Delaware
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000-52059
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20-0634715
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(State or other jurisdiction
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(Commission File
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(IRS Employer
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of Incorporation)
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Number)
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Identification No.)
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1070 Technology Drive, North Venice, Florida, 34275
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(Address of Principal Executive Offices, Including Zip Code)
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(941) 480-1600
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(Registrant's Telephone Number, Including Area Code)
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Exhibit No.
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Description
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2.1
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Stock Purchase Agreement, dated November 25, 2015, among PGT, the Acquired Companies, the Representative and the Sellers identified on the signature pages thereto (Incorporated by reference to Exhibit 2.1 to Registrant’s Current Report on Form 8-K filed with the SEC on November 30, 2015).
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10.1
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Credit Agreement, dated February 16, 2016, among PGTI, the lending institutions from time to time party thereto, and Deutsche Bank AG New York Branch, as Letter of Credit Issuer, Swing Line Lender, Administrative Agent and Collateral Agent (Incorporated by reference to Exhibit 10.1 to Registrant’s Current Report on Form 8-K filed with the SEC on February 17, 2016).
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23.1
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Consent of Berman Hopkins Wright & LaHam, CPAs and Associates, LLP
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99.1
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Press Release dated February 16, 2016 (Incorporated by reference to the exhibit number 99 to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2016).
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99.2
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Unaudited Pro Forma Combined Condensed Consolidated Financial Information
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99.3
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Audited Consolidated Financial Statements and Supplemental Information of WinDoor, Inc. and Subsidiaries for the Years ended December 31, 2015 and 2014
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●
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Changes in new home starts and home remodeling trends
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●
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The economy in the U.S. generally or in Florida where the substantial portion of our sales are generated
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●
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Raw material prices, especially aluminum
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●
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Transportation costs
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●
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Level of indebtedness
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●
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Dependence on our impact-resistant branded product lines
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●
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Integration of acquisition(s)
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●
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Product liability and warranty claims
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●
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Federal and state regulations, and
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●
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Dependence on our manufacturing facilities
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PGT, Inc.
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||
By:
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/s/ Mario Ferrucci III
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Name: Mario Ferrucci III
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||
Title: Vice President and General Counsel
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||
Dated: May 3, 2016
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Exhibit No.
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Description
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|
2.1
|
Stock Purchase Agreement, dated November 25, 2015, among PGT, the Acquired Companies, the Representative and the Sellers identified on the signature pages thereto (Incorporated by reference to the exhibit numbered as indicated above to Registrant’s Current Report on Form 8-K filed with the SEC on November 30, 2015).
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10.1
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Credit Agreement, dated February 16, 2016, among PGTI, the lending institutions from time to time party thereto, and Deutsche Bank AG New York Branch, as Letter of Credit Issuer, Swing Line Lender, Administrative Agent and Collateral Agent. (Incorporated by reference to the exhibit numbered as indicated above to Registrant’s Current Report on Form 8-K filed with the SEC on February 17, 2016).
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23.1
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Consent of Berman Hopkins Wright & LaHam, CPAs and Associates, LLP
|
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99.1
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Press Release dated February 16, 2016 (Incorporated by reference to the exhibit numbered as indicated above to Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on February 17, 2016).
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99.2
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Unaudited Pro Forma Combined Condensed Consolidated Financial Information
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99.3
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Audited Consolidated Financial Statements and Supplemental Information of WinDoor, Inc. and Subsidiaries for the Years ended December 31, 2015 and 2014
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● Audited consolidated financial statements of the Registrant as of and for the year ended January 2, 2016, and the related notes included in its Annual Report on Form 10-K, as filed with the Securities and Exchange Commission on March 11, 2016;
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● Audited consolidated financial statements of WinDoor, Inc. and Subsidiaries as of and for the years ended December 31, 2015 and 2014, and related notes included as Exhibit 99.3 of this Form 8-K/A;
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PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
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||||||||||||||||||||
(unaudited - in thousands, except percentages and footnotes)
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||||||||||||||||||||
As of January 2, 2016
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||||||||||||||||||||
(A)
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(B)
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(C)
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(D) = (B) + (C)
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(E)
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(A) + (D) + (E)
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|||||||||||||||
WinDoor, Inc.
