What changed in this filing

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Item 1. Financial Statements

2020-08-03 compared with 2020-05-06 · 246 added, 133 removed, 346 unchanged (52% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND

COMPREHENSIVE LOSS

COMPREHENSIVE INCOME (LOSS)

(In thousands, except per share data)

Three Months Ended

March 28, 2020

March 30, 2019

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

Cost of sales

1 unchanged sentence

Selling, general, and administrative

Gains from sales of property

Depreciation and amortization

Gains from sales of property

Other operating expenses

Total operating expenses

3 unchanged sentences

Other (income) expense, net

Loss before benefit from income taxes

Benefit from income taxes

Basic loss per share

Diluted loss per share

Comprehensive loss:

Income (loss) before provision for (benefit from) income taxes

Provision for (benefit from) income taxes

Net income (loss)

Basic income (loss) per share

Diluted income (loss) per share

Comprehensive income (loss):

Net income (loss)

Other comprehensive income (loss):

2 unchanged sentences

Pension curtailment, net of tax

Total other comprehensive income

Comprehensive loss

Total other comprehensive income (loss)

Comprehensive income (loss)

See accompanying Notes.

2 unchanged sentences

(In thousands, except share data)

March 28, 2020

June 27, 2020

December 28, 2019

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Accrued compensation

Current maturities of long-term debt, net of discount and debt issuance

costs of $74 and $74, respectively

Finance leases - short-term

Real estate deferred gains - short-term

Current maturities of long-term debt, net of debt issuance costs of $74 and $74, respectively

Finance lease liabilities - short-term

Operating lease liabilities - short-term

Real estate deferred gains - short-term

Other current liabilities

1 unchanged sentence

Non-current liabilities:

Long-term debt, net of discount and debt issuance costs

of $11,861 and $12,481, respectively

Real estate financing obligation

Finance leases - long-term

Real estate deferred gains - long-term

Long-term debt, net of debt issuance costs of $10,915 and $12,481, respectively

Finance lease liabilities - long-term

Operating lease liabilities - long-term

Real estate deferred gains - long-term

Pension benefit obligation

4 unchanged sentences

Common Stock, $0.01 par value, 20,000,000 shares authorized,

9,366,641 and 9,365,768 outstanding on March 28, 2020 and December 28, 2019, respectively

9,461,412 and 9,365,768 outstanding on June 27, 2020 and December 28, 2019, respectively

Additional paid-in capital

7 unchanged sentences

(In thousands)

Three Months Ended

March 28, 2020

March 30, 2019

Six Months Ended

June 27, 2020

June 29, 2019

Cash flows from operating activities:

Adjustments to reconcile net loss to cash used in operations:

Net income (loss)

Adjustments to reconcile net income (loss) to cash provided by (used in) operations:

Benefit from income taxes

2 unchanged sentences

Gains from sales of property

Share-based compensation

Amortization of deferred gain

Share-based compensation

Changes in operating assets and liabilities:

3 unchanged sentences

Other assets and liabilities

Net cash used in operating activities

Net cash provided by (used in) operating activities

Cash flows from investing activities:

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Repayments on term loan

Principal payments on real estate financing obligations

Proceeds from real estate financing obligations

Proceeds from real estate financing transactions

Debt financing costs

Repurchase of shares to satisfy employee tax withholdings

Principal payments on finance lease obligations

Net cash provided by financing activities

Principal payments on finance lease liabilities

Net cash (used in) provided by financing activities

Net change in cash

1 unchanged sentence

Cash at end of period

Supplemental Cash Flow Information

Net income tax (refunds) payments during the period

Interest paid during the period

See accompanying Notes.

13 unchanged sentences

Balance, March 28, 2020

Foreign currency translation, net of tax

Unrealized gain from pension plan, net of tax

Vesting of restricted stock units

Compensation related to share-based grants

Repurchase of shares to satisfy employee tax withholdings

Balance, June 27, 2020

Paid-In Capital

9 unchanged sentences

Balance, March 30, 2019

Foreign currency translation, net of tax

Unrealized loss from pension plan, net of tax

Vesting of restricted stock units

Compensation related to share-based grants

Repurchase of shares to satisfy employee tax withholdings

Balance, June 29, 2019

See accompanying Notes.

