets		(197,868	)		(533,215	)
Accounts payable		(427,204	)		3,106,626
Accrued expenses		(849,127	)		1,197,459
Deferred revenue		(1,225,263	)		535,651
Other long-term liabilities		1,294,324			1,118,391
Net cash provided by operating activities		8,164,757			15,603,734
Cash flows from investing activities:
Purchases of equipment and leasehold improvements		(6,007,061	)		(9,442,178	)
Additions to production certification		(178,537	)		(22,781	)
Net cash used in investing activities		(6,185,598	)		(9,464,959	)
Cash flows from financing activities:
Cash paid for loan costs		–			(159,801	)
Principal payments on notes payable		(1,637,803	)		(1,012,000	)
Distributions to members		(1,506,806	)		(3,653,288	)
Net cash used in financing activities		(3,144,609	)		(4,825,089	)
Net (decrease) increase in cash		(1,165,450	)		1,313,686
Cash, beginning of year		4,485,060			3,171,374
Cash, end of year	$	3,319,610		$	4,485,060
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,045,824		$	4,065,919

See notes to consolidated financial statements.

5

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

GEF WW Parent LLC (dba Western Window Systems) is a limited liability company that is a market- leading resource for doors and windows primarily used in wide opening applications that facilitate indoor- outdoor living. The Company manufactures aluminum doors and windows and vinyl doors sold into the high-end custom home market, the production home market and select commercial markets. The Company is located in Phoenix, Arizona.

Basis of consolidation: These financial statements present the consolidated financial position of GEF WW Parent LLC (Parent) and its subsidiaries, GEF WW Intermediate LLC (Intermediate) (100 percent owned by Parent), GEF WW Buyer LLC (Buyer) (100 percent owned by Intermediate), and WWS Acquisition, LLC (100 percent owned by Buyer) (together, the Company). All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates: The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include impairment considerations and valuation of incentive units. Actual results could differ from those estimates.

Cash: The Company may have cash in banks or other financial institutions in excess of their federally insured limits. The Company has not experienced any losses on these accounts.

Concentration of credit risk: The Company’s top suppliers accounted for approximately 56 percent and 33 percent of accounts payable, and 66 percent and 43 percent of total purchases, for the years ended December 31, 2017 and 2016, respectively.

Accounts receivable: Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within specific terms by the customer. Early pay discounts are generally allowed for customers who provide a 50 percent deposit with a new custom order and pay the respective invoices within thirty days of the invoice date. The Company has a volume program which does not require a deposit and is eligible for the early pay discount provided the respective invoices are paid within ten days of the invoice date. An allowance for discounts of approximately $114,000 is recorded as of December 31, 2016. No allowance for discounts has been recorded as of December 31, 2017.

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, based on estimated losses that will be incurred in collection of all receivables. The estimated losses are based on historical collection experience combined with a review of the current status of the existing receivables. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts. After collection efforts have been exhausted and management deems a receivable balance uncollectible, the allowance is adjusted and the accounts receivable balance is reduced. The allowance for doubtful accounts is approximately $341,000 and $161,000 at December 31, 2017 and 2016, respectively.

Inventories: Inventories consist of raw materials and work-in-process. Work-in-process includes materials, labor and manufacturing overhead. Inventories are valued at the lower of cost (first-in, first-out)

6

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or net realizable value. Management establishes inventory reserves based upon projected customer demand compared to on-hand quantities. The inventory reserve recorded is $50,000 and $150,000 as of December 31, 2017 and 2016, respectively.

Debt discount: Lender fees and other finance costs incurred in connection with amounts financed are recorded as a debt discount. Such discount is amortized using the effective interest method over the terms of the related debt. Total amortization of this discount was approximately $254,000 and $252,000 for the years ended December 31, 2017 and 2016, respectively. Amortization of debt discount is included in interest expense.

Equipment and leasehold improvements: Equipment and leasehold improvements are stated at cost. Depreciation and amortization is computed on the straight-line method over the estimated useful lives as follows:

	Useful Lives
Description:
Machinery, equipment and vehicles	3 - 10 years
Furniture and fixtures	3 - 7 years
Leasehold improvements	Lesser of estimated
	useful life or lease term

Intangible assets: Intangible assets represent the fair value of customer lists, trade name, backlog and non-compete agreements acquired in connection with the acquisition of Western Window Systems, Inc. and are amortized over their estimated useful lives of 3 to 16 years. The fair values of customer lists, backlog and non-compete agreements were estimated based on discounted cash flows attributable to each respective intangible asset. The fair value of the trade name was estimated based on a relief from royalty method as the Company owns their trade name and is not required to pay a third party to license the name.

Goodwill: Goodwill represents the excess of costs over the fair value of the identifiable net assets acquired. The Company evaluates goodwill for impairment in accordance with Accounting Standards Codification (ASC) 350, Goodwill and Other Intangible Assets. ASC 350 requires goodwill to be tested for impairment using a two-step process, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. An impairment loss is recognized to the extent the carrying value of goodwill exceeds the implied fair value. Management has elected to perform its annual impairment testing in December of each year. Upon completion of its annual testing, management determined no impairment has occurred as of December 31, 2017 and 2016.

Impairment of long-lived assets: Long-lived assets, such as equipment, leasehold improvements and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated and undiscounted future cash flows expected to be generated by the asset or asset group at the lowest level of identifiable cash flows. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset group exceeds its fair value. Assets to be disposed of would be separately presented in the consolidated balance sheets reported at the lower of the carrying amount or fair value less costs to dispose, and would no longer be depreciated. No impairment loss has been recognized as of December 31, 2017 and 2016.

7

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Product certifications: Product certifications represent costs incurred to obtain certification by regulators in order to sell the Company’s products. These certifications typically expire every four years, and costs incurred are amortized over the applicable certification period. Amortization expense was approximately $61,000 and $72,000 for the years ended December 31, 2017 and 2016, respectively.

Revenue recognition: Revenue is recognized upon shipment of products, at the time title and ownership transfers to the customer, the sales price is fixed, collection is reasonably assured, and there are no significant obligations remaining. Shipping and handling charges to customers are included in net sales. Shipping and handling costs incurred are included in cost of goods sold. All payments received in advance are recorded as deferred revenue in the consolidated balance sheets.

Sales taxes: Sales to customers are recorded net of the customers’ state and local sales tax obligations. Sales taxes are charged to customers at the applicable rates in effect for the taxing jurisdiction and remitted to the taxing authority in accordance with state law. These taxes are not recorded as revenues or expenses, but as a pass-through activity in the consolidated balance sheets.

Product warranty provisions: Management accrues monthly an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. Effective August 1, 2017, the Company began providing a 10-year warranty on materials and workmanship and a limited lifetime warranty on insulated glass. Management assesses the adequacy of its recorded warranty liability annually and adjusts the amount as necessary. A warranty liability of approximately $498,000 and $491,000 is included in accrued expenses in the accompanying consolidated balance sheets as of December 31, 2017 and 2016, respectively.

Advertising costs: The costs of advertising and promotion are expensed as incurred. Advertising expense for the years ended December 31, 2017 and 2016 was approximately $2,191,000 and $1,912,000, respectively.

Income taxes: As a limited liability company, the Company is not a taxpaying entity for federal income tax purposes. Accordingly, the Company’s taxable income or loss is allocated to its members in accordance with provisions under its operating agreement. There are, however, certain other jurisdictions which levy income tax on the entity, and accordingly, a provision has been considered in the accompanying consolidated financial statements.

The Financial Accounting Standards Board (FASB) issued guidance on accounting for uncertainty in income taxes. Management evaluated the Company’s tax positions and concluded that they had taken no uncertain tax positions that require adjustment to the consolidated financial statements to comply with the provisions of this guidance. The Company is no longer subject to income tax examinations by the U.S. federal authorities for years before 2014 and state or local tax authorities for years before 2013.

Unit-based compensation: The Company has granted incentive units to certain officers and employees. Unit-based compensation expense is measured at the grant date for all unit-based awards to employees and officers, based on the fair value of the award, and is recognized as an expense over the requisite service period, which is generally the vesting period.

Recent accounting pronouncements: In February 2016, the FASB issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic

8

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in the ASU require entities that measure inventory using the first-in, first-out or average cost methods to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, on a prospective basis. The adoption of this standard had no impact on the Company’s consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows, with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company is currently evaluating the impact the adoption of this guidance will have on its consolidated statement of cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in the ASU remove Step 2 from the goodwill impairment test required under previous U.S. GAAP. Entities will perform their goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Entities should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU will be effective for the Company for fiscal years beginning after December 15, 2021, on a prospective basis. Early adoption of ASU 2017-04 is permitted. The Company is currently evaluating the effects the adoption of this guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 one year, making it effective for annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For example, the new guidance requires all excess tax benefits and tax deficiencies related to share-based payments to be recognized in income tax expense, and for those excess tax benefits to be recognized

9

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

regardless of whether it reduces current taxes payable. The ASU also allows an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. ASU 2016-09 will be effective for the Company beginning on January 1, 2018. Different methods of adoption are required for the various amendments and early adoption is permitted, but all of the amendments must be adopted in the same period. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations, and cash flows.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC 718. The amendments in the ASU are effective for fiscal years beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

Reclassification: Certain items in the consolidated financial statements as of and for the year ended December 31, 2016, have been reclassified, with no effect on income or members’ equity, to be consistent with the classification as of and for the year ended December 31, 2017.

Subsequent events: Management has evaluated subsequent events through March 23, 2018, the date which the consolidated financial statements were available to be issued.

Note 2. Inventories

The inventories consist of the following at December 31:

	2017			2016
Raw materials	$	9,812,591		$	6,527,101
Work-in-progress		905,335			1,325,762
Inventory reserves		(50,000	)		(150,000	)
Total	$	10,667,926		$	7,702,863

Note 3. Equipment and Leasehold Improvements

The following is a summary of equipment and leasehold improvements as of December 31:

	2017			2016
Furniture and fixtures	$	2,327,865		$	746,306
Machinery and equipment		7,715,544			1,172,584
Vehicles		108,840			21,218
Leasehold improvements		6,945,689			170,722
Construction in progress		439,549			9,477,332
Less accumulated depreciation		(2,921,645	)		(904,716	)
Total equipment and leasehold improvements	$	14,615,842		$	10,683,446

Depreciation expense was approximately $2,030,000 and $735,000 for the years ended December 31, 2017 and 2016, respectively.

10

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

During 2016, the Company entered into a facility lease in which the landlord provided a lease incentive option in the form of leasehold improvements to be reimbursed by the landlord and six free months of rent. The Company recorded an asset and a corresponding liability for the amount of the lease incentive option. The leasehold incentive obligation is being amortized over the lease term as a reduction to rent expense. At December 31, 2017 and 2016, the remaining lease obligation was approximately $1,898,000 and $953,000, respectively, and is included in other liabilities on the consolidated balance sheets. The amount amortized during the year ended December 31, 2017, was approximately $126,000. No amounts were amortized during the year ended December 31, 2016.