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||||||||||||||||||||
and
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Less:
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Acquired
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||||||||||||||||||
PGTI
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Subsidiaries
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LT, LLC
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Companies
|
SEE NOTE 2
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Condensed
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|||||||||||||||
Historical
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Historical
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Historical
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Historical
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Pro Forma
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Combined
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|||||||||||||||
Actual
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Actual
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Actual
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Actual
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Adjustments
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Pro Forma
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|||||||||||||||
ASSETS
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||||||||||||||||||||
Current assets:
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||||||||||||||||||||
Cash and cash equivalents
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$ | 61,493 | $ | 1,594 | $ | (641 | ) | $ | 953 | $ | (44,420 | ) | (1) | $ | 18,026 | |||||
Accounts receivable, net
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31,783 | 4,718 | - | 4,718 | - | 36,501 | ||||||||||||||
Inventories
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23,053 | 7,396 | - | 7,396 | - | 30,449 | ||||||||||||||
Prepaid expenses and
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||||||||||||||||||||
other current assets
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10,660 | 308 | (175 | ) | 133 | - | 10,793 | |||||||||||||
Total current assets
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126,989 | 14,016 | (816 | ) | 13,200 | (44,420 | ) | 95,769 | ||||||||||||
Property, plant and
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||||||||||||||||||||
equipment, net
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71,503 | 14,288 | (9,210 | ) | 5,078 | - | 76,581 | |||||||||||||
Trade names and other
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||||||||||||||||||||
intangible assets, net
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79,311 | - | - | - | 47,100 | (2) | 126,411 | |||||||||||||
Goodwill
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65,635 | - | - | - | 41,568 | (2) | 107,203 | |||||||||||||
Other assets, net
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2,291 | 686 | (100 | ) | 586 | 1,335 | (3) | 4,212 | ||||||||||||
Total assets
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$ | 345,729 | $ | 28,990 | $ | (10,126 | ) | $ | 18,864 | $ | 45,583 | $ | 410,176 | |||||||
LIABILITIES AND SHARE-
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||||||||||||||||||||
HOLDERS' EQUITY
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||||||||||||||||||||
Current liabilities:
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||||||||||||||||||||
Accounts payable and
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||||||||||||||||||||
accrued liabilities
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$ | 19,578 | $ | 3,207 | $ | (32 | ) | $ | 3,175 | $ | 3,000 | (2) | $ | 25,753 | ||||||
Current portion of
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||||||||||||||||||||
long-term debt
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1,966 | 818 | - | 818 | (118 | ) | (4) | 2,666 | ||||||||||||
Total current liabilities
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21,544 | 4,025 | (32 | ) | 3,993 | 2,882 | 28,419 | |||||||||||||
Long-term debt, less
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||||||||||||||||||||
current portion
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190,502 | 8,412 | (7,380 | ) | 1,032 | 60,598 | (5) | 252,132 | ||||||||||||
Deferred income taxes
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25,894 | - | - | - | - | 25,894 | ||||||||||||||
Other liabilities
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828 | 8 | - | 8 | (8 | ) | 828 | |||||||||||||
Total liabilities
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238,768 | 12,445 | (7,412 | ) | 5,033 | 63,472 | 307,273 | |||||||||||||
Shareholders' equity:
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||||||||||||||||||||
Common stock
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511 | - | - | - | - | 511 | ||||||||||||||
Additional paid-in-capital
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244,944 | - | - | - | - | 244,944 | ||||||||||||||
Retained earnings
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||||||||||||||||||||
(accumulated deficit)
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(128,457 | ) | 11,160 | (198 | ) | 10,962 | (15,020 | ) | (6) | (132,515 | ) | |||||||||