1 unchanged sentence

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 28, 2020

June 27, 2020

Basis of Presentation and Summary of Significant Accounting Policies

3 unchanged sentences

Our independent registered public accounting firm has not audited the accompanying interim financial statements.

We derived the condensed consolidated balance sheet at March 28, 2020 , from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “Fiscal 2019 Form 10-K”), as filed with the Securities and Exchange Commission on March 11, 2020 .

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive loss for the three months ended March 28, 2020 , and March 30, 2019 , our balance sheets at March 28, 2020 and December 28, 2019 , our statements of cash flows for the three months ended March 28, 2020 and March 30, 2019 , and our statements of stockholders’ deficit for the three months ended March 28, 2020 and March 30, 2019 .

We derived the condensed consolidated balance sheet at June 27, 2020 , from the audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 28, 2019 (the “Fiscal 2019 Form 10-K”), as filed with the Securities and Exchange Commission on March 11, 2020 .

In the opinion of our management, the condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our statements of operations and comprehensive loss for the three and six months ended June 27, 2020 , and June 29, 2019 , our balance sheets at June 27, 2020 , and December 28, 2019 , our statements of cash flows for the six months ended June 27, 2020 , and June 29, 2019 , and our statements of stockholders’ deficit for the three and six months ended June 27, 2020 , and June 29, 2019 .

We have condensed or omitted certain notes and other information from the interim condensed consolidated financial statements presented in this report.

1 unchanged sentence

In addition, certain prior period amounts have been reclassified to conform to the current period's presentation.

These reclassifications did not materially impact operating income or consolidated net loss.

The results for the three months ended March 28, 2020 , are not necessarily indicative of results that may be expected for the full year ending January 2, 2021 , or any other interim period.

These reclassifications did not materially impact operating income or consolidated net income (loss).

The results for the three and six months ended June 27, 2020 , are not necessarily indicative of results that may be expected for the full year ending January 2, 2021 , or any other interim period.

We operate on a 5-4-4 fiscal calendar.

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(“Cedar Creek”).

The accounting for the Cedar Creek acquisition was finalized on December 29, 2018 and is included in the consolidated financial information presented herein.

Reclassification of Prior Year Presentation

An adjustment has been made to the Condensed Consolidated Statements of Cash Flows for the three months ended March 28, 2020 , and March 30, 2019 , to include outstanding payments as part of the change in accounts payable within cash flows from operating activities.

Results for Cedar Creek are included in the consolidated financial information presented herein.

Reclassification of Prior Period Presentation

An adjustment has been made to the Condensed Consolidated Statements of Cash Flows for the six months ended June 27, 2020 , and June 29, 2019 , to include outstanding payments as part of the change in accounts payable within cash flows from operating activities.

In previous periods, this change was included within cash flows from financing activities.

We believe this classification is a preferable way to present our cash flows as outstanding payments are included in accounts payable within our Condensed Consolidated Balance Sheet.

We have reclassified certain costs within the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months and six months ended June 27, 2020 , and June 29, 2019 , from selling, general and administrative to other operating expenses.

These costs primarily relate to the integration of the acquisition of Cedar Creek.

Recently Adopted Accounting Standards

1 unchanged sentence

2016-02, “Leases (Topic 842).” Topic 842 establishes a new lease accounting model.

The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a corresponding lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

The most significant changes include the clarification of the definition of a lease, the requirement for lessees to recognize for all leases a right-of-use asset and a

corresponding lease liability in the consolidated balance sheet, and additional quantitative and qualitative disclosures which are designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases.

Expenses are recognized in the consolidated statement of income in a manner similar to prior accounting guidance.

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In connection with the acquisition of Cedar Creek, we acquired certain intangible assets.

As of March 28, 2020 , our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

As of June 27, 2020 , our intangible assets consist of goodwill and other intangible assets including customer relationships, noncompete agreements, and trade names.

Goodwill is the excess of the cost of an acquired entity over the fair value of tangible and intangible assets (including customer relationships, noncompete agreements, and trade names) acquired, and liabilities assumed, under acquisition accounting for business combinations.

As of March 28, 2020 , goodwill was $ 47.8 million .

As of June 27, 2020 , goodwill was $ 47.8 million .

Goodwill is not subject to amortization but must be tested for impairment at least annually.