Note 4. Related-Party Transactions

The Company incurred the following related-party expenses for the Board of Managers and members for the years ended December 31:

	2017		2016
Interest on term note (Note 7)	$	1,265,026	$	1,271,309
Management fees and expenses		75,082		59,074
	$	1,340,108	$	1,330,383

Note 5. Intangible Assets and Goodwill

The following intangible assets and goodwill are included on the consolidated balance sheets at December 31:

	2017
	Weighted- Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer relationships		9	$	50,000,000	$	13,425,926	$	36,574,074
Trade name		16		15,400,000		2,326,042		13,073,958
Non-compete agreements		3		400,000		322,223		77,777
Backlog				600,000		600,000		–
			$	66,400,000	$	16,674,191	$	49,725,809
Goodwill			$	38,844,006	$	–	$	38,844,006

11

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	2016
	Weighted- Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer relationships		9	$	50,000,000	$	7,870,371	$	42,129,629
Trade name		16		15,400,000		1,363,542		14,036,458
Non-compete agreements		3		400,000		188,889		211,111
Backlog				600,000		600,000		–
			$	66,400,000	$	10,022,802	$	56,377,198
Goodwill		NA	$	38,844,006	$	–	$	38,844,006

Estimated aggregate amortization expense for each of the next five years and thereafter is as follows:

Years ending December 31:
2018	$	6,595,833
2019		6,518,056
2020		6,518,056
2021		6,518,056
2022		6,518,056
Thereafter		17,057,752
	$	49,725,809

Amortization expense was approximately $6,651,000 for each of the years ended December 31, 2017 and 2016.

Note 6. Line of Credit

The Company has entered into a credit agreement (Credit Agreement) which provides for a revolving loan commitment of $5,000,000 (Revolver). The Revolver is subject to a borrowing base calculation, as defined in the Credit Agreement. Borrowings under the Revolver bear an interest rate equal to the base rate plus the base margin, as defined in the Credit Agreement, totaling approximately 5.25 percent at December 31, 2017. At December 31, 2017 and 2016, there were no borrowings outstanding on the Revolver. Substantially all of the assets of the Company are pledged as collateral. During July 2017, the Revolver’s maturity date was extended to July 2019 and the unused line fee was reduced to 0.15 percent. The Revolver is subject to certain financial and nonfinancial covenants. The Credit Agreement also provides a term loan commitment in the original principal amount of $45,000,000. Note payable borrowings under the term loan commitment are discussed in Note 7 below.

12

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7. Note Payable

Note payable consists of the following at December 31:

	2017			2016
Note payable secured by substantially all assets of the Company, due in principal installments of $225,000 per quarter through September 30, 2016, $337,500 per quarter through September 30, 2017, $450,000 per quarter through September 30, 2018, and $562,500 per quarter through June 30, 2020, with the remaining outstanding balance due on July 31, 2020. Interest is due monthly at LIBOR plus the LIBOR margin, as defined in the Credit Agreement, totaling 9.69% at December 31, 2017. Beginning with the year ended December 31, 2016, the Credit Agreement requires an additional annual payment based on the excess cash flow calculation, as defined in the Credit Agreement. The Credit Agreement is subject to financial and nonfinancial covenants.	$	42,124,698		$	43,762,500
		42,124,698			43,762,500
Less debt discount		(649,032	)		(903,236	)
Less current maturities		(3,025,640	)		(1,723,500	)
	$	38,450,026		$	41,135,764

At December 31, 2017, management believes the Company is in compliance with all financial and nonfinancial covenants. Current maturities at December 31, 2017, include an excess cash flow payment of approximately $1,113,000 as required under the Credit Agreement based on the Company meeting certain financial ratios.

During August 2016, certain provisions of the Credit Agreement were amended to increase the capital expenditures provision and add a liquidity covenant.

Future maturities of notes payable are as follows:

Years ending December 31:
2018	$	3,025,640
2019		2,250,000
2020		36,849,058
	$	42,124,698

Note 8. Warranty Liability

Changes in the warranty liability included in accrued expenses are as follows:

	2017			2016
Balance at the beginning of period	$	491,183		$	260,026
Warranty expense accrued during the period		374,128			852,294
Warranty claims incurred during the period		(367,268	)		(621,137	)
Balance at the end of period	$	498,043		$	491,183

13

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Members’ Equity

The Company was formed in June 2015, and the Operating Agreement included the establishment of a Board of Managers and two classes of Membership Units. Generally, profits and losses will be allocated to each holder of Membership Units on a pro-rata basis based on the number of units held, and holders of units are to receive quarterly tax distributions on a pro-rata basis.

Common units: Initial capital of approximately $67,000,000 was contributed by members in exchange for common units. The holders of common units have voting rights. There were 890,000 common units outstanding as of December 31, 2017 and 2016.

Incentive units: Holders of incentive units do not have voting rights. See further discussion of the incentive units in Note 12.

Note 10. Profit Sharing Plan

The Company has a 401(k) profit sharing plan for the benefit of its employees. To participate, employees must meet certain eligibility requirements as defined by the plan. The Company may make contributions to the plan at their discretion. The Company’s expense for the plan was approximately $120,000 and $80,000 for the years ended December 31, 2017 and 2016, respectively.

Note 11. Commitments and Contingencies

Operating leases: The Company leases its office and warehouse space and various other equipment through non-cancelable operating leases expiring through October 2022. Monthly payments for these leases range from $300 to approximately $92,000.

Future minimum lease payments under these arrangements are as follows:

Years ending December 31:
2018	$	1,652,000
2019		1,681,000
2020		1,345,000
2021		1,332,000
2022 and thereafter		7,342,000
	$	13,352,000

Rent expense was approximately $1,672,000 and $723,000 for the years ended December 31, 2017 and 2016, respectively.

Litigation: The Company, from time to time, is involved in various legal proceedings and claims in the ordinary course of its business. In the opinion of the Company’s management, the probable resolution of such contingencies will not have a material adverse effect on the financial position or results of operations of the Company.

Note 12. Incentive Units

The Company’s Operating Agreement provides for the grant of incentive units to officers and employees of the Company. The total amount of incentive units reserved for issuance under the Equity

14

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Incentive Plan is 132,987. The total incentive units issued and outstanding were 125,313 at each of the years ended December 31, 2017 and 2016, and total vested units were 35,962 and 19,407 as of December 31, 2017 and 2016, respectively. The incentive units are both time vested and performance based incentive units. Time vested incentive units generally vest over five years and provide for accelerated vesting if there is a capital transaction (as defined). Performance based incentive units vest based on upon a capital transaction.

The Company uses an option pricing model to determine the fair value of unit grants. Compensation expense recorded for the years ended December 31, 2017 and 2016, respectively, in connection with the incentive unit grants was approximately $431,000 and $422,000 related to Series A. No compensation expense has been recorded relating to the Series B, C or D incentive units granted as those incentive units will vest upon the occurrence of a capital transaction. As of December 31, 2017 and 2016, there was approximately $764,000 and $1,195,000, respectively, of unrecognized compensation expense related to non-vested incentive units granted expected to be recognized over a weighted-average period of approximately four years. The incentive units do not have an expiration date.

The fair values of the incentive units at their grant dates were as follows:

	2017		2016
Series A		*	$	23.17
Series B		*		16.53
Series C		*		12.51
Series D		*		10.01

The weighted-average assumptions utilized in the Black Scholes model for December 31 are as follows:

	2017		2016
Expected dividend yield		*		0.00%
Expected volatility		*		46.70%
Risk-free interest rate		*		1.27%
Expected life		*		4 years
Forfeiture rate		*		0.00%

* No incentive units were granted in 2017.

A summary of incentive unit activity as of December 31 is presented below:

	Incentive Units
Outstanding at December 31, 2015		102,299
Repurchased		–
Forfeited		–
Granted		23,014
Outstanding at December 31, 2016		125,313
Repurchased		–
Forfeited		–
Granted		–
Outstanding at December 31, 2017		125,313

15

Independent Auditor’s Report

To the Members

GEF WW Parent LLC and Subsidiaries

Phoenix, Arizona

Report on the Financial Statements

We have audited the accompanying consolidated financial statements of GEF WW Parent LLC and Subsidiaries (Successor) which comprise the consolidated balance sheets as of December 31, 2016 and 2015, the related consolidated statements of operations, changes in members’ equity (deficit), and cash flows for the year ended December 31, 2016 and five-month period ended December 31, 2015, and the related notes to the consolidated financial statements. We have also audited the accompanying consolidated statements of operations, changes in members’ equity, and cash flows for the seven-month period ended July 31, 2015 and the related notes to the consolidated financial statements of WWS Acquisition, LLC (Predecessor) (collectively, the financial statements).

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Successor as of and for the year ended December 31, 2016 and as of December 31, 2015, and the results of Successor and Predecessor operations and cash flows for the five-month period ended December 31, 2015 and the seven-month period ended July 31, 2015, respectively, in accordance with accounting principles generally accepted in the United States of America.

Phoenix, Arizona

March 20, 2017

16

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2016 and 2015

	2016		2015
ASSETS
Current assets:
Cash	$	4,485,060	$	3,171,374
Accounts receivable, net		6,985,317		4,078,519
Inventories, net		7,702,863		5,970,966
Prepaid expenses and other assets		428,415		88,728
Total current assets		19,601,655		13,309,587
Equipment and leasehold improvements, net		10,683,446		2,039,171
Intangibles, net		56,377,198		63,028,588
Goodwill		38,844,006		38,844,006
Product certifications, net		100,281		149,551
Other assets		193,528		–
Total other assets		95,515,013		102,022,145
Total assets	$	125,800,114	$	117,370,903
LIABILITIES AND MEMBERS’ EQUITY
Current liabilities:
Current portion of notes payable	$	1,723,500	$	1,012,500
Accounts payable		6,337,705		3,231,079
Accrued expenses		3,067,660		1,870,201
Deferred revenue		4,103,232		3,567,581
Total current liabilities		15,232,097		9,681,361
Notes payable, less current portion		41,135,764		42,766,900
Other long term liabilities		1,118,391		–
Total noncurrent liabilities		42,254,155		42,766,900
Total liabilities		57,486,252		52,448,261
Members’ equity:
Members’ capital		61,938,122		65,591,410
Members’ accumulated equity (deficit)		6,375,740		(668,768	)
Total members’ equity		68,313,862		64,922,642
Total liabilities and members’ equity	$	125,800,114	$	117,370,903

See notes to consolidated financial statements.