Shareholders' equity
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116,998 | 11,160 | (198 | ) | 10,962 | (15,020 | ) | 112,940 | ||||||||||||
Less: Treasury stock at cost
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(10,037 | ) | - | - | - | - | (10,037 | ) | ||||||||||||
Noncontrolling interest
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- | 5,385 | (2,516 | ) | 2,869 | (2,869 | ) | - | ||||||||||||
Total shareholders'
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||||||||||||||||||||
equity
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106,961 | 16,545 | (2,714 | ) | 13,831 | (17,889 | ) | 102,903 | ||||||||||||
Total liabilities and
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||||||||||||||||||||
shareholders' equity
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$ | 345,729 | $ | 28,990 | $ | (10,126 | ) | $ | 18,864 | $ | 45,583 | $ | 410,176 |
PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS
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||||||||||||||||||||
(unaudited - in thousands, except per-share amounts)
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||||||||||||||||||||
Year Ended January 2, 2016
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||||||||||||||||||||
(A)
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(B)
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(C)
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(D) = (B) + (C)
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(E)
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(A) + (D) + (E)
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|||||||||||||||
WinDoor, Inc.
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||||||||||||||||||||
and
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Less:
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Acquired
|
||||||||||||||||||
PGTI
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Subsidiaries
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LT, LLC
|
Companies
|
SEE NOTE 3
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Condensed
|
|||||||||||||||
Historical
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Historical
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Historical
|
Historical
|
Pro Forma
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Combined
|
|||||||||||||||
Actual
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Actual
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Actual
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Actual
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Adjustments
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Pro Forma
|
|||||||||||||||
Net sales
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$ | 389,810 | $ | 41,537 | $ | (1,252 | ) | $ | 40,285 | $ | - | $ | 430,095 | |||||||
Cost of sales
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270,678 | 26,445 | - | 26,445 | - | 297,123 | ||||||||||||||
Gross margin
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119,132 | 15,092 | (1,252 | ) | 13,840 | - | 132,972 | |||||||||||||
Selling, general and
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||||||||||||||||||||
administrative expenses
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68,190 | 10,996 | (585 | ) | 10,411 | 3,610 | (1) | 82,211 | ||||||||||||
Income from operations
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50,942 | 4,096 | (667 | ) | 3,429 | (3,610 | ) | 50,761 | ||||||||||||
Interest expense, net
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11,705 | 557 | (469 | ) | 88 | 9,424 | (2) | 21,217 | ||||||||||||
Debt extinguishment costs
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- | - | - | - | 3,431 | (3) | 3,431 | |||||||||||||
Other expense, net
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388 | 71 | - | 71 | - | 459 | ||||||||||||||
Income before income taxes
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38,849 | 3,468 | (198 | ) | 3,270 | (16,465 | ) | 25,654 | ||||||||||||
Income tax expense
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15,297 | - | - | - | (4,816 | ) | (4) | 10,481 | ||||||||||||
Net income
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$ | 23,552 | $ | 3,468 | $ | (198 | ) | $ | 3,270 | $ | (11,649 | ) | $ | 15,173 | ||||||
Net income per common share:
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||||||||||||||||||||
Basic
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$ | 0.49 | $ | 0.31 | ||||||||||||||||
Diluted
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$ | 0.47 | $ | 0.30 | ||||||||||||||||
Weighted average shares
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||||||||||||||||||||
outstanding:
|
||||||||||||||||||||
Basic
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48,272 | 48,272 | ||||||||||||||||||
Diluted
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50,368 | 50,368 |
NOTE 2: ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET
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(1)
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Represents cash on hand of nearly $43.5 million used to purchase the Acquired Companies and a reduction of $1.0 million relating to cash of the Acquired Companies, which was not part of the Acquisition.