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In addition, we will evaluate the carrying value for impairment between annual impairment tests if an event occurs or circumstances change that would indicate the carrying amount may be impaired.

Such events and indicators may include, without limitation, significant declines in the

industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.

Our one reporting unit has a negative carrying amount of net assets as of March 28, 2020 .

Such events and indicators may include, without limitation, significant declines in the industries in which our products are used, significant changes in capital market conditions, and significant changes in our market capitalization.

Our one reporting unit has a fair value that exceeds its book value, but a negative carrying amount of net assets, as of June 27, 2020 .

Definite-Lived Intangible Assets.

On March 28, 2020 , the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

(In thousands)

On June 27, 2020 , the gross carrying amounts, accumulated amortization, and net carrying amounts of our definite-lived intangible assets were as follows:

Gross carrying amounts

Net carrying amounts

(In thousands)

Customer relationships

Noncompete agreements

[1] Intangible assets except customer relationships are amortized on straight line basis.

(1) Intangible assets except customer relationships are amortized on a straight-line basis.

Customer relationships are amortized on a double declining balance method.

1 unchanged sentence

The weighted average estimated useful life remaining for customer relationships, noncompete agreements, and trade names is approximately 10 years, 2 years, and 1 year, respectively.

Amortization expense for the definite-lived intangible assets for the three -month periods ended March 28, 2020 , and March 30, 2019 , was $ 2.0 million and $ 2.1 million , respectively.

Amortization expense for the definite-lived intangible assets was $ 1.8 million and $ 3.8 million for the three - and six -month periods ended June 27, 2020 , respectively.

For the three - and six -month periods ended June 30, 2019 , amortization expense was $ 2.0 million and $ 4.1 million , respectively.

Estimated amortization expense for definite-lived intangible assets for the remaining portion of 2020 and the next four fiscal years is as follows:

(In thousands)

Estimated Amortization

(In thousands)

Revenue Recognition

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Adjustments to earnings resulting from revisions to estimates on discounts and returns have been insignificant for each of the reported periods.

Certain customers may receive cash-based incentives or credits, which are accounted for as

variable consideration.

Certain customers may receive cash-based incentives or credits, which are accounted for as variable consideration.

We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized.

4 unchanged sentences

Three Months Ended

March 28, 2020

March 30, 2019

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

(In thousands)

Structural products

1 unchanged sentence

Total net sales

Also, due to the integration of Cedar Creek, our reload sales are less distinct from warehouse sales as they have been traditionally classified.

The following table presents our revenues disaggregated by sales channel.

Certain prior year amounts have been reclassified to conform to the current year revenues disaggregated by sales channel.

Following the acquisition and integration of Cedar Creek, our reload sales were less distinct from warehouse sales, as they have been classified in prior periods.

In addition, from time to time we may also make changes to certain intercompany allocations amongst sales channels.

As a result, certain prior period amounts have been reclassified to conform to the current period revenues disaggregated by sales channel.

Such reclassifications do not have an impact on total net sales as reported in any period.

Sales and usage-based taxes are excluded from revenues.

Three Months Ended

March 28, 2020

March 30, 2019

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

(In thousands)

Warehouse and reload

6 unchanged sentences

Assets Held for Sale

Three of our non-operating properties were designated as held for sale as of March 28, 2020 .

Three of our non-operating properties were designated as held for sale as of June 27, 2020 .

These properties consisted of three former distribution facilities located in the Midwest and Southeast.

We vacated these properties and designated them as held for sale during fiscal 2019 due to their proximity to other locations after the Cedar Creek acquisition.

As of March 28, 2020 , and December 28, 2019 , the net book value of total assets held for sale was $ 1.1 million and was included in “Other current assets” in our Condensed Consolidated Balance Sheets.

As of June 27, 2020 , and December 28, 2019 , the net book value of total assets held for sale was $ 1.1 million and was included in “Other current assets” in our Condensed Consolidated Balance Sheets.

We continue to actively market all properties that are designated as held for sale, and we plan to sell these properties within the next 12 months.