17

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2016 and the

Five-Month Period Ended December 31, 2015 (Successor) and the

Seven-Month Period Ended July 31, 2015 (Predecessor)

				Successor			Predecessor
	Year Ended December 31, 2016			Five-Month Period Ended December 31, 2015			Seven-Month Period Ended July 31, 2015
Net sales	$	89,762,595		$	32,756,633		$	37,014,847
Cost of goods sold:
Materials		34,068,765			14,132,675			15,872,536
Labor and benefits		11,797,776			3,749,721			4,259,767
Shipping		5,219,021			2,846,092			2,958,808
Other manufacturing costs		5,345,679			1,106,375			1,313,361
Total cost of goods sold		56,431,241			21,834,863			24,404,472
Gross profit		33,331,354			10,921,770			12,610,375
Selling, general and administrative expenses		22,391,588			10,005,065			11,728,464
Income from operations		10,939,766			916,705			881,911
Other expense:
Interest expense		(4,317,584	)		(1,735,767	)		(438,542	)
Net income (loss)	$	6,622,182		$	(819,062	)	$	443,369

See notes to consolidated financial statements.

18

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF MEMBERS’ EQUITY (DEFICIT)

For the Year Ended December 31, 2016 and the

Five-Month Period Ended December 31, 2015 (Successor) and the

Seven-Month Period Ended July 31, 2015 (Predecessor)

	Members’ Capital			Members’ Accumulated Deficit			Total
Balance, December 31, 2014 (Predecessor)	$	3,600,630		$	(4,409,738	)	$	(809,108	)
Distributions		–			(2,543,816	)		(2,543,816	)
Net income		–			443,369			443,369
Balance, July 31, 2015 (Predecessor)		3,600,630			(6,510,185	)		(2,909,555	)
Eliminate predecessor equity		(3,600,630	)		6,510,185			2,909,555
Balance, July 31, 2015 (Successor)
Contributions		66,945,954			–			66,945,954
Distributions		(1,354,544	)		–			(1,354,544	)
Incentive unit compensation expense		–			150,294			150,294
Net loss		–			(819,062	)		(819,062	)
Balance, December 31, 2015 (Successor)		65,591,410			(668,768	)		64,922,642
Contributions								–
Distributions		(3,653,288	)		–			(3,653,288	)
Incentive unit compensation expense		–			422,326			422,326
Net income		–			6,622,182			6,622,182
Balance, December 31, 2016	$	61,938,122		$	6,375,740		$	68,313,862

See notes to consolidated financial statements.

19

GEF WW PARENT LLC AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended December 31, 2016 and the

Five-Month Period Ended December 31, 2015 (Successor) and the

Seven-Month Period Ended July 31, 2015 (Predecessor)

				Successor			Predecessor
	Year Ended December 31, 2016			Five-Month Period Ended December 31, 2015			Seven-Month Period Ended July 31, 2015
Cash flows from operating activities:
Net income (loss)	$	6,622,182		$	(819,062	)	$	443,369
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		735,058			230,161			294,243
Amortization		6,651,390			3,371,412			189,510
Amortization for product certifications		72,051			32,918			42,831
Amortization of debt discount and deferred financing fees		251,665			100,300			62,403
Loss on disposal of equipment		62,845			–			–
Bad debt expense		40,961			41,592			821
Inventory provision		60,000			(328,000	)		320,000
Non-cash incentive unit compensation expense		422,326			150,294			–
Changes in working capital components:
Accounts receivable		(2,947,759	)		186,180			(2,339,323	)
Inventories		(1,791,897	)		1,867,839			(2,806,473	)
Prepaid expenses and other assets		(533,215	)		(30,149	)		62,688
Accounts payable		3,106,626			(2,043,100	)		3,100,643
Accrued expenses		1,197,459			(3,845,670	)		4,060,145
Deferred revenue		535,651			(532,419	)		1,065,193
Other long term liabilities		1,118,391			–			–
Net cash provided by (used in) operating activities		15,603,734			(1,617,704	)		4,496,050
Cash flows from investing activities:
Purchases of equipment and leasehold improvements		(9,442,178	)		(551,138	)		(382,601	)
Additions to production certification		(22,781	)		(17,241	)		(27,854	)
Acquisition of Western Window Systems, net of cash		–			(99,151,728	)		–
Net cash used in investing activities		(9,464,959	)		(99,720,107	)		(410,455	)
Cash flows from financing activities:
Net payments on line of credit		–			(600,192	)		600,192
Cash paid for loan costs		(159,801	)		(1,095,900	)		–
Principal payments on capital lease obligation					–			(2,169	)
Proceeds from notes payable		–			45,000,000			–
Principal payments on notes payable		(1,012,000	)		(225,000	)		–
Principal payments on subordinated note payable		–			(4,161,133	)		(2,500,000	)
Contributions from members		–			66,945,954			–
Distributions to members		(3,653,288	)		(1,354,544	)		(2,543,816	)
Net cash (used in) provided by financing activities		(4,825,089	)		104,509,185			(4,445,793	)
Net increase (decrease) in cash		1,313,686			3,171,374			(360,198	)
Cash, beginning of period		3,171,374			–			1,175,436
Cash, end of period	$	4,485,060		$	3,171,374		$	815,238
Supplemental disclosure of cash flow information:
Cash paid for interest	$	4,065,919		$	1,735,767		$	320,709

See notes to consolidated financial statements.

20

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Nature of Business and Significant Accounting Policies

GEF WW Parent LLC (the Company) was incorporated in June 2015 under the laws of the State of Delaware (dba Western Window Systems). The Company is a limited liability company that is a market-leading resource for doors and windows primarily used in wide opening applications that facilitate indoor-outdoor living. The Company manufactures aluminum doors and windows and vinyl doors sold into the high-end custom home market, the production home market, and select commercial markets. The Company is located in Phoenix, Arizona.

As further discussed in Note 2, GEF WW Buyer LLC (Buyer), an indirect wholly owned subsidiary of the Company, entered into a Membership Interest Purchase Agreement dated as of July 1, 2015, to acquire all membership interests of WWS Acquisition, LLC (Predecessor). The acquisition closed on July 31, 2015.

Basis of consolidation: These financial statements present the consolidated financial position of GEF WW Parent LLC (Parent) and its subsidiaries, GEF WW Intermediate LLC (Intermediate) (100 percent owned by Parent), Buyer (100 percent owned by Intermediate), and WWS Acquisition, LLC (Predecessor) (100 percent owned by Buyer), (together the Company or Successor) as of December 31, 2016 and 2015 and the results of operations and cash flows for the year ended December 31, 2016 and the period of August 1, 2015 through December 31, 2015 (the Successor Period) and the results of operations of Predecessor for the period of January 1, 2015 through July 31, 2015. All significant intercompany balances and transactions have been eliminated in consolidation. Any reference to Successor means the Company on or after the closing on July 31, 2015 and any reference to Predecessor means WWS Acquisition, LLC on or prior to the closing on July 31, 2015.

Basis of accounting: The accompanying consolidated financial statements have been prepared on the accrual basis of accounting.

Use of estimates: The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include impairment considerations and valuation of incentive units. Actual results could differ from those estimates.

Cash: The Company may have cash in banks or other financial institutions in excess of their federally insured limits. The Company has not experienced any losses on these accounts.

Concentration of credit risk: The Company’s top customer accounted for approximately 9 percent and 20 percent of receivables and 9 percent and 11 percent of revenues for the year ended December 31, 2016 and both the five-month period ended December 31, 2015 and the seven-month period ended July 31, 2015, respectively.

The Company’s top suppliers accounted for approximately 33 percent and 53 percent of accounts payable, and 43 percent and 72 percent of total purchases for the year ended December 31, 2016 and both the five-month period ended December 31, 2015 and the seven-month period ended July 31, 2015, respectively.

21

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable: Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within specific terms by customer. Early pay discounts are generally allowed for customers who provide a 50 percent deposit with a new custom order and pay the respective invoices within thirty days of the invoice date. The Successor and Predecessor have a volume program which does not require a deposit and is eligible for the early pay discount provided the respective invoices are paid within ten days of the invoice date. An allowance for discounts of approximately $114,000 and $165,000 is recorded as of December 31, 2016 and 2015, respectively.

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, based on estimated losses that will be incurred in collection of all receivables. The estimated losses are based on historical collection experience combined with a review of the current status of the existing receivables. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts. After collection efforts have been exhausted and management deems a receivable balance uncollectible, the allowance is adjusted and the accounts receivable balance is reduced. The allowance for doubtful accounts is approximately $161,000 and $105,000 at December 31, 2016 and 2015, respectively.

Inventories: Inventories consist of raw materials and work-in-process. Work-in-process includes materials, labor and manufacturing overhead. Inventories are valued at the lower of cost (first-in, first-out) or market. The Successor and Predecessor establish inventory reserves based upon projected customer demand compared to on-hand quantities. The inventory reserve recorded is $150,000 and $60,000 as of December 31, 2016 and 2015, respectively.

Debt discount: Lender fees and other finance costs incurred in connection with amounts financed are recorded as a debt discount. Such discount is amortized using the effective interest method, over the terms of the related debt. Total amortization of this discount was approximately $252,000 and $100,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and was approximately $62,000 for the seven-month period ended July 31, 2015. Amortization of debt discount is included in interest expense.

Equipment and leasehold improvements: Equipment and leasehold improvements are stated at cost. Depreciation and amortization is computed on the straight-line method over the estimated useful lives as follows:

	Useful Lives
Description:
Machinery, equipment and vehicles		3 - 7 years
Furniture and fixtures		3 - 7 years
Leasehold improvements		lesser of estimated
		useful life or lease term

Intangible assets: Intangible assets represent the fair value of customer lists, trade name, backlog and non-compete agreements acquired in connection with the acquisition of Western Window Systems, Inc. and are amortized over their estimated useful lives of 3 to 16 years. The fair values of customer lists, backlog and non-compete agreements were estimated based on discounted cash flows attributable to each respective intangible asset. The fair value of the trade name was estimated based on a relief from royalty method because the Company owns their trade name and is not required to pay a third party to license the name.

22

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill: Goodwill represents the excess of costs over the fair value of the identifiable net assets acquired. The Company evaluates goodwill for impairment in accordance with Accounting Standards Codification (ASC) 350, Goodwill and Other Intangible Assets. ASC 350 requires goodwill to be tested for impairment using a two-step process, which is performed annually, as well as when an event triggering impairment may have occurred. The first step tests for impairment, while the second step, if necessary, measures the impairment. An impairment loss is recognized to the extent the carrying value of goodwill exceeds the implied fair value. Management has elected to perform its annual impairment testing in December of each year. Upon completion of its annual testing, management determined no impairment had occurred as of December 31, 2016 and 2015.

