Cornerstone Building Brands, Inc. (“Cornerstone Building Brands”, together with its subsidiaries, unless the context requires otherwise, the “Company,” “we,” “us” or “our”) is a holding company incorporated in Delaware. The Company is the largest exterior building products manufacturer, by sales, in North America.

On July 25, 2022 and pursuant to an Agreement and Plan of Merger dated March 5, 2022 (the “Merger Agreement”) by and among the Company, Camelot Return Intermediate Holdings, LLC (“Camelot Parent”), and Camelot Return Merger Sub, Inc. (“Merger Sub”), investments funds managed by Clayton, Dubilier and Rice, LLC (“CD&R”) became the indirect owners of all the issued and outstanding shares of Cornerstone Building Brands. Pursuant to the Merger Agreement, Merger Sub merged with and into the Company, with the Company surviving the merger as a subsidiary of Camelot Parent (the “Surviving Corporation”). At the effective time of the merger (the “Effective Time”), we became a privately held company and our common shares are no longer traded on the New York Stock Exchange.

At the Effective Time, in accordance with the terms and conditions set forth in the Merger Agreement, each share of Company common stock outstanding immediately prior to the Effective Time of the merger (other than (i) shares of Company common stock that were cancelled or converted into shares of common stock of the Surviving Corporation in accordance with the Merger Agreement and (ii) shares of Company common stock held by stockholders of the Company (other than CD&R, certain investment funds managed by CD&R and other affiliates of CD&R that held shares of Company common stock) who did not vote in favor of the Merger Agreement or the merger and who have perfected and not withdrawn a demand for appraisal rights pursuant to Section 262 of the General Corporation Law of the State of Delaware), was converted into the right to receive cash in an amount equal to $24.65 in cash per share, without interest and subject to any required withholding taxes.

On July 25, 2022, the Company amended its Certificate of Incorporation to authorize 1,000 shares of common stock, par value of $0.01. Each share of common stock will have one vote and all shares of common stock vote together as a single class.

As discussed in Note 6 — Long-Term Debt, in connection with the merger, the Company (i) amended the ABL Credit Agreement to, among other things, upsize the ABL Facility to $850.0 million and add the ABL FILO Facility of $95.0 million, (ii) entered into the Side Car Term Loan Facility in an aggregate principal amount of $300.0 million, and (iii) and issued $710.0 million in aggregate principal amount of 8.750% Senior Secured Notes due August 2028. Proceeds from the Side Car Term Loan Facility and the Senior Secured Notes, together with other sources, were used to fund the consummation of the merger.

Upon the completion of the merger, we elected pushdown accounting of the transaction to reflect the fair market value of our assets acquired and liabilities assumed at the time of the merger. Our Consolidated Financial Statements are presented as Predecessor for periods prior to the merger and Successor for subsequent periods.

The accompanying unaudited Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the U.S. (“U.S. GAAP”). These unaudited Consolidated Financial Statements have been prepared with the Company's accounting policies and on the same basis as those financial statements included in the Company’s latest Annual Report on Form 10-K for the year ended December 31, 2021 and should be read in conjunction with those Consolidated Financial Statements and the Notes thereto. Certain disclosures normally included in the Company’s financial statements prepared in accordance with U.S. GAAP have been omitted on a basis consistent with the rules and regulations of the U.S. Securities and Exchange Commission.

The unaudited Consolidated Financial Statements include the assets and liabilities used in operating the Company's business. The results reported in these unaudited Consolidated Financial Statements should not be regarded as necessarily indicative of results that may be expected for the entire year.

These statements include all adjustments (consisting of normal recurring adjustments) that the Company considered necessary to present a fair statement of its results of operations, financial position and cash flows.

The Company is organized in three reportable segments, which we have renamed as follows: Aperture Solutions (formerly “Windows”), Surface Solutions (formerly “Siding”), and Shelter Solutions (formerly “Commercial”). There was no change in the composition of our reportable segments.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities in the Consolidated Financial Statements and accompanying notes. These estimates include, but are not limited to: establishing the allowance for expected credit losses; allowance for slow-moving and obsolete inventory; the impairment of goodwill and intangible assets; establishing useful lives for and evaluating the recovery of long-lived assets; recognizing the fair value of assets acquired and liabilities assumed in business combinations; accounting for rebates and product warranties; the determination of fair value for share-based compensation; certain assumptions made in accounting for pension benefits; accounting for contingencies; and accounting for income taxes. Actual results may differ from the estimates used in preparing the Consolidated Financial Statements.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that total the amounts shown in the Consolidated Statements of Cash Flows (in thousands):


	Successor		Predecessor
	October 1, 2022		December 31, 2021
Cash and cash equivalents	$	454,748	$	394,447
Other current assets - Restricted cash (1)	461		2,211
Total cash, cash equivalents and restricted cash shown in the Consolidated Statements of Cash Flows	$	455,209	$	396,658

The Company reports accounts receivable net of an allowance for expected credit losses. Trade accounts receivable are the result of sales of the Company’s products to customers throughout the U.S. and Canada and affiliated territories, including international builders who resell to end users. Sales are primarily denominated in U.S. dollars. Credit sales do not normally require a pledge of collateral; however, various types of liens may be filed to enhance the collection process and we require payment prior to shipment for certain international shipments.

The Company establishes provisions for expected credit losses based on the Company’s assessment of the collectability of amounts owed to us by our customers. Such allowances are included in selling, general and administrative expenses in our Consolidated Statements of Income. In establishing the allowance, the Company considers changes in the financial position of a customer, age of the accounts receivable balances, availability of security, unusual macroeconomic conditions, lien rights and bond rights as well as disputes, if any, with our customers. The Company’s allowance for expected credit losses was $0.7 million at October 1, 2022 and was $11.3 million at December 31, 2021.

The carrying amounts of cash and cash equivalents, restricted cash, trade accounts receivable and accounts payable approximate fair value as of October 1, 2022 and December 31, 2021 given the instruments relatively short maturities. The carrying amounts of the indebtedness under revolving credit facilities approximate fair value as the interest rates are variable and reflective of market rates. Fair values for our other debt instruments are measured using Level 1 and Level 2 inputs.

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the reference rate transition. The amendments in these ASUs are elective, apply to all entities that have contracts, hedging relationships, and other transactions that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued because of rate reform, and may be adopted as of March 12, 2020 through December 31, 2022. The Company is evaluating the impact of electing to apply the amendments.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. This creates an exception to the general recognition and measurement principles in ASC 805. The Company will be required to adopt this guidance in the annual and interim periods for the fiscal year ending December 31, 2023, with early adoption permitted. The amendments in this ASU should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company does not anticipate that the adoption of this guidance will have a material impact on the Consolidated Financial Statements.