Long-Term Debt

As of June 27, 2020, and December 28, 2019, long-term debt consisted of the following:

June 27, 2020

December 28, 2019

(In thousands)

Revolving Credit Facility (1)

Term Loan Facility (2)

Finance lease obligations (3)

Unamortized debt issuance costs

current maturities of long-term debt

Long-term debt, net of current maturities

(1) The weighted average interest rate was 2.6 percent and 3.9 percent as of June 27, 2020 and December 28, 2019, respectively.

(2) The weighted average interest rate was 8.0 percent and 8.7 percent as of June 27, 2020 and December 28, 2019, respectively.

(3) Refer to Note 8, Leases , for interest rates associated with finance lease obligations.

Revolving Credit Facility

We have a revolving credit facility that we entered into in April 2018 with Wells Fargo Bank, National Association, as administrative agent, and certain other financial institutions party thereto (the “Revolving Credit Facility”), with a maturity date of October 10, 2022 .

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We amended the Revolving Credit Facility on January 31, 2020 , to provide that (i) the “Seasonal Period” will run from November 15, 2019 , through July 15, 2020 , for the calendar year 2019, and from December 15 of each calendar year through April 15 of each immediately succeeding calendar year for the calendar year 2020 and thereafter, and (ii) the measurement period in the definition of “Cash Dominion Event” will be five consecutive business days instead of three consecutive business days.

The adjustment to the Seasonal Period better aligns advance rates under the Revolving Credit Facility with the seasonality in our business and provides us with an enhanced borrowing base and greater liquidity through July 15, 2020.

As of March 28, 2020 , we had outstanding borrowings of $ 381.6 million , excess availability of $ 96.8 million , and a weighted average interest rate of 3.2 percent .

The adjustment to the Seasonal Period better aligns advance rates under the Revolving Credit Facility with the seasonality in our business and provided us with an enhanced borrowing base and greater liquidity through July 15, 2020.

As of June 27, 2020 , we had outstanding borrowings of $ 322.2 million , excess availability of $ 138.1 million , and a weighted average interest rate of 2.6 percent .

As of December 28, 2019, our principal balance was $ 326.5 million , excess availability was $ 80.0 million , and our weighted average interest rate was 3.9 percent .

The Revolving Credit Facility contains certain financial and other covenants, and our right to borrow under the Revolving Credit Facility is conditioned upon, among other things, our compliance with these covenants.

We were in compliance with all covenants under the Revolving Credit Facility as of March 28, 2020 .

We were in compliance with all covenants under the Revolving Credit Facility as of June 27, 2020 .

Term Loan Facility

We have a term loan facility that we entered into in April 2018 with HPS Investments Partners, LLC, as administrative and collateral agent, and certain other financial institutions party thereto (the “Term Loan Facility”), with a maturity date of October 13, 2023 .

October 13, 2023 .

The Term Loan Facility provides for a senior secured first lien loan facility in an initial aggregate principal amount of $ 180 million and is secured by a security interest in substantially all of our assets.

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The Term Loan Facility also requires certain mandatory prepayments of outstanding loans, subject to certain exceptions.

The Term Loan Facility required maintenance of a total net leverage ratio of 6.25 to 1.00 for the quarter ending March 28, 2020 , and requires a ratio of 8.75 to 1.00 for the second and third quarters of 2020, and ratio levels generally reduce over the remaining term of the Term Loan Facility.

We were in compliance with all covenants under the Term Loan Facility as of March 28, 2020 .

The Term Loan Facility requires maintenance of a total net leverage ratio of 8.75 to 1.00 for the quarter ending June 27, 2020 and the third quarter of 2020, and 5.25 to 1.00 for the fourth quarter of 2020;

ratio levels generally reduce over the remaining term of the Term Loan Facility.

We were in compliance with all covenants under the Term Loan Facility as of June 27, 2020 .

Borrowings under the Term Loan Facility may be made as Base Rate Loans or Eurodollar Rate Loans.

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All other total net leverage ratio covenant levels for prior and future quarters were unchanged.

As of March 28, 2020 , we had outstanding borrowings of $ 77.4 million under the Term Loan Facility and an interest rate of 8.6 percent per annum.

As of June 27, 2020 , we had outstanding borrowings of $ 68.8 million under the Term Loan Facility and an interest rate of 8.0 percent per annum.

As of December 28, 2019 , our principal balance was $ 146.7 million with an interest rate of 8.7 percent per annum.