Prior to July 2015, the Predecessor elected ASU 2014-02 allowing private companies an accounting alternative for the subsequent measurement of goodwill. An entity within the scope of this guidance may elect to amortize goodwill on a straight-line basis over 10 years or less than 10 years if the entity demonstrates that another useful life is more appropriate. An entity that elects the accounting alternative is further required to make an accounting policy election to test goodwill for impairment at either the entity level or the reporting unit level. Goodwill should be tested for impairment when a triggering event occurs that indicates that the fair value of an entity (or a reporting unit) may be below its carrying amount. Under this accounting alternative, the goodwill impairment amount, if any, would be the excess of the entity’s (or the reporting unit’s) carrying amount over its fair value. The Predecessor elected to early adopt this new guidance and began amortizing goodwill on a straight-line basis over 10 years and tested for impairment at the entity level when a triggering event occurred that indicated that the fair value of the entity was below its carrying amount. The Predecessor elected to adopt this guidance on the goodwill amount recorded relating to a transaction that occurred prior to December 31, 2014 and adoption of this guidance resulted in approximately $190,000 in goodwill amortization expense recorded for the seven-month period ended July 31, 2015.

Impairment of long-lived assets: Long-lived assets, such as equipment, leasehold improvements and purchased intangibles subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated and undiscounted future cash flows expected to be generated by the asset or asset group at the lowest level of identifiable cash flows. If the carrying amount of an asset group exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the assets exceeds their fair value. Assets to be disposed of would be separately presented in the balance sheets reported at the lower of the carrying amount or fair value less costs to dispose, and would no longer be depreciated. No impairment loss has been recognized as of December 31, 2016 and 2015.

Product certifications: Product certifications represent costs incurred to obtain certification by regulators in order to sell the Company’s products. These certifications typically expire every four years, and costs incurred are amortized over the applicable certification period. Amortization expense was approximately $72,000 and $33,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and was approximately $43,000 for the seven-month period ended July 31, 2015.

Revenue recognition: Revenue is recognized upon shipment of products, at the time title and ownership transfers to the customer, the sales price is fixed, collection is reasonably assured, and there are no significant obligations remaining. Shipping and handling charges to customers are included in net sales.

23

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Shipping and handling costs incurred are included in the cost of goods sold. All payments received in advance are recorded as deferred revenue in the consolidated balance sheets.

Sales taxes: Sales to customers are recorded net of the customers’ state and local sales tax obligations. Sales taxes are charged to customers at the applicable rates in effect for the taxing jurisdiction and remitted to the taxing authority in accordance with state law. These taxes are not recorded as revenues or expenses, but as a pass-through activity in the consolidated balance sheets.

Product warranty provisions: Management accrues monthly an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. The standard policy is to warrant all shipped goods against defects in design, materials, and workmanship for two years by replacing failed parts. Glass components have warranties of 10 years through the glass supplier. Management assesses the adequacy of its recorded warranty liability annually and adjusts the amount as necessary. A warranty liability of approximately $491,000 and $260,000 are included in accrued expenses in the accompanying consolidated balance sheets as of December 31, 2016 and 2015.

Advertising costs: The costs of advertising and promotion are expensed as incurred. Advertising expenses for the year ended December 31, 2016 and the five-month period ended December 31, 2015, were approximately $1,912,000 and $704,000, respectively and were approximately $688,000 for the seven-month period ended July 31, 2015.

Income taxes: As a limited liability company, neither the Successor nor Predecessor is a taxpaying entity for federal income tax purposes. Accordingly, the Successor or Predecessor’s taxable income or loss is allocated to its members in accordance with provisions under its operating agreement. There are, however, certain other jurisdictions which levy income tax on the entity and accordingly, a provision has been considered in the accompanying consolidated financial statements.

The FASB issued guidance on accounting for uncertainty in income taxes. Management evaluated the Successor and Predecessor’s tax positions and concluded that they had taken no uncertain tax positions that require adjustment to the consolidated financial statements to comply with the provisions of this guidance. The Successor is no longer subject to income tax examinations by the U.S. federal authorities for years before 2013 and state or local tax authorities for years before 2012.

Unit-based compensation: The Predecessor and Successor granted incentive units to certain officers and employees. Unit-based compensation expense is measured at the grant date for all unit-based awards made to employees and officers, based on the fair value of the award and is recognized as an expense over the requisite service period, which is generally the vesting period.

Recent accounting pronouncements: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

In July 2015, the FASB issued ASU 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. The amendments in the ASU require entities that measure inventory using the first-in, first-out or average cost methods to measure inventory at the lower of cost and net realizable value. Net realizable

24

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

value is defined as estimated selling price in the ordinary course of business less reasonably predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

Recent accounting pronouncements (continued): In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

Subsequent events: Management has evaluated subsequent events through March 20, 2017, the date which the consolidated financial statements were available to be issued.

Note 2. Business Acquisition

Buyer purchased 100 percent of the equity of WWS Acquisition, LLC (Predecessor) in July 2015 from Omnia Group Fund I, LLC, OCC Equity Holdings, LP, Jason Funk and Scott Leech, for cash of approximately $100,000,000. The transaction was funded with a combination of new debt obligations as well as equity contributions. The acquisition purchase price was allocated to the respective assets and liabilities acquired, including intangible assets, based on their respective fair values at the date of acquisition. Management anticipates the operations of the entity will result in increased industry market awareness of existing products of the Company. The factors contributing to goodwill include the expectation of continued growth.

The fair value of accounts receivable included gross contractual amounts of approximately $4,555,000, less an amount not expected to be collected of approximately $249,000, resulting in a fair value of approximately $4,306,000.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition:

Cash	$	815,000
Accounts receivable		4,306,000
Inventories		7,511,000
Property and equipment		1,718,000
Prepaids expenses and other assets		224,000
Intangibles		66,400,000
Goodwill		38,844,000
Accounts payable and accrued expenses		(15,090,000	)
Line of credit and long-term debt obligation		(4,761,000	)
Net assets acquired, cash paid to seller	$	99,967,000

25

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As part of the acquisition, the Company incurred transaction costs totaling approximately $1,385,000 that were not considered to be part of the purchase price and, therefore, have been included in selling, general, and administrative expenses on the accompanying consolidated statement of operations for the five-month period ended December 31, 2015. In addition, the Company incurred approximately $1,096,000 in deferred financing costs to obtain the debt financing for the acquisition. These costs have been recorded as a debt discount.

Goodwill acquired in the acquisition is deductible for income tax purposes.

The fair value of the respective intangible assets acquired was determined by management with assistance from a third party valuation firm using discounted cash flows.

Note 3. Inventories

The inventories consist of the following at December 31:

	2016			2015
Raw materials	$	6,527,101		$	5,380,112
Work-in-progress		1,325,762			650,854
Inventory reserves		(150,000	)		(60,000	)
Total	$	7,702,863		$	5,970,966

Note 4. Equipment and leasehold improvements

The following is a summary of equipment and leasehold improvements as of December 31:

	2016			2015
Furniture and fixtures	$	746,306		$	595,041
Machinery and equipment		1,172,584			1,101,691
Vehicles		21,218			21,218
Leasehold improvements		170,722			156,401
Construction in progress		9,477,332			394,981
Less accumulated depreciation		(904,716	)		(230,161	)
Total equipment and leasehold improvements	$	10,683,446		$	2,039,171

Depreciation expense was approximately $735,000 and $230,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and was approximately $294,000 for the seven-month period ended July 31, 2015.

During 2016, the Company entered into a facility lease in which the landlord provided a lease incentive option in the form of leasehold improvements to be reimbursed by the landlord and six free months of rent. The Company recorded an asset for the amount of the lease incentive option with a corresponding liability for the leasehold incentive obligation. The leasehold incentive obligation is being amortized over the lease term as a reduction to rent expense. At December 31, 2016 the remaining lease obligation was approximately $953,000 and is included in other liabilities on the consolidated balance sheets.

26

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 5. Related Party Transactions

The Successor and Predecessor incurred the following related party expenses for the Board of Directors and members for the year ended December 31, 2016 and the five-month period ended December 31, 2015, and the seven-month period ended July 31, 2015:

			Successor		Predecessor
	Year Ended December 31, 2016		Five-Month Period Ended December 31, 2015		Seven-Month Period Ended July 31, 2015
Interest on term note (Note 8)	$	1,271,309	$	840,383	$	313,500
Management fees and expenses		59,074		564		174,840
	$	1,330,383	$	840,947	$	488,340

Note 6. Intangible Assets and Goodwill

The following intangible assets and goodwill are included on the consolidated balance sheets at December 31:

	2016
	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer relationships		9	$	50,000,000	$	7,870,371	$	42,129,629
Trade name		16		15,400,000		1,363,542		14,036,458
Non-compete agreements		3		400,000		188,889		211,111
Backlog				600,000		600,000		–
			$	66,400,000	$	10,022,802	$	56,377,198
Goodwill		NA	$	38,844,006	$	–	$	38,844,006

	2015
	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to amortization:
Customer relationships		9	$	50,000,000	$	2,314,814	$	47,685,186
Trade name		16		15,400,000		401,042		14,998,958
Non-compete agreements		3		400,000		55,556		344,444
Backlog				600,000		600,000		–
			$	66,400,000	$	3,371,412	$	63,028,588
Goodwill		NA	$	38,844,006	$	–	$	38,844,006

27

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated aggregate amortization expense for each of the next five years and thereafter is as follows for the years ending December 31:

2017	$	6,651,389
2018		6,595,833
2019		6,518,056
2020		6,518,056
2021		6,518,056
Thereafter		23,575,808
	$	56,377,198

Amortization expense was approximately $6,651,000 and $3,371,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and approximately $189,000 for seven-month period ended July 31, 2015.

Note 7. Line of Credit

The Company entered into a revolving credit agreement (Revolver) as of July 31, 2015. The Revolver provides for maximum borrowings of up to $5,000,000 and is subject to a borrowing base calculation, as defined in the Revolver. Borrowings under the loan bear an interest rate equal to the base rate plus the base margin, as defined in the Revolver, approximately 4.5 percent at December 31, 2016. The Revolver is subject to a monthly unused line fee at an annual rate of .25 percent. At December 31, 2016 and 2015, there were no borrowings outstanding on the Revolver. Substantially all of the assets of the Company are pledged as collateral and the Revolver matures in July 2017. The Revolver is subject to certain financial and non-financial covenants.

Note 8. Notes Payable

Notes payable consists of the following at December 31:

	2016			Successor 2015
Notes payable secured by substantially all assets of the Company, due in principal installments of $225,000 per quarter through September 30, 2016, $337,500 per quarter through September 30, 2017, $450,000 per quarter through September 30, 2018, $562,500 per quarter through June 30, 2020, with the remaining outstanding balance due on July 31, 2020. Interest is due monthly at LIBOR plus the LIBOR margin as defined in the credit agreement, 9% at December 31, 2016. Beginning with the fiscal year ending December 31, 2016, the loan agreement requires an additional annual payment based on the excess cash flow calculation, as defined in the loan agreement. The loan agreement is subject to financial and non-financial covenants.	$	43,762,500		$	44,775,000
		43,762,500			44,775,000
Less debt discount		(903,236	)		(995,600	)
Less current maturities		(1,723,500	)		(1,012,500	)
	$	41,135,764		$	42,766,900

28

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Note is subject to certain financial covenants, at December 31, 2016, management believes the Company is in compliance with these covenants. Current maturities includes an excess cash flow payment of $261,000 as required under the credit agreement based on the Company meeting certain financial ratios.