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(2)
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Reflects the preliminary estimated allocation of the purchase price of $98.9 million, including intangible assets of $47.1 million (an $18.4 million indefinite-lived tradename intangible, a $26.4 million customer relationship intangible, a $1.3 million developed technology intangible, and a $1.0 million non-compete intangible), $8.2 million in estimated net working capital based on December 31, 2015 amounts, and $5.0 million in property, plant and equipment. Additionally, pursuant to the SPA, which includes an earn-out clause for Sellers to receive contingent consideration, the purchase price allocation includes a current liability of $3.0 million for this potential earn-out contingency payment. Goodwill from the Acquisition is estimated to be $41.6 million.
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(3)
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Represents reduction of $0.6 million of other assets of the Acquired Companies, not included in the Acquisition, and a reduction of $0.8 million relating to the assumed write-off of deferred financing costs relating to PGTI’s existing credit facility. Offsetting these reductions is approximately $2.7 million of additional deferred financing costs relating to the Refinancing.
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(4)
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Represents reduction of $0.8 million in current portion of long-term debt of the Acquired Companies, not assumed by PGTI in the Acquisition. This reduction was partially offset by $0.7 million increase in the current portion of long-term debt relating to the refinancing from the increase in PGTI’s annual required principal repayments from $2.0 million per year to $2.7 million.
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(5)
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Represents increase in long-term debt in the Refinancing, which resulted in an increase in total long-term debt of $72.5 million ($270.0 million under the Credit Agreement, less $197.5 million outstanding under the existing credit facility at the time of the Refinancing), of which $0.7 million is considered to be current portion, or an increase of $71.8 million. Additionally, long-term debt is assumed to have increased $2.1 million from the write-off of existing deferred lender fees and original issue discount in the Refinancing. These increases were partially offset by reductions of $1.0 million in long-term debt of the Acquired Companies, not assumed by PGTI in the Acquisition, and $12.3 million relating to additional deferred lender fees and original issue discount under the Credit Agreement in the Refinancing.
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(6)
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Represents the elimination of retained earnings of the Acquired Companies of $11.0 million. Also includes write-offs of existing deferred debt-related costs totaling nearly $2.9 million as discussed in notes (3) and (5), and an additional $1.2 million of debt-related costs relating to the Credit Agreement from the Refinancing.
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NOTE 3: ADJUSTMENTS TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS
|
(1)
|
Represents increase in intangible amortization expense relating to the amortizable intangible assets acquired in the Acquisition, as discussed in NOTE 2 above. Estimate lives have been assigned to each amortizable intangible asset as follows: $26.4 million customer relationship (10 years); $1.3 million developed technology (9 years); $1.0 million non-compete agreement (5 years). Based on these assigned lives, amortization expense is estimated to increase $3.0 million in the first year. Also included in the increase in selling, general and administrative expenses is $0.6 million of non-capitalizable Refinancing-related expenses.
|
(2)
|
Reflects the increase in estimate interest expense as the result of the Refinancing. Upon the Refinancing, debt outstanding under the Credit Agreement is $270.0 million, and has an estimated interest rate of 6.75% based on LIBOR floor of 1% and margin spread of 575 basis points. The Credit Agreement has required principal reductions on a quarterly basis totaling 1% of the $270.0 million per year, which would result in annual cash interest expense in the first year of $18.1 million, an increase in cash interest expense of $7.7 million. Also, interest expense is anticipated to increase as the result of the additional deferred fees, costs and original issue discount in the Refinancing, which we estimated will result in an additional $1.7 million in non-cash interest expense.
|
(3)
|
Reflects the write-off of deferred financing costs, lender fees and original issue discount as the result of the Refinancing.
|
(4)
|
Reflects an estimated effective tax rate of 36.5% as the result of the beneficial impact of the Section 199 manufacturer’s deduction, applied to the above adjustments, as well as the income before taxes of the Acquired Companies due to becoming part of a taxable corporation in the Acquisition.
|
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