The decrease in the outstanding borrowings was due to net proceeds of the real estate financing transactions described in Note 8 being applied to the Term Loan Facility.

Finance Lease Obligations

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate, with the majority of those finance leases related to real estate.

For more information on our finance lease obligations, refer to Note 8, Leases .

Net Periodic Pension (Benefit) Cost

1 unchanged sentence

Three Months Ended

March 28, 2020

March 30, 2019

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

(In thousands)

Interest cost on projected benefit obligation

4 unchanged sentences

Stock Compensation Expense

During the three months ended March 28, 2020 , and March 30, 2019 , we incurred stock compensation expense of $ 1.0 million and $ 0.7 million , respectively.

The increase in our stock compensation expense for the three-month period is attributable to having more outstanding equity-based grants during the period than in the prior year.

We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification.

Our operating and finance lease portfolio generally includes leases for real estate, certain logistics equipment, and vehicles.

During the three months ended June 27, 2020 , and June 29, 2019 , we incurred stock compensation expense of $ 0.9 million and $ 0.6 million , respectively.

During the six months ended June 27, 2020 , and June 29, 2019 , we incurred stock compensation

expense of $ 1.9 million and $ 1.3 million , respectively.

The increase in our stock compensation expense for the three- and six-month periods is attributable to having more outstanding equity-based awards during these periods than in the prior year and the vesting of awards in connection with the departure of certain employees.

We have operating and finance leases for certain of our distribution facilities, office space, land, mobile fleet, and equipment.

Many of our leases are non-cancelable and typically have a defined initial lease term, and some provide options at our election to renew for specified periods of time.

The majority of our leases have remaining lease terms of 1 year to 15 years , some of which include one or more options to extend the leases for 5 years .

Our leases generally provide for fixed annual rentals.

Certain of our leases include provisions for escalating rent based on, among other things, contractually defined increases and/or changes in the Consumer Price Index (“CPI”).

Some of our leases require us to pay taxes, insurance, and maintenance expenses associated with the leased assets.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We determine if an arrangement is a lease at inception and assess lease classification as either operating or finance at lease inception or modification.

Operating lease right-of use (“ROU”) assets and liabilities are presented separately on the condensed consolidated balance sheets.

Finance lease ROU assets are included in property and equipment and the finance lease obligations are presented separately in the condensed consolidated balance sheet.

We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.

When a lease does not provide an implicit interest rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments.

We have also made the accounting policy election to not separate lease components from non-lease components related to our mobile fleet asset class.

Finance Lease Liabilities

Our finance lease liabilities consist of leases related to equipment and vehicles, and real estate.

As noted in the table below, a majority of our finance leases, formally known as capital leases, relate to real estate.

During 2017 and 2018, we entered into real estate financing transactions on warehouse facilities in Tampa, FL;

Bellingham, PA;

Frederick, MD;

Lawrenceville, GA;

and Raleigh, NC.

These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5 -year renewal options, with one having a single 10 -year renewal option.

We accounted for these transactions in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, which was the lease accounting standard in effect at the inception of these arrangements.

We have recorded these transactions as finance lease liabilities on our balance sheet.

As of June 27, 2020 and December 28, 2019, total unrecognized deferred gains related to these transactions were $ 84.0 and $ 85.8 million , respectively.

On May 19, 2019 , we completed a real estate financing transaction on a warehouse facility in University Park, IL for net proceeds of $ 21.8 million .

On June 20, 2019 , we completed a real estate financing transaction on a warehouse facility in Yulee, FL for net proceeds of $ 13.3 million .

These two transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms of 15 years with multiple 5 -year renewal options.

Gross proceeds of these transactions were $ 45.0 million .

On December 31, 2019 , we completed real estate financing transactions on warehouse facilities in Madison, TN;

Kansas City, MO;

Richmond, VA;

and Bridgeton, MO for aggregate net proceeds of $ 27.2 million .

On January 31, 2020 , we completed real estate financing transactions on warehouse facilities in Charlotte, NC;

Independence, KY:

San Antonio, TX;

Portland, ME;

Denville, NJ;

Pensacola, FL;

and Tallmadge, OH for aggregate net proceeds of $ 34.1 million .

On February 28, 2020 , we completed a real estate financing transaction on a warehouse facility in Elkhart, IN for net proceeds of $ 7.5 million .

These transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms from 15 years to 18 years with multiple 5 -year renewal options.

Gross proceeds of these transactions were $ 78.3 million .

We determined that the transactions in fiscal 2019 and in the current fiscal year did not qualify as sales in accordance with ASC 842.

Therefore, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions, and no gain or loss was recorded.

We determined that these leases qualified for finance lease treatment and recorded them accordingly.

The net book value of the assets related to these transactions remains on our books as property and equipment and we continue to depreciate the assets over their remaining useful lives.

A portion of our real estate lease cost is generally subject to annual changes in the Consumer Price Index (“CPI”).

2 unchanged sentences

In addition, a subset of our vehicle lease cost is considered variable.

The following table presents our assets and liabilities related to our leases as of June 27, 2020 and December 28, 2019 :

June 27, 2020

December 28, 2019

(In thousands)

Classification

Operating lease right-of-use assets

Operating lease right of use assets

Finance lease right-of-use assets (1)

Property and equipment, net

Total lease right-of-use assets

Current portion

Operating lease liabilities

Operating lease liabilities - short term

Finance lease liabilities

Finance lease liabilities - short term

Non-current portion

Operating lease liabilities

Operating lease liabilities - long term

Finance lease liabilities

Finance lease liabilities - long term

Total lease liabilities

(1) Finance lease right-of-use assets are presented net of accumulated amortization of $ 51.3 and $ 30.8 million as of June 27, 2020 and December 28, 2019, respectively.

The components of lease expense were as follows:

Three Months Ended March 28, 2020

Three Months Ended March 30, 2019

Three Months Ended

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

(In thousands)

Operating lease cost:

4 unchanged sentences

Supplemental cash flow information related to leases was as follows:

Three Months Ended March 28, 2020

Three Months Ended March 30, 2019

Three Months Ended

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

( In thousands)

(In thousands)

Cash paid for amounts included in the measurement of lease liabilities

6 unchanged sentences

Supplemental balance sheet information related to leases was as follows:

March 28, 2020

June 27, 2020

December 28, 2019

10 unchanged sentences

Finance leases

The major categories of our finance lease liabilities as of March 28, 2020 are as follows:

March 28, 2020

The major categories of our finance lease liabilities as of June 27, 2020 and December 28, 2019 are as follows:

June 27, 2020

December 28, 2019

2 unchanged sentences

Total finance leases

As of March 28, 2020 , maturities of lease liabilities were as follows:

As of June 27, 2020 , maturities of lease liabilities were as follows:

Operating leases

3 unchanged sentences

imputed interest

On December 28, 2019 , our total operating lease commitments were as follows:

(In thousands)

Real Estate Transactions

On December 31, 2019 , we completed four real estate financing transactions on warehouse facilities in Madison, TN;

Kansas City, MO;

Richmond, VA;

and Bridgeton, MO for aggregate net proceeds of $ 27.2 million .

On January 31, 2020 , we completed nine real estate financing transactions on warehouse facilities in Charlotte, NC;

Independence, KY:

San Antonio, TX;

Portland, ME;

Denville, NJ;

Pensacola, FL;

and Tallmadge, OH for aggregate net proceeds of $ 34.1 million .

On February 28, 2020 , we completed one real estate financing transaction on a warehouse facility in Elkhart, IN for net proceeds of $ 7.5 million .

These fourteen real estate financing transactions were completed pursuant to sale-leaseback arrangements, and upon their completion, we entered into long-term leases on the properties for initial terms from fifteen to eighteen years with multiple five -year renewal options.

We determined that these transactions did not qualify as sales in accordance with the FASB’s Accounting Standards Codification (“ASC”) Topic 842 and, for accounting purposes, the transactions were not accounted for as sale-leaseback transactions.

When this occurs, the real estate transaction is accounted for as a financing transaction, whereby the gross proceeds are recorded as a financing obligation in our consolidated balance sheets in other current liabilities and in noncurrent liabilities as real estate financing obligations.

The assets related to these transactions remain on our books and we continue to depreciate them.

Gross proceeds of these transactions were $ 78.3 million .