During August 2016, certain provisions of the credit agreement were amended to increase the capital expenditures provision and to add a liquidity covenant.

Future maturities of notes payable are as follows as of December 31:

2017	$	1,723,500
2018		1,912,500
2019		2,250,000
2020		37,876,500
	$	43,762,500

Note 9. Warranty Liability

Changes in the warranty liability included in accrued expenses are as follows:

				Successor			Predecessor
	Year Ended December 31, 2016			Five-Month Period Ended December 31, 2015			Seven-Month Period Ended July 31, 2015
Balance at the beginning of period	$	260,026		$	248,395		$	197,107
Warranties accrued during the period		852,294			294,953			366,701
Warranty work incurred during the period		(621,137	)		(283,322	)		(315,413	)
Balance at the end of period	$	491,183		$	260,026		$	248,395

Note 10. Members’ Equity

Successor: Parent was formed in June 2015, and the Operating Agreement included the establishment of a Board of Managers and two classes of Membership Units. Generally, profits and losses will be allocated to each holder of Membership Units on a pro-rata basis based on the number of units held, and holders of units are to receive quarterly tax distributions on a pro-rata basis.

Common units: Initial capital of approximately $67,000,000 was contributed by members to fund the transaction in July 2015. The holders of common units have voting rights. There were 890,000 common units outstanding as of December 31, 2016 and 2015.

Incentive units: Holders of incentive units do not have voting rights. As discussed in Note 13, incentive units were granted during the year ended December 31, 2016 and 2015.

Note 11. Profit Sharing Plan

The Company has a 401(k) profit sharing plan for the benefit of its employees. To participate, employees must meet certain eligibility requirements as defined by the plan. The Company may make contributions to the plan at their discretion. The Company’s expense for the plan was approximately $80,000 and $25,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and approximately $39,000 for the seven-month period ended July 31, 2015.

29

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12. Commitments and Contingencies

Operating leases: The Company leases its office and warehouse space and various other equipment through noncancelable operating leases expiring through October 2022. Monthly payments for these leases range from $300 to approximately $92,000. In 2016 the Company signed a new lease to move into a new facility and moved their production to this new location in December 2016.

Future minimum lease payments under these arrangements are as follows at December 31:

2017	$	1,601,000
2018		1,597,000
2019		1,624,000
2020		1,289,000
2021 and thereafter		8,590,000
	$	14,701,000

Rent expense was approximately $723,000 and $232,000 for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, and was approximately $295,000 for the seven-month period ended July 31, 2015.

Litigation: The Company, from time to time, is involved in various legal proceedings and claims in the ordinary course of its business. In the opinion of the Company’s management, the probable resolution of such contingencies will not have a material adverse effect on the financial position or results of operations of the Company.

Note 13. Incentive Units

The Company’s Operating Agreement provides for the grant of incentive units to officers and employees of the Company. The total amount of incentive units reserved for issuance under the Equity Incentive Plan is 132,987. The total incentive units issued and outstanding were 125,313 and 102,299 and total vested were 19,407 and -0- as of December 31, 2016 and 2015, respectively. The incentive units are both time vested and performance based incentive units. Time vested incentive units generally vest over five years and provide for accelerated vesting if there is a capital transaction (as defined). Performance based incentive units vest based on upon a capital transaction.

As previously discussed, the Company uses an option pricing model to determine the fair value of unit grants. Compensation expense recorded for the year ended December 31, 2016 and the five-month period ended December 31, 2015, respectively, in connection with the incentive unit grants was approximately $422,000 and $150,000 related to Series A. No compensation expense has been recorded relating to the Series B, C, or D incentive units granted as those incentive units will vest upon the occurrence of a capital transaction. As of December 31, 2016 and 2015 there was approximately $1,195,000 and $1,290,000 of unrecognized compensation expense related to nonvested incentive units granted expected to be recognized over a weighted-average period of approximately four years. The incentive units do not have an expiration date.

30

GEF WW PARENT LLC AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of the incentive units at their grant dates were as follows:

	2016		2015
Series A	$	23.17	$	23.17
Series B		16.53		16.53
Series C		12.51		12.51
Series D		10.01		10.01

The weighted-average assumptions utilized in the Black Scholes model for the years ended December 31, 2016 and 2015 are as follows:

	2016			2015
Expected dividend yield		0.00	%		0.00	%
Expected volatility		46.70	%		46.70	%
Risk-free interest rate		1.27	%		1.27	%
Expected life		4 years			4 years
Forfeiture rate		0.00	%		0.00	%

A summary of incentive unit activity as of December 31, 2016 and 2015 and changes during the five-month period then ended is presented below:

	Incentive Units
Outstanding at August 1, 2015		–
Repurchased		–
Forfeited		–
Granted		102,299
Outstanding at December 31, 2015		102,299
Repurchased		–
Forfeited		–
Granted		23,014
Outstanding at December 31, 2016		125,313

31

EX-99.2

Exhibit 99.2

GEF WW PARENT LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2018 and December 31, 2017

	June 30, 2018		December 31, 2017
Assets
Current Assets
Cash	$	3,684,551	$	3,319,610
Accounts receivable, net		8,812,493		8,018,609
Inventories, net		11,525,522		10,667,926
Prepaid expenses and other assets		958,015		621,605
Total Current Assets		24,980,581		22,627,750
Equipment and leasehold improvements, net		14,296,236		14,615,842
Intangibles, net		46,389,005		49,725,809
Goodwill		38,844,006		38,844,006
Product Certifications, net		479,313		217,402
Other assets		198,206		198,206
Total Other Assets		85,910,530		88,985,423
Total Assets	$	125,187,347	$	126,229,015
Liabilities and Members’ Equity
Current Liabilities
Current portion of note payment	$	2,137,500	$	3,025,640
Accounts payable		5,236,489		5,910,501
Accrued expenses		3,541,938		2,218,533
Deferred revenue		4,421,591		2,877,969
Other current liabilities		211,354		–
Total Current Liabilities		15,548,872		14,032,643
Note payable, less current portion		31,620,538		38,450,026
Other long-term liabilities		2,433,082		2,412,715
Total Noncurrent Liabilities		34,053,620		40,862,741
Total Liabilities		49,602,492		54,895,384
Members’ Equity
Members’ capital		57,215,254		60,431,316
Members’ accumulated earning		18,369,601		10,902,315
Total Members’ Equity		75,584,855		71,333,631
Total Liabilities and Members’ Equity	$	125,187,347	$	126,229,015

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

GEF WW PARENT LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Six Months Ended June 30, 2018 and 2017

	Six Month			Six Month
	June 30,			June 30,
	2018			2017
Net Sales	$	63,024,806		$	50,487,263
Materials		23,015,264			19,522,923
Labor and benefits		5,667,702			6,071,780
Shipping		4,329,247			3,815,109
Other manufacturing		3,433,323			3,204,266
Total Cost of Sales		36,445,536			32,614,078
Gross Profit		26,579,270			17,873,185
Selling, general & administrative expense		17,105,131			13,225,259
Operating Income		9,474,139			4,647,926
Interest Expense		(2,222,011	)		(2,125,445	)
Net Income	$	7,252,128		$	2,522,481

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

GEF WW PARENT LLC AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30, 2018 and 2017

	Six Month			Six Month
	June 30,			June 30,
	2018			2017
Cash flows from Operating activities:
Net Income	$	7,252,128		$	2,522,481
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation		1,214,911			960,076
Amortization		3,365,170			3,359,208
Amortization of debt discount and deferred financial fees		127,102			127,102
Bad Debt		229,041			–
Noncash incentive unit compensation expense		215,670			215,671
Changes in working capital components:
Accounts Receivable		(1,022,925	)		(2,473,205	)
Inventories		(857,596	)		(920,441	)
Prepaid & Other Assets		(336,410	)		(267,814	)
Accounts Payable		(674,012	)		(495,261	)
Deferred Revenue		1,543,622			(342,489	)
Accrued Expenses & Other		1,555,126			534,720
Net Cash provided by Operating Activities		12,611,827			3,220,048
Cash flows from Investing activities:
Increase (Decrease) in
Purchase of equipment and leasehold improvements		(895,305	)		(4,264,136	)
Additions to production certifications		(290,789	)		(44,933	)
Net Cash used by Investing Activities		(1,186,094	)		(4,309,069	)
Cash flows from Financing activities:
Principal payments on notes payable		(7,844,730	)		(850,302	)
Distributions to members		(3,216,062	)		(4,347	)
Net Cash used by Financing Activities		(11,060,792	)		(854,649	)
Net (decrease) increase in cash		364,941			(1,943,670	)
Cash, beginning of the year		3,319,610			4,485,060
Cash, end of the year	$	3,684,551		$	2,541,390

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 1. Nature of Business and Significant Accounting Policies

GEF WW Parent LLC (the Company dba Western Window Systems) is a limited liability company that is a market-leading resource for doors and windows primarily used in wide opening applications that facilitate indoor-outdoor living. The Company manufactures aluminum doors and windows and vinyl doors sold into the high-end custom home market, the production home market, and select commercial markets. The Company is located in Phoenix, Arizona.

These condensed consolidated financial statements do not include all the information and footnotes required by United States Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the interim period is not necessarily indicative of the results that may be expected for the remainder of the current year or for any future periods.

The condensed consolidated balance sheet as of December 31, 2017, is derived from the audited consolidated financial statements, but does not include all disclosures required by GAAP. The condensed consolidated balance sheet as of December 31, 2017, and the unaudited condensed consolidated financial statements as of and for the six months ended June 30, 2018, should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 30, 2017, included elsewhere in this Offering Memorandum. The accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in the Company’s 2017 Audited Financial Statements included in this Offering Memorandum.

Basis of consolidation: These financial statements present the consolidated financial position of GEF WW Parent LLC (Parent) and its subsidiaries, GEF WW Intermediate LLC (Intermediate) (100 percent owned by Parent), GEF WW Buyer (Buyer) (100 percent owned by Intermediate), and WWS Acquisition, LLC (100 percent owned by Buyer), (together the Company). All significant intercompany balances and transactions have been eliminated in consolidation.

Use of estimates: The preparation of the consolidated financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include impairment considerations.

Cash: The Company may have cash in banks or other financial institutions in excess of their federally insured limits. The Company has not experienced any losses on these accounts.

