ACQUISITIONS

3 Months Ended

Apr. 03, 2021

2020 Acquisition

On March 2, 2020, the Company acquired 100% of the issued and outstanding shares of the common stock of Kleary Masonry, Inc. (“Kleary”) for total consideration of $40.0 million, exclusive of the $2.0 million working capital adjustment that was finalized during the three months ended July 4, 2020. The transaction was financed with cash on hand and through borrowings under the Company’s asset-based revolving credit facility. Kleary primarily services residential customers with manufactured stone installations and commercial customers with manufactured wall installations in the Sacramento, California area, which strengthens the Company’s position as a market leader in stone veneer. Kleary’s results are reported within the Siding segment.

The Company determined the fair value of the tangible and intangible assets and the liabilities acquired, and recorded goodwill based on the excess of the fair value of the acquisition consideration over such fair values, as follows (in thousands):


Assets acquired:
Cash	$	143
Accounts receivable	7,135
Inventories	670
Prepaid expenses and other current assets	277
Property, plant and equipment	1,042
Lease right of use assets	445
Intangible assets (trade names/customer relationships)	22,350
Goodwill	12,539

Total assets acquired	44,601
Liabilities assumed:
Accounts payable	1,149
Other accrued expenses	1,020


Lease liabilities	339
Other long-term liabilities	109
Total liabilities assumed	2,617
Net assets acquired	$	41,984

The $12.5 million of goodwill from the Kleary acquisition was allocated to the Siding segment and will be deductible for tax purposes. The goodwill is attributable to the workforce of the acquired business and the synergies expected to be realized. The fair value of all assets acquired and liabilities assumed was finalized during the first quarter of 2021, which did not result in any adjustments during the quarter ended April 3, 2021.

Unaudited Pro Forma Financial Information

The following table provides unaudited supplemental pro forma results for Cornerstone for the three months ended April 4, 2020 as if the Kleary acquisitions had occurred on January 1, 2020 (in thousands, except for per share data):


	Three Months Ended
	April 4, 2020
Net sales	$	1,122,169
Net loss applicable to common shares	(540,870)
Net loss per common share:
Basic	$	(4.29)
Diluted	$	(4.29)

The unaudited supplemental pro forma financial information was prepared based on the historical information of Cornerstone and Kleary. The unaudited supplemental pro forma financial information does not give effect to the potential impact of current financial conditions, any anticipated synergies, operating efficiencies or cost savings that may result from the acquisition or any integration costs. Unaudited pro forma balances are not necessarily indicative of operating results had the Kleary acquisition occurred on January 1, 2020 or of future results.