On March 28, 2020 , our future minimum payments related to the financing obligations under our real estate financing transactions entered into during 2019 and 2020 were as follows:

On December 28, 2019 , maturities of lease liabilities were as follows:

Operating leases

Finance leases

(In thousands)

Total lease payments

imputed interest

Commitments and Contingencies

1 unchanged sentence

From time to time, we are involved in various proceedings incidental to our businesses, and we are subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which we operate.

Although the ultimate outcome of these proceedings cannot be determined with certainty, based on presently available information management believes that adequate reserves have been established for probable losses with respect thereto.

Management further believes that, while the ultimate outcome of one or more of these matters could be material to operating results in any given quarter, it will not have a materially adverse effect on our consolidated financial condition, our results of operations, or our cash flows.

Collective Bargaining Agreements

As of March 28, 2020 , we had over 2,200 employees on a full-time basis, and approximately 20 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”).

As of June 27, 2020 , we had 2,000 employees on a full-time basis, and approximately 21 percent of our employees were represented by various local labor union Collective Bargaining Agreements (“CBAs”).

Approximately 1 percent of our employees are covered by three CBAs that are up for renewal in fiscal 2020.

As of March 28, 2020 , one of these CBAs was renewed and the remaining two are expected to be renegotiated later this year.

As of June 27, 2020 , one of these CBAs was renewed and the remaining two are expected to be renegotiated later this year.

Accumulated Other Comprehensive Loss

Comprehensive loss includes both net loss and other comprehensive income (loss).

Comprehensive loss includes both net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) results from items deferred from recognition into our Condensed Consolidated Statements of Operations and Comprehensive Loss.

Accumulated other comprehensive loss is separately presented on our Condensed Consolidated Balance Sheets as part of stockholders’ deficit.

The changes in balances for each component of accumulated other comprehensive loss for the three months ended March 28, 2020 , were as follows:

The changes in balances for each component of accumulated other comprehensive loss for the six months ended June 27, 2020 , were as follows:

Foreign currency, net

5 unchanged sentences

Other comprehensive income, net of tax (1)

March 28, 2020, ending balance, net of tax

[1] For the three months ended March 28, 2020 , the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a component of net periodic pension cost was $ 0.3 million , net of tax of $ 0.1 million .

Please see Note 6, Net Periodic Pension Cost, for further information.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted on March 27, 2020, and contained several measures meant to counteract the economic effects of the COVID-19 pandemic.

We are currently evaluating the provisions of the CARES Act and its impact.

Our effective tax rate for the three months ended March 28, 2020 , and March 30, 2019 , was 86.5 percent and 27.3 percent , respectively.

Our effective tax rate for the three months ended March 28, 2020 was impacted by (i) the discrete tax benefit of $ 3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the Internal Revenue Code (“IRC”) as a result of changes under the CARES Act to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) the permanent addback of certain nondeductible expenses, including meals and entertainment, and (iii) the effect of the partial valuation allowance for separate company state income tax losses.

Our effective tax rate for the three months ended March 30, 2019 , was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses.

June 27, 2020, ending balance, net of tax

(1) For the six months ended June 27, 2020 , the actuarial loss recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss as a component of net periodic pension cost was $ 0.5 million , net of tax of $ 0.2 million .

Please see Note 6, Net Periodic Pension (Benefit) Cost , for further information.

Our effective tax rate for the three months ended June 27, 2020 , and June 29, 2019 , was 33.9 percent and 27.2 percent , respectively.

Our effective tax rate for the three months ended June 27, 2020 was impacted by (i) recording discrete tax expense of $ 0.4 million for a shortfall on the vesting of our restricted stock units, (ii) the permanent addback of certain nondeductible expenses, including meals and entertainment and officer’s compensation, and (iii) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest under 163(j) of the Internal Revenue Code (“IRC”).

Our effective tax rate for the three months ended June 29, 2019 , was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation, and the effect of the partial valuation allowance for separate company state income tax losses.

In addition, we recorded discrete tax expense of $ 0.2 million for a shortfall on the vesting of our restricted stock units, which was offset by a $ 0.2 million discrete tax benefit for claiming tax credits.

Our effective tax rate was ( 36.8 ) percent and 29.5 percent , for the first six months of fiscal 2020 and 2019, respectively.