Accounts receivable: Accounts receivable are uncollateralized customer obligations due under normal trade terms requiring payment within specific terms by the customer. Early pay discounts are generally allowed for customers who provide a 50 percent deposit with a new custom order and pay the respective invoices within thirty days of the invoice date. The Company has a volume program which does not require a deposit and is eligible for an early pay discount provided the respective invoices are paid within ten days of the invoice date.

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The carrying amount of accounts receivable is reduced by an allowance for doubtful accounts, if necessary, based on estimated losses that will be incurred in collection of all receivables. The estimated

4

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

losses are based on historical collection experience combined with a review of the current status of the existing receivables. Management provides for probable uncollectible amounts through a charge to earnings and a credit to the allowance for doubtful accounts. After collection efforts have been exhausted and management deems a receivable balance uncollectible, the allowance is adjusted, and the accounts receivable balance is reduced. The allowance for doubtful accounts is approximately $544,000 and $341,000 for the six months ended June 30, 2018 and year ended December 31, 2017, respectively.

Inventories: Inventories consist of raw materials and work-in-process. Work-in-process includes materials, labor and manufacturing overhead. Inventories are valued at the lower of cost (first-in, first-out) or net realizable value. Management establishes inventory reserves based upon projected customer demand compared to on-hand quantities. The inventory reserve recorded is $236,000 and $50,000 at June 30, 2018 and at December 31, 2017, respectively.

Debt discount: Lender fees and other finance costs incurred in connection with amounts financed are recorded as a debt discount. Such discount is amortized using the effective interest method, over the terms of the related debt. Total amortization of this discount was approximately $127,000 for both the six months ended June 30, 2018 and 2017, respectively. Amortization of debt discount is included in interest expense.

Product warranty provisions: Management accrues monthly an estimate of its exposure to warranty claims based on both current and historical product sales data and warranty costs incurred. Effective August 1, 2017, the Company began providing a 10-year warranty on materials and workmanship and a limited lifetime warranty on insulated glass. Management assesses the adequacy of its recorded warranty liability annually and adjusts the amount as necessary. A warranty liability of approximately $546,000 and $498,000 is included in accrued expenses in the accompanying consolidated balance sheets for at June 30, 2018 and at December 31, 2017, respectively.

Advertising costs: The costs of advertising and promotion are expensed as incurred. Advertising expense for the six months ended June 30, 2018 and 2017, was approximately $907,000 and $1,426,000, respectively.

Recent accounting pronouncements: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2019. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. ASU 2016-15 provides guidance on how certain cash receipts and cash payments should be presented and classified in the statement of cash flows with the objective of reducing existing diversity in practice with respect to these items. ASU 2016-15 is effective for annual periods, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted. The Company has reviewed the new guidance and determined it has no impact on its statement of cash flows.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. The amendments in the ASU remove Step 2 from the goodwill impairment test required under previous U.S. GAAP. Entities will perform their goodwill impairment test by

5

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

comparing the fair value of a reporting unit with its carrying amount. Entities should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU will be effective for the Company for fiscal years beginning after December 15, 2021, on a prospective basis. Early adoption of ASU 2017-04 is permitted. The Company is currently evaluating the effects adoption of this guidance will have on its consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14 which defers the effective date of ASU 2014-09 one year making it effective for annual reporting periods beginning after December 15, 2018. Management is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements.

Improvements to Employee Share-Based Payment Accounting. The ASU is intended to simplify various aspects of accounting for share-based compensation arrangements, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. For example, the new guidance requires all excess tax benefits and tax deficiencies related to share-based payments to be recognized in income tax expense, and for those excess tax benefits to be recognized regardless of whether it reduces current taxes payable. The ASU also allows an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur. ASU 2016-06 will be effective for the Company beginning on January 1, 2018. Different methods of adoption are required for the various amendments and early adoption is permitted, but all of the amendments must be adopted in the same period. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial condition, results of operations and cash flows.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, to provide guidance about which changes to the terms or conditions of a share-based payment award requires an entity to apply modification accounting in ASC 718. The amendments in the ASU are effective for fiscal years beginning after December 15, 2017, and should be applied prospectively to an award modified on or after the adoption date. Early adoption is permitted, including adoption in an interim period. The Company is currently evaluating the impact of the adoption of this guidance on its consolidated financial statements.

Note 2. Inventories

The inventories consist of the following at June 30, 2018 and December 31, 2017:

	2018			2017
Raw Materials	$	10,342,138		$	9,812,591
Work-in-progress		1,419,788			905,335
Inventory reserves		(236,404	)		(50,000	)
Total	$	11,525,522		$	10,667,926

6

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 3. Intangible Assets and Goodwill

The following intangible assets and goodwill are included on the consolidated balance sheets at June 30, 2018 and December 31, 2017:

	June 30, 2018
	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to Amortization
Customer Relationships		9	$	50,000,000	$	16,203,704	$	33,796,296
Trade Name		16		15,400,000		2,807,291		12,592,709
Non-complete agreements		3		400,000		400,000		–
Backlog				600,000		600,000		–
			$	66,400,000	$	20,010,995	$	46,389,005
Goodwill		NA	$	38,844,006			$	38,844,006

	December 31, 2017
	Weighted Average Useful Life (Years)		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Subject to Amortization
Customer Relationships		9	$	50,000,000	$	13,425,926	$	36,574,074
Trade Name		16		15,400,000		2,326,042		13,073,958
Non-complete agreements		3		400,000		322,223		77,777
Backlog				600,000		600,000		–
			$	66,400,000	$	16,674,191	$	49,725,809
Goodwill		NA	$	38,844,006			$	38,844,006

Estimated aggregate amortization expense for each of the next five years and thereafter is as follows for the years ending December 31:

Years Ending December 31:
Remainder of 2018	$	3,259,028
2019		6,518,056
2020		6,518,056
2021		6,518,056
2022		6,518,056
Thereafter		17,057,753
	$	46,389,005

Amortization expense was approximately $3,337,000 and $3,326,000 for the six months ended June 30, 2018 and 2017, respectively.

7

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 4. Line of Credit

The Company has entered into a credit agreement (Credit Agreement) which provides for a revolving loan commitment of $5,000,000 (Revolver). The Revolver is subject to a borrowing base calculation, as defined in the Credit Agreement. Borrowings under the Revolver bear an interest rate equal to the base rate plus the base margin, as defined in the Credit Agreement, totaling approximately 5.25 percent at June 30, 2018. At June 30, 2018 and December 31, 2017, there were no borrowings outstanding on the Revolver. Substantially all of the assets of the Company are pledged as collateral. During July 2017, the Revolver’s maturity date was extended to July 2019 and the unused line fee was reduced to .15 percent. The Revolver is subject to certain financial and non-financial covenants. The Credit Agreement also provides a term loan commitment in the original principal amount of $45,000,000. Note payable borrowings under the term loan commitment are discussed in Note 5 below.

Note 5. Note Payable

Note payable consists of the following at June 30, 2018 and December 31, 2017:

	2018			2017
Note payable secured by substantially all assets of the Company, due in principal installments of $337,500 per quarter through September 30, 2017, $450,000 per quarter through September 30, 2018, $562,500 per quarter through June 30, 2020, with the remaining outstanding balance due on July 31, 2020. Interest is due monthly at LIBOR plus the LIBOR margin as defined in the Credit Agreement, totaling 10.32% at June 30, 2018. Beginning with the year ending December 31, 2016, the Credit Agreement requires an additional annual payment based on the excess cash flow calculation, as defined in the Credit Agreement. The Credit Agreement is subject to financial and non-financial covenants.	$	34,279,968		$	42,124,698
		34,279,968			42,124,698
Less debt discounts		(521,930	)		(649,032	)
Less current maturities		(2,137,500	)		(3,025,640	)
	$	31,620,538		$	38,450,026

At June 30, 2018, management believes the Company is in compliance with all financial and nonfinancial covenants. Current maturities at June 30, 2018 does not include the May 1, 2019 excess cash flow payment required under the Credit Agreement based on the Company meeting certain financial ratios. The Company is currently projecting approximately $2,200,000 for the excess cash flow payment in 2019. As the excess cash flow payment per the agreement is determined at December 31, 2018 it was not included in the current maturities balance as of June 30, 2018.

Future maturities of notes payable are as follows as of December 31:

Year Ended December 31, 2018:
2018	$	1,012,500
2019		4,450,000
2020		28,817,468
	$	34,279,968

8

GEF WW PARENT LLC AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Note 6. Warranty Liability

Changes in the warranty liability included in accrued expenses are as follows:

	2018			2017
Balance at the beginning of the period, January 1	$	498,043		$	491,183
Warranty expense incurred during the period		337,471			238,137
Warranty claims incurred during the period		(289,223	)		(182,859	)
Balance as the end of the period, June 30	$	546,291		$	546,461

Note 7. Related-Party Transactions

The Company incurred the following related-party expenses for the Board of Managers and members for the six months ended June 30:

	2018		2017
Interest on term note (Note 5)	$	654,616	$	624,848
Management fee and expenses		33,319		49,615
	$	687,935	$	674,463

9

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On August 13, 2018, PGT Innovations, Inc., a Delaware corporation (“PGTI”), completed the acquisition (the “Western Window Systems Acquisition”) of all of the equity interests of GEF WW Parent LLC, a Delaware limited liability company and a parent company of WWS Acquisition, LLC d/b/a Western Window Systems (“GEF WW”), and WWS Blocker LLC, a Delaware limited liability company (“Blocker,” and, together with GEF WW, “Western Window Systems” or “WWS”) pursuant to the terms of the purchase agreement dated as of July 24, 2018 (the “Purchase Agreement”) by and among PGTI, Coyote Acquisition Co., a Delaware corporation and a wholly owned subsidiary of PGTI, GEF WW, Blocker, various entities that collectively owned all of the equity interests of GEF WW and a seller representative.

The unaudited pro forma condensed combined financial statements presented below are derived from the historical consolidated financial statements of PGTI and Western Window Systems, as adjusted to reflect the issuance of $315 million aggregate principal amount of 6.75% Senior Notes due 2026, consummated on August 10, 2018 (the “Notes”) and the Western Window Systems Acquisition, consummated on August 13, 2018.

The unaudited pro forma condensed combined balance sheet as of June 30, 2018, assumes that the Western Window Systems Acquisition and issuance of the Notes occurred on June 30, 2018. The unaudited pro forma condensed combined statements of income for the year ended December 30, 2017 (the last day of PGTI’s 2017 fiscal year) and the six months ended June 30, 2018 (the last day of PGTI’s 2018 second quarter) assume that the Western Window Systems Acquisition and the issuance of the Notes occurred on January 1, 2017.

PGTI’s fiscal year consists of 52 or 53 weeks ending on the Saturday nearest December 31 and Western Window Systems fiscal year ends on each December 31. The unaudited pro forma condensed combined financial information was prepared using (1) PGTI’s unaudited interim condensed combined financial statements as of June 30, 2018 and for the six months ended June 30, 2018, (2) PGTI’s audited combined financial statements for the year ended December 30, 2017, (3) the unaudited interim consolidated financial statements of Western Window Systems as of June 30, 2018 and for the six months ended June 30, 2018, and (4) the audited consolidated financial statements of Western Window Systems for the year ended December 31, 2017. The difference in fiscal periods for PGTI and Western Window Systems is considered to be insignificant. Accordingly, the unaudited pro forma condensed combined financial statements for each period are presented on the basis of PGTI’s fiscal year and combine the historical results of PGTI and Western Window Systems with no related adjustments. The following unaudited pro forma condensed combined financial information should be read in conjunction with the historical financial statements of PGTI and Western Window Systems.

The unaudited pro forma condensed combined financial information includes pro forma adjustments that are (1) directly attributable to the issuance of the Notes and Western Window Systems Acquisition, (2) factually supportable and (3) with respect to the unaudited pro forma condensed combined statements of operations, expected to have a continuing impact on the operating results of the combined company. The pro forma adjustments set forth in the unaudited pro forma condensed combined financial information reflect the following:

• changes in cash on hand provided in connection with the issuance of the Notes, and resulting from the cash on hand of Western Window Systems not acquired by PGTI in the Western Window Systems Acquisition;

• changes in indebtedness incurred in connection with the issuance of the Notes, and resulting from the indebtedness of Western Window Systems repaid at the closing, and not assumed by, PGTI in the Western Window Systems Acquisition;

• transaction fees and debt issuance costs incurred in connection with the issuance of the Notes and the Western Window Systems Acquisition;

• changes in interest expense resulting from the issuance of the Notes, including amortization of estimated debt issuance costs, and resulting interest expense not incurred on the indebtedness of Western Window Systems not assumed by PGTI in the Western Window Systems Acquisition;

• changes in assets and liabilities to record the preliminary estimates of their fair values in accordance with acquisition accounting related to the Western Window Systems Acquisition;

• changes in amortization expense resulting from the preliminary fair value adjustments to amortizable intangible assets in the Western Window Systems Acquisition;

• a preliminary estimate of the effect of the above adjustments on deferred income tax assets, liabilities, and related provision for income taxes, including a tax benefit in the year ended December 30, 2017 relating to the revaluation of the net deferred tax liability as the result of the Tax Cuts and Jobs Act of 2017 (the “Tax Cuts and Jobs Act”); and

• the equity impact of the elimination of historical equity balances of Western Window Systems.

The pro forma adjustments reported in these financial statements are based upon available information and certain assumptions that PGTI management believes are reasonable. The unaudited pro forma condensed combined financial information is presented for informational purposes only and is not intended to represent or be indicative of what the results of operations or financial condition would have been had the issuance of the Notes and Western Window Systems Acquisition actually occurred on the dates indicated, nor is it meant to be indicative of future results of operations or financial condition for any future period or as of any future date.

Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial information.

2

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

	As of June 30, 2018
	PGTI Historical Actual			WWS Historical Actual		Financing Adjustments					Acquisition Adjustments					Combined Pro Forma
	(dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	63,923		$	3,684	$	303,000		(3a	)	$	(358,897	)	(4a	)	$	11,710
Accounts receivable, net		74,970			8,812		—					—					83,782
Inventories		35,326			11,526		—					—					46,852
Contract assets, net		11,012			—		—					—					11,012
Prepaid expenses and other current assets		10,656			958		—					—					11,614
Total current assets		195,887			24,980		303,000					(358,897	)				164,970
Property, plant and equipment, net		93,433			14,296		—					—					107,729
Trade names and other intangible assets, net		111,725			46,389		—					131,411		(4b	)		289,525
Goodwill		108,060			38,844		—					118,623		(4b	)		265,527
Other assets, net		1,336			678		—					(480	)	(4c	)		1,534
Total assets	$	510,441		$	125,187	$	303,000				$	(109,343	)			$	829,285
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	45,911		$	13,411		(512	)	(3c	)		—				$	58,810
Current portion of long-term debt		303			2,137		—					(2,137	)	(4d	)		303
Total current liabilities		46,214			15,548		(512	)				(2,137	)				59,113
Long-term debt, less current portion		215,081			31,621		305,000		(3b	)		(31,621	)	(4d	)		520,081
Deferred income taxes		23,287			—		—					—					23,287
Other liabilities		17,015			2,433		—					—					19,448
Total liabilities		301,597			49,602		304,488					(33,758	)				621,929
Shareholders’ equity:
Common stock		533			—		—					—					533
Additional paid-in-capital		254,399			57,215		—					(57,215	)	(4e	)		254,399
Accumulated other comprehensive loss		(384	)		—		—					—					(384	)
Retained earnings (accumulated deficit)		(32,945	)		18,370		(1,488	)	(3c	)		(18,370	)	(4e	)		(34,433	)
Shareholders’ equity		221,603			75,585		(1,488	)				(75,585	)				220,115
Less: Treasury stock at cost		(12,759	)		—		—					—					(12,759	)
Total shareholders’ equity		208,844			75,585		(1,488	)				(75,585	)				207,356
Total liabilities and shareholders’ equity	$	510,441		$	125,187	$	303,000				$	(109,343	)			$	829,285

3

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

	Year Ended December 30, 2017
	PGTI Historical Actual		WWS Historical Actual		Reclassification					Financing Adjustments					Acquisition Adjustments					Combined Pro Forma
Net sales	$	511,081	$	100,159	$	—				$	—				$	—				$	611,240
Cost of sales		352,097		64,361		(7,715	)	(2	)		—					—					408,743
Gross profit		158,984		35,798		7,715					—					—					202,497
Selling, general and administrative expenses		98,803		27,403		7,715		(2	)		—					3,596		(6a	)		137,517
Income from operations		60,181		8,395		—					—					(3,596	)				64,980
Interest expense, net		20,279		4,300		—					18,213		(5a	)		—					42,792
Income before income taxes		39,902		4,095		—					(18,213	)				(3,596	)				22,188
Income tax expense (benefit)		63		—		—					(6,702	)	(5b	)		(427	)	(6b	)		(7,066	)
Net income	$	39,839	$	4,095	$	—				$	(11,511	)			$	(3,169	)			$	29,254
Net income per common share:
Basic	$	0.80																		$	0.59
Diluted	$	0.77																		$	0.57
Weighted average shares outstanding:
Basic		49,522																			49,522
Diluted		51,728																			51,728

4

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

	Six Months Ended June 30, 2018
	PGTI Historical Actual			WWS Historical Actual		Reclassification					Financing Adjustments					Acquisition Adjustments					Combined Pro Forma
Net sales	$	309,522		$	63,025	$	—				$	—				$	—				$	372,547
Cost of sales		204,802			36,446		(4,329	)	(2	)		—					—					236,919
Gross profit		104,720			26,579		4,329					—					—					135,628
Selling, general and administrative expenses		61,238			17,105		4,329		(2	)		—					1,790		(6a	)		84,462
Gains on transfers of assets		(2,551	)		—		—					—					—					(2,551	)
Income from operations		46,033			9,474		—					—					(1,790	)				53,717
Interest expense, net		7,652			2,222		—					9,034		(5a	)		—					18,908
Debt extinguishment costs		3,079			—		—					—					—					3,079
Other expense, net		—			—		—					—					—					—
Income before income taxes		35,302			7,252		—					(9,034	)				(1,790	)				31,730
Income tax expense (benefit)		5,414			—		—					(2,309	)	(5b	)		1,397		(6b	)		4,502
Net income	$	29,888		$	7,252	$	—				$	(6,725	)			$	(3,187	)			$	27,228
Net income per common share:
Basic	$	0.60																			$	0.54
Diluted	$	0.57																			$	0.52
Weighted average shares outstanding:
Basic		50,087																				50,087
Diluted		52,023																				52,023

5

NOTE 1: BASIS OF PRESENTATION

PGTI’s fiscal year ends on the Saturday nearest December 31 of the related year. As such, PGTI’s 2017 fiscal year ended on December 30, 2017, and consisted of 52 weeks. Western Window Systems’ fiscal periods are based on the calendar. As such, Western Window Systems’ 2017 fiscal year ended on December 31, 2017, and consisted of 52 weeks.

The unaudited pro forma condensed combined balance sheet was prepared using the historical unaudited consolidated balance sheets of PGTI and Western Window Systems as of June 30, 2018. The unaudited pro forma condensed combined statements of operations were prepared using:

• the historical audited consolidated statement of operations of PGTI for the year ended December 30, 2017 (the last day of PGTI’s 2017 fiscal year);

• the historical audited consolidated statement of operations of Western Window Systems for the year ended December 31, 2017; and

• the historical unaudited consolidated statement of operations of PGTI for the six-month period ended June 30, 2018 (the last day PGTI’s second quarter of 2018), and of Western Window Systems for the six-month period ended June 30, 2018.

The Western Window Systems Acquisition will be accounted for using the acquisition method of accounting in accordance with ASC 805 which establishes a new basis of accounting for all of Western Window Systems’ identifiable assets and liabilities as of the date of the Western Window Systems Acquisition. For purposes of these pro forma financial statements, the purchase price allocation for the Western Window Systems Acquisition, subject to working capital and certain other closing adjustments is based on the historical unaudited balance sheet of Western Windows Systems as of June 30, 2018 and is estimated as follows:

(dollars in thousands) Pro Forma Purchase Price Allocation for the Western Window Systems Acquisition
Total consideration	$	355,213
Current assets	$	21,296
Property, plant and equipment		14,296
Intangible assets		177,800
Other assets		198
Goodwill		157,467
Total assets acquired		375,844
Current liabilities assumed		(13,411	)
Other liabilities assumed		(2,433	)
Net assets acquired	$	355,213

In the unaudited pro forma condensed combined balance sheet, the consideration for the Western Window Systems Acquisition has been allocated to the acquired identifiable assets and assumed liabilities based upon management’s preliminary estimate of their respective fair values as of June 30, 2018. Any differences between the fair value of the consideration for the Western Window Systems Acquisition transferred and the fair values of the assets acquired and liabilities assumed is presented as goodwill. The unaudited pro forma condensed combined statements of operations also include certain acquisition accounting adjustments related to the Western Window Systems Acquisition, including items expected to have a continuing impact on the combined results, such as amortization expense on acquired intangible assets or depreciation expense on acquired property, plant and equipment.

The final purchase price accounting will be determined at a later date and is dependent on a number of factors, including the final valuation of tangible and identifiable intangible assets acquired and liabilities assumed as of the closing date of the Western Window Systems Acquisition, as the case may be, when additional information will be available and the resolution of purchase price adjustments pursuant to the Purchase Agreement. Accordingly, the acquisition accounting and related depreciation and amortization reflected in these unaudited pro forma condensed combined financial statements are preliminary, have been made solely for the purpose of preparing these statements and may change upon the receipt of additional and more detailed information. Such changes could result in a material change to the unaudited pro forma condensed combined financial information.

6

Additionally, the unaudited pro forma condensed combined statements of operations include certain financing adjustments related to the issuance of the Notes expected to have an ongoing effect on the combined results. The unaudited pro forma condensed combined statements of operations do not include the impacts of any revenue, cost or other operating synergies that may result from the Western Window Systems Acquisition.

Upon consummation of the Western Window Systems Acquisition, Western Window Systems’ accounting policies were adjusted to conform to those of PGTI. PGTI has identified preliminary adjustments to conform Western Window Systems’ accounting policies to those of PGTI based upon currently available information and assumptions management believes to be reasonable:

• Historically, Western Window Systems classified the cost of distributing its products as a component of the cost of goods sold. In accordance with PGTI’s accounting policy regarding distribution costs, after the Western Window Systems Acquisition, these costs are accounted for as a fulfillment activity and classified as a component of selling, general and administrative expenses.

• Historically, Western Window Systems capitalized product certification costs as incurred, and amortized such costs over the life of the certifications, which typically had been four years. In accordance with PGTI’s accounting policy regarding product certification costs, after the Western Window Systems Acquisition, these costs are expensed as incurred.

The unaudited pro forma condensed combined balance sheet and statements of operations have been adjusted to reflect these changes as further described in the footnotes. PGTI and Western Window Systems are not aware of any other material differences between the accounting policies of the two companies, except for the adjustments described in Note 2 to reclassify certain balances presented in the historical financial statements of Western Window Systems to conform presentation to that of PGTI. Management is currently in the process of conducting a more detailed review of Western Window Systems’ accounting policies in an effort to determine if differences in accounting policies require further reclassification of Western Window Systems’ results of operations or reclassification of assets or liabilities to conform to PGTI’s accounting policies and classifications. As a result, PGTI may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on these unaudited pro forma condensed combined financial statements.

NOTE 2: RECLASSIFICATIONS

Financial information presented in the “WWS Historical Actual” column in the unaudited pro forma condensed combined balance sheet as of June 30, 2018 has been reclassified to conform to the presentation of PGTI as indicated in the table below:

(dollars in thousands) Presentation in WWS’s Historical Financial Statements	Presentation in Unaudited Pro Forma Condensed Combined  Financial Statements	As of June 30, 2018
Cash	Cash and cash equivalents	$	3,684
Equipment and leasehold improvements, net	Property, plant and equipment, net		14,296
Intangible assets, net	Trade names and other intangible assets, net		46,389
Product certifications, net	Other assets, net		480
Current portion of note payable	Current portion of long-term debt		2,137
Accounts payable	Accounts payable and accrued liabilities		5,236
Accrued expenses	Accounts payable and accrued liabilities		3,542
Deferred revenue	Accounts payable and accrued liabilities		4,422
Other current liabilities	Accounts payable and accrued liabilities		211
Note payable, less current portion	Long-term debt, less current portion		31,621
Other long-term liabilities	Other liabilities		2,433
Members’ capital	Additional paid-in-capital		57,215
Members’ accumulated earnings	Retained earnings (accumulated deficit)		18,370

7

Financial information presented in the “WWS Historical Actual” column in the unaudited pro forma condensed combined statements of operations for the year ended December 30, 2017, and the six months ended June 30, 2018, has been reclassified to conform to that of PGTI as indicated in the table below:

(dollars in thousands) Presentation in WWS’s Historical Financial Statements	Presentation in Unaudited Pro Forma Condensed Combined Financial Statements	Year Ended December 30, 2017		Six months Ended June 30, 2018
Cost of goods sold—Materials	Cost of sales	$	38,647	$	23,015
Cost of goods sold—Labor and benefits	Cost of sales		11,713		5,668
Cost of goods sold—Shipping	Selling, general and administrative expenses		7,715		4,329
Cost of goods sold—Other manufacturing costs	Cost of sales		6,286		3,434
Total cost of goods sold	Cost of sales	$	64,361	$	36,446

NOTE 3: FINANCING ADJUSTMENTS RELATING TO THE UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 2018

(a) The net change in cash is calculated as follows:

(dollars in thousands)
Proceeds from the issuance of the Notes	$	315,000
Less: Payment of financial advisor and underwriting fees		(8,460	)
Less: Payment of estimated expenses		(3,540	)
Total financing costs and transaction expenses		(12,000	)
Net adjustment to cash	$	303,000

(b) Includes the net adjustment to total debt associated with the issuance of the Notes, calculated as follows:

(dollars in thousands)
Issuance of the Notes	$	315,000
Less: Portion of total financing and transaction costs to be deferred and amortized		(10,000	)
Net adjustment to long-term debt, less current portion	$	305,000

(c) Represents adjustment to accumulated deficit for the portion of total financing and transactions costs expensed, net of tax effect:

(dollars in thousands)
Portion of total financing and transaction costs to be expensed	$	(2,000	)
Effective tax rate		25.6	%
Net adjustment to accrued income taxes		(512	)
Net adjustment to retained earnings (accumulated deficit)	$	(1,488	)

NOTE 4: ACQUISITION ADJUSTMENTS RELATING TO THE UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET AS OF JUNE 30, 2018

(a) The net change in cash is calculated as follows:

(dollars in thousands)
Contemporaneous repayment of Seller’s debt	$	(34,280	)
Consideration to Seller paid in Western Window Systems Acquisition, net		(320,933	)
Less: WWS cash not acquired		(3,684	)
Net adjustment to cash	$	(358,897	)

8

(b) Includes adjustments to record acquired assets at estimated acquisition-date fair values. The estimated fair values of these assets are based on the preliminary valuations performed for the preparation of the pro forma financial information and are subject to the final valuations. The respective net adjustments have been calculated as follows:

(dollars in thousands)
Intangible assets acquired in the Western Window Systems Acquisition	$	177,800
Less: WWS historical intangible assets		(46,389	)
Net adjustment to trade names and other intangible assets, net	$	131,411

(dollars in thousands)
Goodwill in the preliminary allocation	$	157,467
Less: WWS historical goodwill		(38,844	)
Net adjustment to goodwill	$	118,623

(c) Historically, Western Window Systems capitalized product certification costs as incurred, and amortized such costs over the life of the certifications, which typically had been approximately four years. In accordance with PGTI’s accounting policy regarding product certification costs, after the Western Window Systems Acquisition, such costs are expensed as incurred. At June 30, 2018, Western Window Systems had net product certification costs capitalized on its consolidated balance sheet of $480,000. This adjustment represents the elimination of Western Window Systems’ capitalized net product certification costs not acquired by PGTI in the Western Window Systems Acquisition.

(d) Represents the repayment of Western Window Systems’ long-term debt from Seller’s proceeds, contemporaneously with the closing of the Western Window Systems Acquisition, including both the current and long-term portions, not assumed by PGTI in the Western Window Systems Acquisition, with the elimination of Seller’s deferred financing costs not acquired by PGTI. The respective net adjustments have been calculated as follows:

(dollars in thousands)
Seller’s long-term debt repaid, current portion	$	(2,137	)
Seller’s long-term debt repaid, long-term portion		(32,143	)
Less: Seller’s deferred financing costs not acquired		522
Net adjustment to long-term debt	$	(31,621	)

(e) Represents the elimination of the historical members’ equity balances of Western Window Systems.

NOTE 5: FINANCING ADJUSTMENTS RELATING TO THE UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 2017 AND SIX MONTHS ENDED JUNE 30, 2018

(a) Represents the net adjustment to reflect (i) the incremental interest expense on the Notes, resulting in an increase in outstanding indebtedness of $315.0 million, (ii) the increase in non-cash interest expense relating to the amortization of incremental deferred financing costs and (iii) the elimination of the historical interest expense of Western Window Systems. The net adjustments are calculated as follows:

	Year Ended December 30, 2017			Six Months Ended June 30, 2018
	(dollars in thousands)
Incremental interest expense on the Notes	$	21,263		$	10,631
Incremental amortization of deferred financing costs		1,250			625
Less: WWS historical interest expense		(4,300	)		(2,222	)
Net adjustment to interest expense, net	$	18,213		$	9,034

(b) Represents the income tax benefit from the net incremental interest expense at PGTI’s effective income tax rate, excluding discrete items of income tax, which was 36.8% for the year ended December 30, 2017, and is estimated will be 25.6% in PGTI’s 2018 fiscal year.

9

NOTE 6: ACQUISITION ADJUSTMENTS RELATING TO THE UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 30, 2017 AND SIX MONTHS ENDED JUNE 30, 2018

(a) Represents the net adjustment to reflect the incremental amortization expense related to amortizable intangible assets acquired in the Western Window Systems Acquisition. The estimated fair values of these intangible assets are based on the preliminary valuations performed for the preparation of the pro forma financial information and are subject to the final valuations that have not been completed. Western Window Systems historical amortization includes the amortization of its capitalized product certification costs which, as discussed in Note 1, PGTI expenses as incurred. The respective net adjustments have been calculated as follows:

	Year Ended December 30, 2017			Six Months Ended June 30, 2018
	(dollars in thousands)
Incremental amortization on acquired intangibles	$	10,310		$	5,155
Less: WWS historical intangible amortization		(6,714	)		(3,365	)
Net adjustment to selling, general and administrative expenses	$	3,596		$	1,790

10

(b) Represents the impact to income tax expense (benefit) from transition of Western Window Systems to being a taxable entity upon acquisition by PGTI, and the net incremental amortization expense at PGTI’s effective income tax rate, excluding discrete items of income tax, which was 36.8% for the year ended December 30, 2017, and is estimated will be 25.6% in PGTI’s 2018 fiscal year. The income tax benefit for the year ended December 30, 2017 also includes a discrete item of income tax benefit of $610,000 due to the enactment of the Tax Cuts and Jobs Act, relating to the revaluation of the net deferred tax liability resulting from the difference between amortization expense for book purposes and amortization expense for tax purposes during 2017. The adjustments to income tax expense (benefit) have been calculated as follows:

	Year Ended December 30, 2017			Six Months Ended June 30, 2018
	(dollars in thousands)
WWS historical actual income before taxes	$	4,095		$	7,252
Acquisition adjustments effect on income before income taxes		(3,596	)		(1,790	)
Net change to income before income taxes		499			5,462
Effective tax rate		36.8	%		25.6	%
Incremental income tax expense		183			1,397
Effects of Tax Cuts and Jobs Act on deferred tax liability		(610	)		—
Net change to income tax expense (benefit)	$	(427	)	$	1,397

11