Our effective tax rate for the six months ended June 27, 2020 was impacted by (i) the discrete tax benefit of $ 3.9 million resulting from the release of the valuation allowance associated with the nondeductible interest expense under Section 163(j) of the IRC as a result of changes under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was enacted on March 27, 2020, and contained, among other things, several tax-based measures meant to counteract the effects of the COVID-19 pandemic, to increase the allowable percentage from 30 percent of adjusted taxable income to 50 percent of adjusted taxable income, (ii) recording discrete tax expense of $ 0.4 million for a shortfall on the vesting of our restricted stock units, (iii) the permanent addback of certain nondeductible expenses, including meals and entertainment and nondeductible compensation, and (iv) the effect of the partial valuation allowance for separate company state income tax losses and previously nondeductible interest expense under Section 163(j) of the IRC.

Our effective tax rate for the six months ended June 29, 2019 , was impacted by the permanent addback of certain nondeductible expenses, including meals and entertainment and executive compensation and the effect of the valuation allowance for separate company state income tax losses.

In addition, during the first six months of fiscal 2019, we recorded discrete tax expense of $ 0.2 million for a shortfall on vesting of our restricted stock units, which was offset by a $ 0.2 million discrete tax benefit for claiming state tax credits.

Our financial statements contain certain deferred tax assets which primarily resulted from tax benefits associated with the loss before income taxes in prior years, as well as net deferred income tax assets resulting from other temporary differences related to certain reserves, pension obligations, and differences between book and tax depreciation and amortization.

record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized.

We record a valuation allowance against our net deferred tax assets when we determine that, based on the weight of available evidence, it is more likely than not that our net deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences can be carried forward under tax law.

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At the end of each quarter, we evaluate the weight of available evidence (both positive and negative).

We considered the recent reported loss generated in the current quarter and prior years (adjusted for unusual one-time items) and income generated in 2017, including the prior year income from Cedar Creek.

We considered the recent reported income generated in the current quarter and prior years (adjusted for unusual one-time items) and income generated in 2017, including the prior year income from Cedar Creek.

We also considered evidence related to the four sources of taxable income to determine whether such positive evidence outweighed the negative evidence.

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tax planning strategies.

At the end of the first fiscal quarters of 2020 and 2019, in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence.

At the end of the first two fiscal quarters of 2020 and 2019 , in our evaluation of the weight of available evidence, we concluded that the weight of the positive evidence outweighed the negative evidence.

In addition to the evidence discussed above, we considered as positive evidence forecasted future taxable income, the detail scheduling of the timing of the reversal of our deferred tax assets and liabilities, and the evidence from business and tax planning strategies described below.

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We will continue to monitor any changes to our results of operations that may affect our estimates, including any impact of COVID-19 if applicable.

Loss per Share

We calculate basic loss per share by dividing net loss by the weighted average number of common shares outstanding.

We calculate diluted earnings per share using the treasury stock method, by dividing net income by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units, and performance units.

The reconciliation of basic loss and diluted loss per common share for the three-month periods ended March 28, 2020 , and March 30, 2019 , were as follows:

Income (Loss) per Share

We calculate basic income (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding.

We calculate diluted income (loss) per share using the treasury stock method, by dividing net income (loss) by the weighted average number of common shares outstanding plus the dilutive effect of outstanding share-based awards, including restricted stock units, and performance units .

Due to the financial results for the six month period ended June 27, 2019 , 0.1 million of incremental shares were excluded from the computation of diluted weighted averages outstanding, because their effect would be anti-dilutive.

The reconciliation of basic net income (loss) and diluted net income (loss) per common share for the three- and six-month periods ended June 27, 2020 , and June 29, 2019 , were as follows:

Three Months Ended

Six Months Ended

June 27, 2020

June 29, 2019

June 27, 2020

June 29, 2019

(In thousands, except per share data)

March 28, 2020

March 30, 2019

(In thousands, except per share data)

Net income (loss)

Weighted-average shares outstanding - basic

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Weighted-average shares outstanding - diluted

Basic loss per share

Diluted loss per share

Subsequent Events

Sixth Amendment to the Term Loan Facility

On April 1, 2020 , we entered into the Sixth Amendment to our Term Loan Agreement which, among other things, modified the total net leverage ratio covenant levels for the second and third quarters of 2020.

Refer to Note 5 for further details.

Basic income (loss) per share

Diluted income (loss) per share

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements