JELD-WEN Holding, Inc. 10-K

Item 9A - Controls and Procedures Disclosure Controls and Procedures The Company maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), which are designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, including this Report, are recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Company under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer (“CEO”) and principal financial officer (“CFO”), as appropriate to allow timely decisions regarding required disclosure. The Company’s management, including the Company’s CEO and CFO, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Report and, based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2020. Management’s Report on Internal Control over Financial Reporting The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s CEO and CFO, of the effectiveness of the Company’s internal control over financial reporting. The Company’s management used the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations (COSO) to perform this evaluation. Based on this evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2020. The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report appearing under Item 8- Financial Statements and Supplementary Data . Remediation of Material Weaknesses As previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019, we identified material weaknesses in our internal control over financial reporting, including that we did not maintain a sufficient complement of personnel in our Europe operations with the appropriate level of knowledge, experience and training in internal control over financial reporting commensurate with our financial reporting requirements to allow for the consistent execution of control activities. Further, monitoring controls maintained at the Europe operations and corporate levels did not operate with a sufficient degree of precision to provide for the appropriate level of oversight of activities related to our internal control over financial reporting. These material weaknesses contributed to the following additional material weaknesses in that we did not design and maintain effective controls within certain of our Europe operations related to the review and approval of customer pricing, the review and approval of manual journal entries, and the reconciliation of subsidiary ledger financial information used in the consolidated financial statements. Specifically, we did not design and maintain controls to ensure (i) the review and approval of the initial set-up, and subsequent changes/modifications, of customer pricing related to revenue arrangements; (ii) that journal entries were properly prepared with sufficient supporting documentation, were reviewed and approved to ensure accuracy and completeness of the journal entries, and were reviewed by an appropriate individual separate from the preparer of such journal entry; and (iii) the subsidiary financial information used in the preparation of the consolidated financial statements agreed to the financial information recorded in the subsidiary ledger, and to the extent there were differences, that they were appropriately validated. As of June 27, 2020, we concluded that the enhancements to the design of our control activities related to the reconciliation of subsidiary ledger financial information used in the consolidated financial statements were satisfactorily implemented and had operated effectively for a sufficient time. Therefore, we concluded the material weakness was remediated as of June 27, 2020. As of December 31, 2020, management concluded that each of the remaining previously identified material weaknesses had been remediated as a result of actions taken by us implementing new controls and procedures that were part of our remediation plan. These actions included: • Enhancing and supplementing the finance team in Europe by increasing the number of roles, reassigning responsibilities, and adding additional resources with an appropriate level of knowledge and experience in internal control over financial reporting commensurate with the financial reporting complexities of the organization; 62 Back to top • Enhancement of the onboarding process for finance team personnel in Europe to ensure familiarity with policies and internal control over financial reporting; • Enhancing the tone and increasing the frequency of communications from executive management to employees on the importance of internal control over financial reporting; • Evaluating corporate and segment monitoring controls to ensure they are designed and operating at the appropriate level of precision required to support risk mitigation; • Implementing enhancements to the design of our customer pricing controls in Europe; • Implementing enhancements to the design of our journal entry controls in Europe; • Implementing enhancements to the close processes which includes the centralization of certain tasks and the development of manuals and standardized templates to enhance the evidence supporting the local teams’ execution of internal control over financial reporting. • Strengthening procedures and setting guidelines for documentation of controls throughout our domestic and international locations for consistency of application; and • Instituting additional training programs that occur on a regular basis related to internal control over financial reporting, monitoring controls, complex accounting topics, account reconciliations, and journal entry controls for our world-wide finance and accounting personnel. Changes in Internal Control over Financial Reporting As of December 31, 2020, management remediated the material weaknesses previously reported in our Annual Report on Form 10-K for the year ended December 31, 2019 as outlined above. Except for certain changes related to the review and approval of customer pricing in Europe, the changes related to the remediation of the previously reported material weaknesses processes have not materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Therefore, in accordance with Rule 13a-15(d) of the Exchange Act, management, with the participation of our CEO and CFO, determined that elements of the changes to the review and approval of customer pricing in Europe have materially affected or are reasonably likely to materially affect our internal control over financial reporting during the Company’s most recently completed quarter ended December 31, 2020. Item 9B - Other Information None. 63 Back to top PART III Item 10 - Directors, Executive Officers and Corporate Governance The information required by this item with respect to our executive officers appears in Part I of this Form 10-K under the heading, “Executive Officers of the Registrant”. The other information required by this item is incorporated by reference to the Company’s definitive Proxy Statement for its 2021 Annual Meeting of Stockholders to be held on April 29, 2021, which will be filed with the SEC within 120 days of the Company’s fiscal year end covered by this Form 10-K (“Proxy Statement”). Item 11 - Executive Compensation The information required by this item is incorporated by reference to the Proxy Statement. Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Equity Compensation Plan Information The following table sets forth information with respect to shares of our common stock that may be issued under our existing equity compensation plans, as of December 31, 2020: (a) (b) (c) Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (1) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) Equity compensation plans approved by security holders 5,163,091 (2) $20.41 3,120,289 (3) Equity compensation plans not approved by security holders — — — Total 5,163,091 $20.41 3,120,289 (1) Excludes RSUs and PSUs, which have no exercise price. (2) Consists of shares underlying 2,631,831 stock options, 1,786,797 RSUs, and 744,463 PSUs outstanding under the 2011 Stock Incentive Plan and 2017 Omnibus Equity Plan. (3) Number of securities remaining for future issuances includes only shares available under the 2017 Omnibus Equity Plan. The other information required by this item is incorporated by reference to the Proxy Statement. Item 13 - Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated by reference to the Proxy Statement. Item 14 - Principal Accounting Fees and Services The information required by this item is incorporated by reference to the Proxy Statement. 64 Back to top Item 15 - Exhibits and Financial Statement Schedules 1. Financial Statements The financial statements are set forth under Item 8- Financial Statements and Supplementary Data of this Form 10-K. 2. Financial Statement Schedules The following financial statement schedules are attached to this report. Schedule I - Condensed Financial Information of the Registrant All other schedules are omitted because they are not applicable, not required, or the information is included in the financial statements or the notes thereto. 3. Exhibits The exhibits listed on the accompanying Exhibit Index are filed or incorporated by reference as part of this 10-K and such Exhibit Index is incorporated herein by reference. Exhibit No. Exhibit Description Form File No. Exhibit Filing Date 3.1 Amended and Restated Certificate of Incorporation of JELD-WEN Holding, Inc. 8-K 001-38000 3.1 May 13, 2020 3.2 Second Amended and Restated Bylaws of JELD-WEN Holding, Inc. 8-K 001-38000 3.2 May 13, 2020 4.1* Description of Securities . 4.2 Specimen Common Stock Certificate of JELD-WEN Holding Inc. S-1/A 333-211761 4.1 January 5, 2017 4.3 Amended and Restated Registration Rights Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP, Onex Advisor III LLC, Onex Partners III GP LP, Onex Partners III PV LP, Onex Partners III Select LP, Onex US Principals LP, Onex Corporation, Onex American Holdings II LLC, BP EI LLC, 1597257 Ontario Inc. and the other parties thereto, dated January 24, 2017. 10-K 001-38000 4.2 March 3, 2017 4.4 Amendment No. 1 to Amended and Restated Registration Rights Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP, Onex Advisor III LLC, Onex Partners III GP LP, Onex Partners III PV LP, Onex Partners III Select LP, Onex US Principals LP, Onex Corporation, Onex American Holdings II LLC, BP EI LLC, 1597257 Ontario Inc. and the other parties thereto, dated May 12, 2017. S-1 333-221538 4.3 May 15, 2017 4.5 Amendment No. 2 to Amended and Restated Registration Rights Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP, Onex Advisor III LLC, Onex Partners III GP LP, Onex Partners III PV LP, Onex Partners III Select LP, Onex US Principals LP, Onex Corporation, Onex American Holdings II LLC, BP EI LLC, 1597257 Ontario Inc. and the other parties thereto, dated November 12, 2017. S-1 333-221538 4.4 November 13, 2017 4.6 Indenture, dated as of December 14, 2017, among JELD-WEN, Inc., the guarantors party thereto and Wilmington Trust, National Association, as Trustee (including for of Note). 8-K 001-38000 4.1 December 14, 2017 4.7 First Supplemental Indenture, dated as of December 21, 2018, among American Building Supply, Inc., J B L Hawaii, Limited and Wilmington Trust, National Association, as Trustee. 8-K 001-38000 4.1 December 27, 2018 4.8 Second Supplemental Indenture, dated as of September 24, 2020, among Milliken Millwork, Inc., VPI Quality Windows, Inc., subsidiaries of JELD-WEN, Inc. and Wilmington Trust, National Association, as Trustee. 10-Q 001-38000 4.2 November 3, 2020 4.9* Third Supplemental Indenture, dated as of December 31, 2020, among JELD-WEN, Inc., the guarantors party thereto and Wilmington Trust, National Association, as Trustee. 4.10 Indenture, dated as of May 4, 2020, among JELD-WEN, Inc., the guarantors party thereto and Wilmington Trust, National Association, as trustee and notes collateral agent (including form of Notes). 8-K 001-38000 4.1 May 5, 2020 65 Back to top Exhibit No. Exhibit Description Form File No. Exhibit Filing Date 4.11 First Supplemental Indenture, dated September 24, 2020, to the Senior Secured Notes Indenture, dated May 4, 2020, to the Senior Secured Notes Indenture, dated May 4, 2020, among Milliken Millwork, Inc., subsidiaries of JELD-WEN, Inc., and Wilmington Trust, National Association, as Trustee. 10-Q 001-38000 4.1 November 3, 2020 4.12* Second Supplemental Indenture, dated as of December 31, 2020, among JELD-WEN, Inc., the guarantors party thereto and WilmingtonTrust, National Association, as Trustee and Notes Collateral Agent. 4.13 Pledge and Security Agreement, dated as of May 4, 2020, among JELD-WEN, Inc., JELD-WEN Holding, Inc., the other grantors party thereto and Wilmington Trust, National Association, as notes collateral agent. 8-K 001-38000 4.2 May 5, 2020 4.14 Guarantor Joinder Agreement, dated as of September 24, 2020, to the Term Loan Credit Agreement, dated as of October 15, 2014 (as amended on July 1, 2015, November 1, 2016, March 7, 2017, December 14, 2017, September 20, 2019) among Milliken Millwork, Inc., VPI Quality Windows, Inc., and Bank of America, N.A., as Administrative Agent. 10-Q 001-38000 4.3 November 3, 2020 4.15 Borrower Joinder Agreement, dated as of September 24, 2020, to the Revolving Credit Agreement, dated as of October 15, 2014 (as amended on July 1, 2015, November 1, 2016, December 14, 2017, December 21, 2018 and December 31, 2019) among Milliken Millwork, Inc., VPI Quality Windows, Inc., and Wells Fargo Bank, National Association, as Administrative Agent. 10-Q 001-38000 4.4 November 3, 2020 10.1 Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc., JELD-WEN of Canada, Ltd., the other guarantors party thereto, Wells Fargo Bank, National Association, and the lenders party thereto, dated October 15, 2014. S-1 333-211761 10.1 June 1, 2016 10.2 Amendment No. 1 to Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc., JELD-WEN of Canada, Ltd., the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, and the lenders party thereto, dated July 1, 2015. S-1 333-211761 10.1.1 June 1, 2016 10.3 Amendment No. 2 to Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc., JELD-WEN of Canada, Ltd., Karona, Inc., the subsidiary guarantors party thereto, Wells Fargo Bank, National Association, and the lenders party thereto, dated November 1, 2016. S-1/A 333-211761 10.1.2 November 17, 2016 10.4 Amendment No. 3 to Credit Agreement, among JELD-WEN, Inc., JELD-WEN Holding, Inc., JELD-WEN of Canada, Ltd., the other borrowers party thereto, the subsidiary guarantors party thereto, the lenders party thereto, Wells Fargo Bank, National Association, as administrative agent, issuing bank and swingline lender and the other parties thereto, dated as of December 14, 2017. 8-K 001-38000 10.1 December 15, 2017 10.5 Amendment No. 4, dated as of December 21, 2018, among JELD-WEN, Inc., American Building Supply, Inc., J B L Hawaii, Limited, the other borrowers party thereto, the subsidiary guarantors party thereto, the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent. 8-K 001-38000 10.1 December 27, 2018 10.6 Amendment No. 5, dated as of December 31, 2019, among JELD-WEN Holding, Inc., JELD-WEN, Inc., JELD-WEN of Canada, Ltd., the other borrowers and subsidiary guarantors party thereto, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto . 8-K 001-38000 10.1 January 6, 2020 10.7 Term Loan Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc., Onex BP Finance LP, the other guarantors party thereto, Bank of America, N.A. and the lenders party thereto, dated October 15, 2014. S-1 333-211761 10.2 June 1, 2016 10.8 Amendment No. 1 to Term Loan Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc., Onex BP Finance LP, the subsidiary guarantors party thereto, Bank of America, N.A., and the lenders party thereto, dated July 1, 2015. S-1 333-211761 10.2.1 June 1, 2016 10.9 Amendment No. 2 to Term Loan Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc. the subsidiary guarantors party thereto, Onex BP Finance LP, Bank of America, N.A., and the lenders party thereto, dated November 1, 2016. S-1/A 333-211761 10.2.2 November 17, 2016 10.10 Amendment No. 3 to Term Loan Credit Agreement, among JELD-WEN Holding, Inc., JELD-WEN, Inc. the subsidiary guarantors party thereto, Onex BP Finance LP, Bank of America, N.A., and the lenders party thereto, dated March 7, 2017. 8-K 001-38000 10.1 March 8, 2017 66 Back to top Exhibit No. Exhibit Description Form File No. Exhibit Filing Date 10.11 Amendment No. 4, by and among JELD-WEN, Inc., JELD-WEN Holding, Inc., the subsidiary guarantors party thereto, the lenders party thereto, Bank of America, N.A., as administrative agent and the other parties thereto, dated as of December 14, 2017. 8-K 001-38000 10.2 December 15, 2017 10.12 Amendment No. 5, dated as of September 20, 2019, among JELD-WEN Holding, Inc., JELD-WEN, Inc., the subsidiary guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent. 8-K 001-38000 10.1 September 20, 2019 10.13 Stock Purchase Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP and the other investors party thereto, dated August 30, 2012. S-1/A 333-211761 10.3 December 16, 2016 10.14 Amendment to Stock Purchase Agreements, among JELD-WEN Holding, Inc. and Onex Partners III LP, dated April 3, 2013. S-1/A 333-211761 10.3.1 December 16, 2016 10.15 Amendment to Stock Purchase Agreement, among JELD-WEN Holding, Inc. and Onex Partners III LP, dated May 31, 2016. S-1/A 333-211761 10.3.2 December 16, 2016 10.16 Form of Joinder to Stock Purchase Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP and the other investors party thereto. S-1/A 333-211761 10.3.3 December 16, 2016 10.17 Amended and Restated Stock Purchase Agreement, among JELD-WEN Holding, Inc., Onex Partners III LP, Onex Advisor III LLC, Onex Partners III GP LP, Onex Partners III PV LP, Onex Partners III Select LP, Onex US Principals LP, Onex Corporation, Onex American Holdings II LLC, BP EI LLC and 1597257 Ontario Inc., dated July 29, 2011. S-1/A 333-211761 10.4 December 16, 2016 10.18 Amendment No. 1 to Amended and Restated Stock Purchase Agreement, among JELD-WEN Holding, Inc. and Onex Partners III LP, dated September 1, 2011. S-1/A 333-211761 10.4.1 December 16, 2016 10.19 Amendment to Amended and Restated Stock Purchase Agreement, among JELD-WEN Holding, Inc. and Onex Partners III LP, dated May 31, 2016. S-1/A 333-211761 10.4.2 December 16, 2016 10.20+ JELD-WEN Holding, Inc. Amended and Restated Stock Incentive Plan, dated January 30, 2017. 10-Q 001-38000 10.14 May 12, 2017 10.21+ Form of Nonstatutory Common Stock Option Agreement under JELD-WEN Holding, Inc. Amended and Restated Stock Incentive Plan. S-1/A 333-211761 10.7 December 16, 2016 10.22+ Form of Nonstatutory Class B-1 Common Stock Option Agreement under JELD-WEN Holding, Inc. Amended and Restated Stock Incentive Plan. S-1/A 333-211761 10.8 December 16, 2016 10.23+ Form of Restricted Stock Unit Award Agreement under JELD-WEN Holding, Inc. Amended and Restated Stock Incentive Plan. S-1/A 333-211761 10.9 December 16, 2016 10.26+ JELD-WEN Holding, Inc. 2017 Omnibus Equity Plan. S-1/A 333-211761 10.17 January 5, 2017 10.27+ Form of Nonqualified Stock Option Agreement under JELD-WEN Holding, Inc. 2017 Omnibus Equity Plan. S-1/A 333-211761 10.18 January 5, 2017 10.28+ Amendment to Form of Nonqualified Stock Option Agreement under JELD-WEN Holding, Inc. 2017 Omnibus Equity Plan. 10-K 001-38000 10.37 March 6, 2018 10.29+ Form of Restricted Stock Unit Award Agreement under JELD-WEN Holding, Inc. 2017 Omnibus Plan. S-1/A 333-211761 10.19 January 5, 2017 10.30+ Amendment to Form of Restricted Stock Unit Award Agreement under JELD-WEN Holding, Inc. 2017 Omnibus Plan. 10-K 001-38000 10.38 March 6, 2018 10.31+ Form of Performance Share Unit Award Agreement under JELD-WEN Holding, Inc. 2017 Omnibus Plan. 10-K 001-38000 10.39 March 6, 2018 10.32+ JELD-WEN Holding, Inc. 2017 Management Incentive Plan. S-1/A 333-211761 10.20 January 5, 2017 10.33+ Letter Agreement, by and between JELD-WEN Holding, Inc. and the shareholders party thereto, dated January 24, 2017. 10-K 001-38000 10.36 March 6, 2018 10.34+ Form of Indemnification Agreement. S-1 333-211761 10.25 June 1, 2016 10.35+ Form of Executive Employment Agreement between JELD-WEN Holding, Inc. and each of Roya Behnia, Daniel J. Castillo, Timothy R. Craven, John R. Linker, and Gary S. Michel. 10-Q 001-38000 10.1 August 5, 2020 10.37+ Executive Employment Agreement between JELD-WEN Australia Pty Ltd and Perter Farmakis, dated March 1, 2018 . 10-K 001-38000 10.40 March 1, 2019 10.38 Letter Agreement, by and between JELD-WEN Holding, Inc. and the shareholder party thereto, dated February 19, 2020. 10-K 001-38000 10.38 February 24, 2020 21.1* List of subsidiaries of JELD-WEN Holding, Inc. 67 Back to top Exhibit No. Exhibit Description Form File No. Exhibit Filing Date 22.1* Subsidiary Guarantors and Issuers of Guaranteed Securities. 23.1* Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm. 24.1* Power of Attorney (included on the signature page of this Annual Report on Form 10-K). 31.1* Certification of Periodic Report by Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002 . 31.2* Certification of Periodic Report by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. 32.1* Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS* Inline XBRL Instance Document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). * Filed herewith. + Indicates management contract or compensatory plan. Item 16 - Form 10-K Summary None. 68 Back to top SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this 10-K to be signed on its behalf by the undersigned, thereunto duly authorized. JELD-WEN HOLDING, INC. (Registrant) By: /s/ John Linker John Linker Chief Financial Officer Date: February 23, 2021 POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John Linker and Roya Behnia, jointly and severally, his or her attorney-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his or her substitute or substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities and Exchange Act of 1934, this 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Gary S. Michel President, Chief Executive Officer and Director (Principal Executive Officer) February 23, 2021 Gary S. Michel /s/ John Linker Chief Financial Officer (Principal Financial Officer) February 23, 2021 John Linker /s/ Scott Vining Chief Accounting Officer (Principal Accounting Officer) February 23, 2021 Scott Vining /s/ Matthew Ross Chairman February 23, 2021 Matthew Ross /s/ Roderick C. Wendt Vice Chairman February 23, 2021 Roderick C. Wendt /s/ William Banholzer Director February 23, 2021 William Banholzer /s/ Martha Byorum Director February 23, 2021 Martha (Stormy) Byorum /s/ Greg G. Maxwell Director February 23, 2021 Greg G. Maxwell /s/ Anthony Munk Director February 23, 2021 Anthony Munk /s/ Suzanne Stefany Director February 23, 2021 Suzanne Stefany 69 Back to top Signature Title Date /s/ Bruce Taten Director February 23, 2021 Bruce Taten /s/ Steven E. Wynne Director February 23, 2021 Steven E. Wynne 70 Back to top Index to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm F- 2 Consolidated Statements of Operations for the Years Ended December 31, 2020, 2019, and 2018 F- 4 Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2020, 2019, and 2018 F- 5 Consolidated Balance Sheets as of December 31, 2020 and 2019 F- 6 Consolidated Statements of Equity for the Years Ended December 31, 2020, 2019, and 2018 F- 7 Consolidated Statements of Cash Flows for the Years Ended December 31, 2020, 2019, and 2018 F- 8 Notes to Consolidated Financial Statements F- 9 Index to Financial Statement Schedules Schedule I - Parent Company Information as of December 31, 2020 and 2019 and for the Years Ended December 31, 2020, 2019, and 2018 F- 52 F-1 Back to top Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of JELD-WEN Holding, Inc. Opinions on the Financial Statements and Internal Control over Financial Reporting We have audited the accompanying consolidated balance sheets of JELD-WEN Holding, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations, of comprehensive income (loss), of equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes and financial statement schedule listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Change in Accounting Principle As discussed in Note 8 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. F-2 Back to top Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Goodwill Impairment Assessment As described in Notes 1 and 6 to the consolidated financial statements, the Company’s consolidated goodwill balance was $639.9 million as of December 31, 2020. Management tests goodwill for impairment on an annual basis during the fourth quarter and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. Fair value of the reporting units is determined by management using a discounted cash flow model. Management’s cash flow projections included significant judgments and assumptions relating to expected revenue and terminal growth rates, profit margins, and the cost of capital. The principal considerations for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the reporting units; (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to expected revenue and terminal growth rates, profit margins, and the cost of capital; and (iii) the audit effort involved the use of professionals with specialized skill and knowledge. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting units. These procedures also included, among others (i) testing management’s process for developing the fair value estimates; (ii) evaluating the appropriateness of the discounted cash flow model; (iii) testing the completeness and accuracy of underlying data used in the model; and (iv) evaluating the significant assumptions used by management related to expected revenue and terminal growth rates, profit margins, and the cost of capital. Evaluating management’s assumptions related to expected revenue and terminal growth rates and profit margins involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting units; (ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the cost of capital assumption. /s/ PricewaterhouseCoopers LLP Charlotte, North Carolina February 23, 2021 We have served as the Company’s auditor since 2000. F-3 Back to top Item 1 - Financial Statements JELD-WEN HOLDING, INC. CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, (amounts in thousands, except share and per share data) 2020 2019 2018 Net revenues $ 4,235,677 $ 4,289,761 $ 4,346,847 Cost of sales 3,333,770 3,417,222 3,428,311 Gross margin 901,907 872,539 918,536 Selling, general and administrative 702,715 660,574 734,166 Impairment and restructuring charges 10,469 21,551 17,328 Operating income 188,723 190,414 167,042 Interest expense, net 74,800 71,778 70,818 Other income ( 2,752 ) ( 1,409 ) ( 34,887 ) Income before taxes 116,675 120,045 131,111 Income tax expense (benefit) 25,089 57,074 ( 10,058 ) Income from continuing operations, net of tax 91,586 62,971 141,169 Equity earnings of non-consolidated entities — — 738 Net income $ 91,586 $ 62,971 $ 141,907 Weighted average common shares outstanding: Basic 100,633,392 100,618,105 104,530,572 Diluted 101,681,981 101,464,325 106,360,657 Net income per share Basic $ 0.91 $ 0.63 $ 1.36 Diluted $ 0.90 $ 0.62 $ 1.33 The accompanying notes are an integral part of these Consolidated Financial Statements. F-4 Back to top JELD-WEN HOLDING, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) For the Years Ended December 31, (amounts in thousands) 2020 2019 2018 Net income $ 91,586 $ 62,971 $ 141,907 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments, net of tax benefit $ 0 , $ 0 , ($ 1,892 ) 105,442 ( 15,335 ) ( 65,185 ) Interest rate hedge adjustments, net of tax benefit of ($ 468 ), ($ 4,831 ), and ($ 538 ), respectively ( 1,384 ) 6,173 2,636 Defined benefit pension plans, net of tax (benefit) expense of ($ 3,800 ), $ 1,152 , and $ 4,214 , respectively ( 11,476 ) 2,692 12,237 Total other comprehensive income (loss), net of tax 92,582 ( 6,470 ) ( 50,312 ) Comprehensive income $ 184,168 $ 56,501 $ 91,595 The accompanying notes are an integral part of these Consolidated Financial Statements. F-5 Back to top JELD-WEN HOLDING, INC. CONSOLIDATED BALANCE SHEETS (amounts in thousands, except share and per share data) December 31, 2020 December 31, 2019 ASSETS Current assets Cash and cash equivalents $ 735,820 $ 225,962 Restricted cash 774 3,914 Accounts receivable, net 477,472 469,762 Inventories 512,228 505,078 Other current assets 34,359 38,562 Total current assets 1,760,653 1,243,278 Property and equipment, net 872,585 864,375 Deferred tax assets 199,194 183,837 Goodwill 639,867 602,500 Intangible assets, net 246,055 250,327 Operating lease assets, net 214,727 202,053 Other assets 31,604 34,962 Total assets $ 3,964,685 $ 3,381,332 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 269,891 $ 294,951 Accrued payroll and benefits 151,742 109,386 Accrued expenses and other current liabilities 379,289 298,603 Current maturities of long-term debt 66,702 65,846 Total current liabilities 867,624 768,786 Long-term debt 1,701,340 1,451,526 Unfunded pension liability 115,077 107,937 Operating lease liability 177,491 164,026 Deferred credits and other liabilities 91,368 67,682 Deferred tax liabilities 7,321 9,288 Total liabilities 2,960,221 2,569,245 Commitments and contingencies (Note 25) Shareholders’ equity Preferred Stock, par value $ 0.01 per share, 90,000,000 shares authorized; no shares issued and outstanding — — Common Stock: 900,000,000 shares authorized, par value $ 0.01 per share, 100,806,068 shares outstanding as of December 31, 2020; 900,000,000 shares authorized, par value $ 0.01 per share, 100,668,003 shares outstanding as of December 31, 2019 1,008 1,007 Additional paid-in capital 690,687 671,772 Retained earnings 371,462 290,583 Accumulated other comprehensive loss ( 58,693 ) ( 151,275 ) Total shareholders’ equity 1,004,464 812,087 Total liabilities and shareholders’ equity $ 3,964,685 $ 3,381,332 The accompanying notes are an integral part of these Consolidated Financial Statements. F-6 Back to top JELD-WEN HOLDING, INC. CONSOLIDATED STATEMENTS OF EQUITY December 31, 2020 December 31, 2019 December 31, 2018 (amounts in thousands, except share and per share amounts) Shares Amount Shares Amount Shares Amount Preferred stock, $ 0.01 par value per share — $ — — $ — — $ — Common stock, $ 0.01 par value per share Balance at beginning of period 100,668,003 $ 1,007 101,310,862 $ 1,013 105,990,483 $ 1,060 Shares issued for exercise/vesting of share-based compensation awards 427,950 5 645,957 7 907,068 9 Shares repurchased ( 265,589 ) ( 3 ) ( 1,192,419 ) ( 12 ) ( 5,287,964 ) ( 53 ) Shares surrendered for tax obligations for employee share-based transactions ( 24,296 ) ( 1 ) ( 96,397 ) ( 1 ) ( 298,725 ) ( 3 ) Balance at period end 100,806,068 $ 1,008 100,668,003 $ 1,007 101,310,862 $ 1,013 Additional paid-in capital Balance at beginning of period $ 672,445 $ 659,241 $ 653,327 Shares issued for exercise/vesting of share-based compensation awards 2,979 1,970 192 Shares surrendered for tax obligations for employee share-based transactions ( 463 ) ( 1,956 ) ( 8,887 ) Amortization of share-based compensation 16,399 13,190 14,609 Balance at period end 691,360 672,445 659,241 Employee stock notes Balance at beginning of period ( 673 ) ( 648 ) ( 661 ) Net issuances, payments and accrued interest on notes — ( 25 ) 13 Balance at period end ( 673 ) ( 673 ) ( 648 ) Balance at period end $ 690,687 $ 671,772 $ 658,593 Retained earnings Balance at beginning of period $ 290,583 $ 246,833 $ 229,903 Share repurchased ( 4,997 ) ( 19,982 ) ( 124,977 ) Adoption of new accounting standard ASU No. 2016-13 ( 5,710 ) — — Adoption of new accounting standard ASU No. 2016-02 — 761 — Net income 91,586 62,971 141,907 Balance at period end $ 371,462 $ 290,583 $ 246,833 Accumulated other comprehensive income (loss) Balance at beginning of period $ ( 151,275 ) $ ( 144,805 ) $ ( 94,493 ) Foreign currency adjustments 105,442 ( 15,335 ) ( 65,185 ) Unrealized (loss) gain on interest rate hedges ( 1,384 ) 6,173 2,636 Net actuarial pension (loss) gain ( 11,476 ) 2,692 12,237 Balance at period end $ ( 58,693 ) $ ( 151,275 ) $ ( 144,805 ) Total shareholders’ equity at period end $ 1,004,464 $ 812,087 $ 761,634 The accompanying notes are an integral part of these Consolidated Financial Statements. F-7 Back to top JELD-WEN HOLDING, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, (amounts in thousands) 2020 2019 2018 OPERATING ACTIVITIES Net income $ 91,586 $ 62,971 $ 141,907 Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization 134,623 133,969 125,100 Deferred income taxes ( 9,063 ) 21,838 ( 35,804 ) (Gain) loss on sale of business units, property and equipment ( 4,122 ) ( 1,377 ) 845 Adjustment to carrying value of assets 5,537 6,625 1,230 Equity earnings in non-consolidated entities — — ( 738 ) Amortization of deferred financing costs 2,679 1,971 2,107 Non-cash gain on previously held shares of an equity investment — — ( 20,767 ) Stock-based compensation 16,399 13,315 15,052 Contributions to U.S. pension plan ( 12,619 ) ( 7,760 ) ( 4,125 ) Amortization of U.S. pension expense 6,852 8,919 9,314 Other items, net 21,125 ( 3,320 ) 2,263 Net change in operating assets and liabilities, net of effect of acquisitions: Accounts receivable 10,819 8,426 16,507 Inventories 9,849 4,190 ( 33,092 ) Other assets 5,520 6,938 ( 18,966 ) Accounts payable and accrued expenses 62,880 37,611 39,540 Change in short term and long-term tax liabilities 13,590 8,393 ( 20,720 ) Net cash provided by operating activities 355,655 302,709 219,653 INVESTING ACTIVITIES Purchases of property and equipment ( 77,692 ) ( 101,506 ) ( 97,399 ) Proceeds from sale of business units, property and equipment 14,308 8,632 1,973 Purchase of intangible assets ( 19,204 ) ( 34,686 ) ( 21,301 ) Purchases of businesses, net of cash acquired — ( 57,799 ) ( 167,688 ) Cash received for notes receivable 585 411 274 Net cash used in investing activities ( 82,003 ) ( 184,948 ) ( 284,141 ) FINANCING ACTIVITIES Change in long-term debt 210,858 13,101 70,468 Employee note repayments — — 39 Contingent consideration for acquisitions — — ( 3,701 ) Common stock issued for exercise of options 2,984 1,977 201 Common stock repurchased ( 5,000 ) ( 19,994 ) ( 125,030 ) Payments to tax authorities for employee share-based compensation ( 933 ) ( 1,495 ) ( 9,452 ) Net cash provided by (used in) financing activities 207,909 ( 6,411 ) ( 67,475 ) Effect of foreign currency exchange rates on cash 25,157 903 ( 6,648 ) Net increase (decrease) in cash and cash equivalents 506,718 112,253 ( 138,611 ) Cash, cash equivalents and restricted cash, beginning 229,876 117,623 256,234 Cash, cash equivalents and restricted cash, ending $ 736,594 $ 229,876 $ 117,623 For further information see Note 27 - Supplemental Cash Flow. The accompanying notes are an integral part of these Consolidated Financial Statements. F-8 Back to top JELD-WEN HOLDING, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Description of Company and Summary of Significant Accounting Policies Nature of Business – JELD-WEN Holding, Inc., along with its subsidiaries, is a vertically integrated global manufacturer and distributor of windows and doors that derives substantially all of its revenues from the sale of its door and window products. Unless otherwise specified or the context otherwise requires, all references in these notes to “JELD-WEN,” “we,” “us,” “our,” or the “Company” are to JELD-WEN Holding, Inc. and its subsidiaries. We have facilities located in the U.S., Canada, Europe, Australia, Asia, and Mexico. Our products are marketed primarily under the JELD-WEN brand name in the U.S. and Canada and under JELD-WEN and a variety of acquired brand names in Europe, Australia, and Asia. Our revenues are affected by the level of new housing starts and remodeling activity in each of our markets. Our sales typically follow seasonal new construction and repair and remodeling industry patterns. The peak season for home construction and remodeling in many of our markets generally corresponds with the second and third calendar quarters, and therefore, sales volume is typically higher during those quarters. Our first and fourth quarter sales volumes are generally lower due to reduced repair and remodeling activity and reduced activity in the building and construction industry as a result of colder and more inclement weather in certain areas of our geographic end markets. Basis of Presentation – The accompanying consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the SEC. Certain prior year amounts have been reclassified to conform to current year presentation. All U.S. dollar and other currency amounts, except per share amounts, are presented in thousands unless otherwise noted. Ownership – As of December 31, 2020, Onex owned approximately 33 % of the outstanding shares of our Common Stock. Share Repurchases – In April 2018, our Board of Directors authorized the repurchase of up to $ 250.0 million of our Common Stock through December 2019. Through October 2019, we had repurchased $ 145.0 million of our Common Stock under this authorization. On November 4, 2019, the Board of Directors authorized an increase to the remaining authorization under the share repurchase program to a total of $ 175.0 million with no expiration date. As of December 31, 2020, $ 170.0 million was remaining under the repurchase authorization. During the years ended December 31, 2020, December 31, 2019, and December 31, 2018, we repurchased 265,589 , 1,192,419 , and 5,287,964 shares of our Common Stock, respectively, for aggregate consideration of $ 5.0 million, $ 20.0 million, and $ 125.0 million, respectively. Fiscal Year – We operate on a fiscal calendar year, and each interim quarter is comprised of two 4-week periods and one 5-week period, with each week ending on a Saturday. Our fiscal year always begins on January 1 and ends on December 31. As a result, our first and fourth quarters may have more or fewer days included than a traditional 91-day fiscal quarter. Use of Estimates – The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates, assumptions, and allocations that affect amounts reported in the consolidated financial statements and related notes. Significant items that are subject to such estimates and assumptions include, but are not limited to, long-lived assets including goodwill and other intangible assets, employee benefit obligations, income tax uncertainties, contingent assets and liabilities, provisions for bad debt, inventory, warranty liabilities, legal claims, valuation of derivatives, environmental remediation, and claims relating to self-insurance. Actual results could differ due to the uncertainty inherent in the nature of these estimates. COVID-19 – The CARES Act in the U.S. and similar legislation in other jurisdictions includes measures that assist companies in responding to the COVID-19 pandemic. These measures consisted primarily of cash assistance to support employment levels and deferment of remittance of certain non-income tax expense payments. The most significant impact was the CARES Act in the U.S., which included a provision that allows employers to defer the remittance of the employer portion of the social security tax. The deferred employment tax must be paid over two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022. For the year ended December 31, 2020, the Company deferred $ 20.9 million of the employer portion of social security tax, of which $ 10.4 million is included in accrued payroll and benefits, and the remaining is included in deferred credits and other liabilities in the F-9 Back to top consolidated balance sheet. The $ 20.9 million deferral is included in other items, net in our consolidated statements of cash flows. For our Europe and Australasia regions, the deferrals totaled approximately $ 11.5 million and $ 1.8 million, respectively. The impact of the CARES Act and similar legislation in prospective periods may differ from our estimates as of December 31, 2020 due to changes in interpretations and assumptions, guidance that may be issued, and actions we may take in respect to these measures. The CARES Act and similar legislation in other jurisdictions are highly detailed and we will continue to assess the impact that various provisions will have on our business. Segment Reporting – Our reportable segments are organized and managed principally by geographic region: North America, Europe, and Australasia. We report all other business activities in Corporate and unallocated costs. In addition to similar economic characteristics, we also consider the following factors in determining the reportable segments: the nature of business activities, the management structure directly accountable to our chief operating decision maker for operating and administrative activities, the discrete financial information regularly reviewed by the chief operating decision maker, and information presented to the Board of Directors and investors. No segments have been aggregated for our presentation. Acquisitions – We apply the provisions of FASB ASC Topic 805, Business Combinations , in the accounting for our acquisitions. It requires us to recognize separately from goodwill the assets acquired and the liabilities assumed, at their acquisition date fair values. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the net of the acquisition date fair values of the assets acquired and the liabilities assumed. While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which may be up to one year from the acquisition date, material adjustments must be reflected in the reporting period in which the adjustment amount is determined. Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded in the current period in our consolidated statements of operations. For a given acquisition, we may identify certain pre-acquisition contingencies as of the acquisition date and may extend our review and evaluation of these pre-acquisition contingencies throughout the measurement period in order to obtain sufficient information to assess whether we include these contingencies as a part of the fair value estimates of assets acquired and liabilities assumed and, if so, to determine their estimated amounts. If we cannot reasonably determine the fair value of a pre-acquisition contingency (non-income tax related) by the end of the measurement period, we will recognize an asset or a liability for such pre-acquisition contingency if: (a) it is probable that an asset existed or a liability had been incurred at the acquisition date and (b) the amount of the asset or liability can be reasonably estimated. Subsequent to the measurement period, changes in our estimates of such contingencies will affect earnings and could have a material effect on our results of operations and financial position. In addition, uncertain tax positions and tax related valuation allowances assumed in connection with a business combination are initially estimated as of the acquisition date. We re-evaluate these items quarterly based upon facts and circumstances that existed as of the acquisition date. Subsequent to the measurement period or our final determination of the tax allowance’s or contingency’s estimated value, whichever comes first, changes to these uncertain tax positions and tax related valuation allowances will affect our provision for income taxes in our consolidated statements of operations and could have a material impact on our results of operations and financial position. Cash and Cash Equivalents – We consider all highly-liquid investments purchased with an original or remaining maturity at the date of purchase of three months or less to be cash equivalents. Our cash management system is designed to maintain zero bank balances at certain banks. Checks written and not presented to these banks for payment are reflected as book overdrafts and are a component of accounts payable. Restricted Cash – Restricted cash consists primarily of cash required to meet certain bank guarantees and projected self-insurance obligations. New funding is generated from employees’ portion of contributions and is added to the deposit account weekly as claims are paid. Accounts Receivable – Accounts receivable are recorded at their net realizable value. Our customers are primarily retailers, distributors, and contractors. As of December 31, 2020, one customer accounted for 19.2 % of the consolidated accounts receivable balance. As of December 31, 2019, one customer accounted for 17.6 % of the consolidated accounts receivable balance. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. We estimate the allowance for doubtful accounts our assessment of credit risk relating to our accounts receivable based on quantitative and qualitative factors, primarily historical credit collections within each region where we have operations. If the financial condition of a customer deteriorates or other circumstances occur that result in an impairment of a customer’s ability to make payments, we record additional allowances as needed. We write off uncollectible trade accounts receivable against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by us has concluded. F-10 Back to top Inventories – Inventories in the accompanying consolidated balance sheets are valued at the lower of cost or net realizable value and are determined by the first-in, first-out (“FIFO”) or average cost methods. We record provisions to write-down obsolete and excess inventory to its estimated net realizable value. The process for evaluating obsolete and excess inventory requires us to evaluate historical inventory usage and expected future production needs. Accelerating the disposal process or incorrect estimates may cause actual results to differ from the estimates at the time such inventory is disposed or sold. We classify certain inventories that are available for sale directly to external customers or used in the manufacturing of a finished good within raw materials. Notes Receivable – Notes receivable are recorded at their net realizable value. The balance consists primarily of installment notes and affiliate notes. The allowance for doubtful notes is based upon credit risks, historical loss trends, and specific reviews of delinquent notes. We write off uncollectible note receivables against the allowance for doubtful accounts when collection efforts have been exhausted and/or any legal action taken by us has been concluded. Current maturities and interest, net of short-term allowance are reported as other current assets. Customer Displays – Customer displays include all costs to manufacture, ship, and install the displays of our products in retail store locations. Capitalized display costs are included in other assets and are amortized over the life of the product lines, typically 3 to 4 years. Related amortization is included in SG&A expense in the accompanying consolidated statements of operations and was $ 7.9 million in 2020, $ 8.7 million in 2019, and $ 9.0 million in 2018. Cloud Computing Arrangements –We capitalize qualified cloud computing implementation costs associated with the application development stage and subsequently amortize these costs over the term of the hosting agreement and stated renewal period, if it is reasonably certain we will renew, typically 3 to 5 years. Capitalized costs are included in other assets on the consolidated balance sheet and amortization is included in SG&A expense in the accompanying consolidated statement of operations. Property and Equipment – Property and equipment are recorded at cost. The cost of major additions and betterments are capitalized and depreciated using the straight-line method over their estimated useful lives. Replacements, maintenance, and repairs that do not improve or extend the useful lives of the related assets or adapt the property to a new or different use are expensed as incurred. Interest over the construction period is capitalized as a component of cost of constructed assets. Upon sale or retirement of property or equipment, cost and related accumulated depreciation are removed from the accounts and any gain or loss is charged to income. Leasehold improvements are amortized over the shorter of the useful life of the improvement, the lease term, or the life of the building. Depreciation is generally provided over the following estimated useful service lives: Land improvements 10 - 20 years Buildings 15 - 45 years Machinery and equipment 3 - 20 years Intangible Assets –Intangible assets are accounted for in accordance with ASC 350, Intangibles – Goodwill and Other . Definite lived intangible assets are amortized based on the pattern of economic benefit over the following estimated useful lives: Trademarks and trade names 5 - 40 years Software 3 - 10 years Licenses and rights 3 - 14 years Customer relationships 4 - 20 years Patents 5 - 25 years The lives of definite lived intangible assets are reviewed and reduced if necessary, whenever changes in their planned use occur. Legal and registration costs related to internally-developed patents and trademarks are capitalized and amortized over the lesser of their expected useful life or the legal patent life. Cost and accumulated amortization are removed from the accounts in the period that an intangible asset becomes fully amortized. The carrying value of intangible assets is reviewed by management to assess the recoverability of the assets when facts and circumstances indicate that the carrying value may not be recoverable. The recoverability test requires us to first compare undiscounted cash flows expected to be generated by that definite lived intangible asset or asset group to its carrying amount. If the carrying amounts of the definite lived intangible assets are not recoverable on an undiscounted cash flow basis, an impairment charge is recognized to the extent that the carrying amount exceeds its fair value. Fair value is determined through various valuation techniques. F-11 Back to top Our valuation of identifiable intangible assets acquired is based on information and assumptions available to us at the time of acquisition, using income and market approaches to determine fair value. We do not amortize indefinite-lived intangible assets, but test for impairment annually, or when indications of potential impairment exist. For intangible assets other than goodwill, if the carrying value exceeds the fair value, we recognize an impairment loss in an amount equal to the excess. No material impairments were identified during fiscal years December 31, 2020, December 31, 2019 and December 31, 2018. We capitalize certain qualified internal use software costs during the application development stage and subsequently amortize these costs over the estimated useful life of the asset. Costs incurred during the preliminary project stage and post-implementation operation stage are expensed as incurred. Long-Lived Assets – Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. The first step in an impairment review is to forecast the expected undiscounted cash flows generated from the anticipated use and eventual disposition of the asset. If the expected undiscounted cash flows are less than the carrying value of the asset, then an impairment charge is required to reduce the carrying value of the asset to fair value. Long-lived assets currently available for sale and expected to be sold within one year are classified as held for sale in other current assets. Leases – We lease certain warehouses, distribution centers, office spaces, land, vehicles and equipment. We determine if an arrangement is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of identified property, plant, or equipment (an identified asset) for a period of time in exchange for consideration. Amounts associated with operating leases are included in operating lease assets (“ROU assets”), net, accrued expense and other current liabilities and noncurrent operating lease liability in our consolidated balance sheet. Amounts associated with finance leases are included in property and equipment, net, current maturities of long-term debt, and long-term debt in our consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. If the lease does not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. The incremental borrowing rate for operating leases that commenced in the period is determined by using the prior quarter end’s incremental borrowing rates. Leases with an initial term of 12 months or less are not recorded on the balance sheet, and we recognize lease expense for these leases on a straight-line basis over the lease term. Variable lease payments that are dependent on usage, output, or may vary for other reasons, are excluded from lease payments in the measurement of the ROU asset and lease liability, and accordingly are recognized as lease expense in the period the obligation for those payments is incurred. For lease agreements entered into or reassessed after the adoption of Topic 842, we combine lease and nonlease components. Certain leases include renewal and/or termination options, with renewal terms that can extend the lease term from one to 20 years or more, and the exercise of lease renewal options under these leases is at our sole discretion. These options are included in the lease term used to determine ROU assets and corresponding liabilities when we are reasonably certain we will exercise the option. The depreciable life of assets and leasehold improvements are limited by the expected lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Goodwill – Goodwill is tested for impairment on an annual basis during the fourth quarter and between annual tests if indicators of potential impairment exist, using a fair-value-based approach. Current accounting guidance provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is impaired. If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the fair value of the reporting unit exceeds its carrying amount, we calculate the estimated fair value of the reporting unit. We estimated the fair value of our reporting units using a discounted cash flow model (implied fair value measured on a non-recurring basis using level 3 inputs). Inherent in the development of the discounted cash flow projections are assumptions and estimates derived from a review of our expected revenue and terminal growth rates, profit margins, and cost of capital. Changes in assumptions or estimates used in our goodwill impairment testing could materially affect the determination of the fair value of a reporting unit, and therefore, could eliminate the excess of fair value over carrying value of a reporting unit and, in some cases, could result in impairment. Such changes in assumptions could be caused by items such as a loss of one or more significant customers, decline in the demand for our products due to changing economic conditions, or failure to control cost increases above what can be recouped in sale price increases. These types of changes would negatively affect our profits, revenues, and growth over the long term and such a decline could significantly affect the fair value assessment of our reporting units and cause our goodwill to become impaired. F-12 Back to top We have completed the required annual testing of goodwill for impairment for all reporting units and have determined that goodwill was not impaired in any years presented. Deferred Revenue – We record deferred revenue when we collect pre-payments from customers for performance obligations we expect to fulfill through future performance of a service or delivery of a product. We classify our deferred revenue based on our estimate as to when we expect to satisfy the related performance obligations. Current deferred revenues are typically included in accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Warranty Accrual – Warranty terms range primarily from one year to lifetime on certain window and door components. Warranties are normally limited to replacement or service of defective components for the original customer. Some warranties are transferable to subsequent owners and are generally limited to ten years from the date of manufacture or require pro-rata payments from the customer. A provision for estimated warranty costs is recorded at the time of sale based on historical experience and we periodically adjust these provisions to reflect actual experience. Restructuring – Costs to exit or restructure certain activities of an acquired company or our internal operations are accounted for as one-time termination and exit costs as required by the provisions of FASB ASC 420, Exit or Disposal Cost Obligations , and are accounted for separately from any business combination. A liability for costs associated with an exit or disposal activity is recognized and measured at its fair value in our consolidated statements of operations in the period in which the liability is incurred. When estimating the fair value of restructuring activities, assumptions are applied, which can differ materially from actual results. This may require us to revise our initial estimates, which may materially affect our results of operations and financial position in the period the revision is made. Derivative Financial Instruments – Derivative financial instruments are used to manage interest rate risk associated with our borrowings and foreign currency exposures related to transactions denominated in currencies other than the U.S. dollar, or in the case of our non-U.S. companies, transactions denominated in a currency other than their functional currency. All derivatives are recorded as assets or liabilities in the consolidated balance sheets at their respective fair values. As of December 31, 2020, December 31, 2019 and December 31, 2018, we had netting provisions in certain agreements with our counterparties. We have elected to not offset the fair values of derivative assets and liabilities executed with the same counterparty that are generally subject to enforceable netting agreements. Changes in a derivative’s fair value are recognized in earnings unless specific hedge criteria are met, and we elect hedge accounting prior to entering into the hedge. If a derivative is designated as a fair value hedge, the changes in fair value of both the derivative and the hedged item attributable to the hedged risks are recognized in the same line item in the results of operations. If the derivative is designated as a cash flow hedge, changes in the fair value related to the derivatives considered highly effective are initially recorded in accumulated other comprehensive income (loss) and subsequently classified to the consolidated statements of operations when the hedged item impacts earnings, and in the same line item on the consolidated statements of operations as the impact of the hedge transaction. At the inception of a fair value or cash flow hedge, we formally document the hedge relationship and the risk management objective for undertaking the hedge. In addition, for derivatives that qualify for hedge accounting, we assess, both at inception of the hedge and on an ongoing basis, whether the derivative financial instrument is and will continue to be highly effective in offsetting cash flows or fair value of the hedged item and whether it is probable that the hedged forecasted transaction will occur. Changes in the fair value of derivatives that do not qualify for hedge accounting, or fail to meet the criteria, thereafter, are also recognized in the consolidated statements of operations. See Note 24 - Fair Value of Financial Instruments for additional information on the fair value of our derivative assets and liabilities. Revenue Recognition – Revenue is recognized when obligations under the terms of a contract with our customer are satisfied. Generally, this occurs with the transfer of control of our products or services. The transfer of control to the customer occurs at a point in time, usually upon satisfaction of the shipping terms within the contract. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. The taxes we collect concurrent with revenue-producing activities (e.g., sales tax, value added tax, and other taxes) are excluded from revenue. Incentive payments to customers that directly relate to future business are recorded as a reduction of net revenues over the periods benefited. Shipping and handling costs are treated as fulfillment costs and are not considered a separate performance obligation. Shipping and handling costs charged to customers and the related expenses are reported in revenues and cost of sales for all customers. The expected costs associated with our base warranties and field service actions continue to be recognized as expense when the products are sold (see Note 12 - Warranty Liability ). Since payment is due at or shortly after the point of sale, the contract asset is classified as a receivable. We do not adjust the promised amount of consideration for the effects of a significant financing component when we expect, at contract inception, that the period between our transfer of a promised product or service to a customer and when the customer pays for that product or service will be one year or less. We do not typically include extended payment terms F-13 Back to top in our contracts with customers. Incidental items that are immaterial in the context of the contract are recognized as expense. We disaggregate revenues based on geographical location. See Note 16 - Segment Information for further information on disaggregated revenue. Advertising Costs – All costs of advertising our products and services are charged to expense as incurred. Advertising and promotion expenses included in SG&A expenses were $ 31.7 million in 2020, $ 40.0 million in 2019, and $ 43.4 million in 2018. Interest Expense and Extinguishment of Debt Costs – We record debt extinguishment costs separately from interest expense within other income in the consolidated statements of operations. Foreign Currency Translation and Adjustments – Typically, our foreign subsidiaries maintain their accounting records in their local currency. All of the assets and liabilities of these subsidiaries (including long-term assets, such as goodwill) are converted to U.S. dollars at the exchange rate in effect at the balance sheet date, income and expense accounts are translated at average rates for the period, and shareholder’s equity accounts are translated at historical rates. The effects of translating financial statements of foreign operations into our reporting currency are recognized as a cumulative translation adjustment in consolidated other comprehensive income (loss). This balance is net of tax, where applicable. The effects of translating financial statements of foreign operations in which the U.S. dollar is their functional currency are included in the consolidated statements of operations. The effects of translating intercompany debt are recorded in the consolidated statements of operations unless the debt is of a long-term investment nature in which case gains and losses are recorded in consolidated other comprehensive income (loss). Foreign currency transaction gains or losses are credited or charged to income as incurred. Income Taxes – Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. We evaluate both the positive and negative evidence that is relevant in assessing whether we will realize the deferred tax assets. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. The tax effects from an uncertain tax position can be recognized in the consolidated financial statements, only if the position is more likely than not to be sustained, based on the technical merits of the position and the jurisdiction taxes of the Company. We recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit and the tax related to the position would be due to the entity and not the owners. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized, upon ultimate settlement with the relevant tax authority. We apply this accounting standard to all tax positions for which the statute of limitations remains open. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Tax Act passed in December 2017 continues to have significant effects on our financial statements primarily through Treasury regulations, whether proposed or final, which continue to be issued in relation to specific provisions of the Tax Act. In accordance with Staff Accounting Bulletin No. 118 issued by the SEC in December 2017 immediately following the passage of the Tax Act, we made provisional estimates for certain direct and indirect effects of the Tax Act based on information available to us at that time. In the fourth quarter of 2018, we completed our accounting for the enactment-date income tax effects of the Tax Act and recorded adjustments as a component of income tax expense from continuing operations. The Tax Act subjects a U.S. shareholder to current tax on GILTI earned by certain foreign subsidiaries. We have elected to account for the impact of GILTI in the period in which it is incurred. We file a consolidated federal income tax return in the U.S. and various states. For financial statement purposes, we calculate the provision for federal income taxes using the separate return method. Certain subsidiaries file separate tax returns in certain countries and states. Any U.S. federal, state, and foreign income taxes refundable and payable are reported in other current assets and accrued expenses and other current liabilities in our consolidated balance sheet. We do not have any non-current taxes receivable or payable at December 31, 2020 or December 31, 2019. We record interest and penalties on amounts due to tax authorities as a component of income tax expense (benefit) in the consolidated statements of operations. Contingent Liabilities – Contingent liabilities arising from claims, assessments, litigation, fines, penalties, and other sources require significant judgment in determining the probability of loss and the amount of the potential loss. Each F-14 Back to top quarter, we review significant new claims and litigation for the probability of an adverse outcome. Estimates are recorded as liabilities when it is probable that a liability has been incurred and the amount of the loss is reasonably estimable. Disclosure is required when there is a reasonable possibility that the ultimate loss will materially exceed the recorded provision. Contingent liabilities are often resolved over long time periods. Estimating probable losses requires analysis of multiple forecasts that often depend on judgments about potential actions by third parties, such as regulators, and the estimated loss can change materially as individual claims develop. Legal costs incurred in connection with loss contingencies are expensed as incurred. Employee Retirement and Pension Benefits – We have a defined benefit plan available to certain U.S. hourly employees and several other defined benefit plans located outside of the U.S. that are country specific. The most significant of these plans is in the U.S., which is no longer open to new employees. Amounts relating to these plans are recorded based on actuarial calculations, which use various assumptions, such as discount rates and expected return on assets. See Note 26 - Employee Retirement and Pension Benefits . Recently Adopted Accounting Standards – In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting , which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the discontinuation of the London Interbank Offered Rate (“LIBOR”) or by another reference rate expected to be discontinued. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope , to clarify the scope of ASU No. 2020-04. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. In May 2020, we elected the expedient within ASC 848 which allows us to assume that our hedged interest payments are probable of occurring regardless of any expected modifications in their terms related to reference rate return. In addition, ASC 848 allows for the option to change the method of assessing effectiveness upon a change in critical terms of the derivative or the hedged transactions and upon the end of relief under ASC 848. At this time, we have elected to continue the method of assessing effectiveness as documented in the original hedge documentation and apply the practical expedients related to probability to assume that the reference rate on the hypothetical derivative matches the reference rate on the hedging instrument. We plan to evaluate the remaining expedients for adoption, as applicable, when contracts are modified. Refer to Note 23 - Derivative Financial Instruments for additional disclosure information relating to our hedging activity. In August 2018, the FASB issued ASU No. 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which adds, modifies, and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other post retirement plans. We adopted this guidance as of December 31, 2020. The adoption did not have a material impact to our financial statements or related disclosures. In January 2017, the FASB issued ASU No. 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . To simplify the measurement of goodwill impairments, this ASU eliminates Step 2 from the goodwill impairment test, which required the calculation of the implied fair value of goodwill. Instead, under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. We adopted this standard in the first quarter of 2020 and the adoption did not have an impact on our consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard requires the measurement and recognition of expected credit losses for financial assets held at amortized cost and adds an impairment model that is based on expected losses rather than incurred losses. In April 2019, the FASB issued ASU No. 2019-04, Codification Improvements to (Topic 326), Financial Instruments-Credit Losses, (Topic 815), Derivatives and Hedging, and (Topic 825), Financial Instruments , to clarify and address certain items related to the amendments of ASU No. 2016-13. We adopted this standard in the first quarter of 2020 using the modified retrospective approach, which primarily impacted our allowance for doubtful accounts as a result of our analysis of customer historical credit and collections data. Additionally, we recognized a $ 5.7 million cumulative effect adjustment, net of tax, to retained earnings, which includes a $ 7.6 million increase to the allowance for doubtful accounts and a $ 1.9 million net impact to deferred tax assets. Recent Accounting Standards Not Yet Adopted – In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes , which removes certain exceptions to the general principles of ASC 740, including, but not limited to, accounting relating to intraperiod tax allocations, deferred tax liabilities related to outside basis differences, and year to date losses in interim periods. This guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. We are currently assessing the impact of this ASU on our consolidated financial statements and disclosures. F-15 Back to top We have considered the applicability and impact of all ASUs. We have assessed ASUs not listed above and have determined that they were either not applicable or were not expected to have a material impact on our financial statements. Note 2. Acquisitions In March 2019, we acquired VPI Quality Windows, Inc. (“VPI”). VPI is a leading manufacturer of vinyl windows, specializing in customized solutions for mid-rise multi-family, industrial, hospitality and commercial projects, primarily in the western U.S. VPI is located in Spokane, Washington and is a part of our North America segment. The fair values of the assets and liabilities acquired of this acquisition are summarized below: (amounts in thousands) Preliminary Allocation Measurement Period Adjustment Final Allocation Fair value of identifiable assets and liabilities: Accounts receivable $ 11,417 $ ( 420 ) $ 10,997 Inventories 2,555 ( 141 ) 2,414 Other current assets 261 40 301 Property and equipment 3,166 176 3,342 Identifiable intangible assets 17,702 5,735 23,437 Operating lease assets 3,739 — 3,739 Goodwill 26,553 ( 3,053 ) 23,500 Other assets 10 — 10 Total assets $ 65,403 $ 2,337 $ 67,740 Accounts payable 2,629 — 2,629 Other current liabilities 1,875 522 2,397 Operating lease liability 3,413 — 3,413 Other liabilities — 1,502 1,502 Total liabilities $ 7,917 $ 2,024 $ 9,941 Purchase price: Cash consideration, net of cash acquired $ 57,486 $ 313 $ 57,799 The final goodwill of $ 23.5 million, calculated as the excess of the purchase price over the fair value of net assets, represents operational efficiencies and sales synergies, and the full amount is expected to be tax-deductible. The intangible assets include customer relationships and tradenames and will be amortized over a weighted average amortization period of eight years . Acquisition-related costs are expensed as incurred and are included in SG&A expense in our accompanying consolidated statements of operations. We incurred acquisition-related costs of $ 0.4 million during the year ended December 31, 2019. Prior to our purchase of VPI, certain employees held employment agreements including retention bonuses with service requirements extending into the post-acquisition period. As agreed with the former owners, the retention bonuses were prepaid at the acquisition date and any repayments of the retention bonuses under the terms of the employment agreements will accrue to the benefit of the former owners. The cash used to pay the retention bonuses was excluded from our determination of purchase price. In 2019, we expensed the post-acquisition value of these retention bonuses as acquisition-related cost totaling $ 7.1 million, which are included in SG&A expense in our accompanying consolidated statements of operations for the year ended December 31, 2019. The purchase price allocation was considered complete as of March 28, 2020. F-16 Back to top During 2018, we completed four acquisitions. The fair values of the assets and liabilities acquired in these acquisitions are summarized below: (amounts in thousands) Preliminary Allocation Measurement Period Adjustment Final Allocation Fair value of identifiable assets and liabilities: Accounts receivable $ 58,714 $ ( 2,079 ) $ 56,635 Inventories 97,305 ( 8,069 ) 89,236 Other current assets 14,910 ( 6,137 ) 8,773 Property and equipment 53,128 26,170 79,298 Identifiable intangible assets 70,057 ( 1,363 ) 68,694 Goodwill 64,950 ( 4,330 ) 60,620 Other assets 7,283 ( 3,528 ) 3,755 Total assets $ 366,347 $ 664 $ 367,011 Accounts payable 29,512 ( 6,097 ) 23,415 Current maturities of long-term debt 17,278 803 18,081 Other current liabilities 27,595 4,496 32,091 Long-term debt 47,369 5,129 52,498 Other liabilities 17,551 ( 2,353 ) 15,198 Total liabilities $ 139,305 $ 1,978 $ 141,283 Purchase price: Cash consideration, net of cash acquired $ 169,002 $ ( 1,314 ) $ 167,688 Contingent consideration 3,898 — 3,898 Gain on previously held shares 20,767 — 20,767 Existing investment in acquired entity 33,483 — 33,483 Non-cash consideration related to acquired intercompany balances ( 108 ) — ( 108 ) Total consideration, net of cash acquired $ 227,042 $ ( 1,314 ) $ 225,728 Goodwill of $ 60.6 million, calculated as the excess of the purchase price over the fair value of net assets, represents operational efficiencies and sales synergies, and no amount is expected to be tax-deductible. The intangible assets include customer relationships, tradenames, patents, and software and will be amortized over a weighted average amortization period of 16 years. Acquisition-related costs of $ 8.1 million were expensed as incurred and are included in SG&A expense in our accompanying consolidated statements of operations for the year ended December 31, 2018. The purchase price allocation was considered complete for the Domoferm, A&L, ABS, and D&K acquisitions as of March 30, 2019. The contingent consideration relating to the A&L acquisition was based on underlying business performance through June 2018 and was paid in the third quarter of 2018 in the amount of $ 3.7 million. The gain on previously held shares relates to the remeasurement of our existing 50 % ownership interest to fair value for one of the recent acquisitions. We evaluated the acquisitions quantitatively and qualitatively and determined them to be insignificant both individually and in the aggregate. Therefore, certain pro forma disclosures under ASC 805-10-50 have been omitted. The results of the acquisitions are included in our consolidated financial statements from the date of their acquisition. Note 3. Accounts Receivable We sell our manufactured products to a large number of customers, primarily in the residential housing construction and remodel sectors, broadly dispersed across many domestic and foreign geographic regions. We assess the credit risk relating to our accounts receivable based on quantitative and qualitative factors, primarily historical credit collections within each region where we have operations. We perform ongoing credit evaluations of our customers to minimize credit risk. We do not usually require collateral for accounts receivable but will require advance payment, guarantees, a security interest in the products sold to a customer, and/or letters of credit in certain situations. Customer accounts receivable converted to notes receivable are collateralized by inventory or other collateral. One window and door customer from our North America segment represents 15.4 %, 14.6 %, and 14.2 % of net revenues in 2020, 2019, and 2018, respectively. As of January 1, 2020, we adopted ASC 326 - Measurement of Credit Losses on Financial Instruments on a modified retrospective basis, which increased the allowance for doubtful accounts by $ 7.6 million on the date of adoption. F-17 Back to top The following is a roll forward of our allowance for doubtful accounts as of December 31: (amounts in thousands) 2020 2019 2018 Balance as of January 1, $ ( 5,967 ) $ ( 6,227 ) $ ( 4,468 ) Acquisitions (Note 2) — ( 235 ) ( 1,668 ) Additions charged to expense ( 649 ) ( 961 ) ( 2,769 ) Additions related to adoption of 2016-09 ( 7,635 ) — — Deductions 1,898 1,407 2,301 Currency translation ( 581 ) 49 377 Balance at period end $ ( 12,934 ) $ ( 5,967 ) $ ( 6,227 ) Note 4. Inventories Inventories are stated at the lower of cost or net realizable value. Finished goods and work-in-process inventories include material, labor, and manufacturing overhead costs. (amounts in thousands) 2020 2019 Raw materials $ 382,698 $ 372,289 Work in process 35,712 38,432 Finished goods 93,818 94,357 Total inventories $ 512,228 $ 505,078 Note 5. Property and Equipment, Net (amounts in thousands) 2020 2019 Land improvements $ 32,312 $ 34,211 Buildings 536,376 511,563 Machinery and equipment 1,508,979 1,423,809 Total depreciable assets 2,077,667 1,969,583 Accumulated depreciation ( 1,349,423 ) ( 1,252,092 ) 728,244 717,491 Land 72,525 69,262 Construction in progress 71,816 77,622 Total property and equipment, net $ 872,585 $ 864,375 The prior year figures in the table above have been revised to correct for errors associated with our accounting for retirements and disposal of the fair value adjustments of buildings, machinery and equipment, and accumulated depreciation associated with a 2006 acquisition in Europe. The effect of the errors was to understate the amounts previously reported for buildings by $ 9.3 million, machinery and equipment by $ 54.6 million, total depreciable assets by $ 63.9 million, and accumulated depreciation by $ 63.9 million. In the fourth quarter of 2019, we placed in service a newly constructed plant and corresponding machinery and equipment located within our Australasia segment. We monitor all property and equipment for any indicators of potential impairment. We recorded impairment charges of $ 2.0 million, $ 3.7 million, and $ 1.1 million during the years ended December 31, 2020, December 31, 2019, and December 31, 2018, respectively. The effect on our carrying value of property and equipment due to currency translations for foreign assets was an increase of $ 27.1 million and a decrease of $ 2.0 million for the years ended December 31, 2020 and December 31, 2019, respectively. Depreciation expense was recorded as follows: F-18 Back to top (amounts in thousands) 2020 2019 2018 Cost of sales $ 88,551 $ 84,449 $ 85,357 Selling, general and administrative 9,594 9,882 8,699 Total depreciation expense $ 98,145 $ 94,331 $ 94,056 Note 6. Goodwill The following table summarizes the changes in goodwill by reportable segment: (amounts in thousands) North America Europe Australasia Total Reportable Segments Balance as of December 31, 2018 $ 223,562 $ 279,688 $ 82,692 $ 585,942 Acquisitions 26,553 — — 26,553 Acquisition remeasurements ( 1,535 ) — ( 1,248 ) ( 2,783 ) Sale of business unit ( 1,343 ) — — ( 1,343 ) Currency translation 265 ( 5,776 ) ( 358 ) ( 5,869 ) Balance as of December 31, 2019 $ 247,502 $ 273,912 $ 81,086 $ 602,500 Currency translation 148 29,485 7,734 37,367 Balance as of December 31, 2020 $ 247,650 $ 303,397 $ 88,820 $ 639,867 We have recorded impairments in prior periods related to the divestiture of certain operations. Cumulative impairments of goodwill totaled $ 1.6 million at December 31, 2018. In accordance with current accounting guidance, we identified three reporting units for the purpose of conducting our goodwill impairment review. In determining our reportable units, we considered (i) whether an operating segment or a component of an operating segment was a business, (ii) whether discrete financial information was available, and (iii) whether the financial information is regularly reviewed by management of the operating segment. We performed our annual impairment assessment during the beginning of the December fiscal month of 2020. The excess of the fair value of our reporting units over their respective carrying values for the three reporting units exceeded 20 %. No impairment loss was recorded in 2020, 2019, or 2018. Note 7. Intangible Assets, Net The cost and accumulated amortization values of our intangible assets were as follows: December 31, 2020 (amounts in thousands) Cost Accumulated Amortization Net Book Value Customer relationships and agreements $ 155,006 $ ( 68,186 ) $ 86,820 Software 106,697 ( 26,801 ) 79,896 Trademarks and trade names 60,699 ( 9,821 ) 50,878 Patents, licenses and rights 48,759 ( 20,298 ) 28,461 Total amortizable intangibles $ 371,161 $ ( 125,106 ) $ 246,055 December 31, 2019 (amounts in thousands) Cost Accumulated Amortization Net Book Value Customer relationships and agreements $ 151,540 $ ( 57,326 ) $ 94,214 Software 92,821 ( 18,222 ) 74,599 Trademarks and trade names 58,088 ( 7,512 ) 50,576 Patents, licenses and rights 45,392 ( 14,454 ) 30,938 Total amortizable intangibles $ 347,841 $ ( 97,514 ) $ 250,327 Through December 31, 2020, we have capitalized software costs of $ 76.4 million related to the application development stage of our global ERP system implementation, including $ 16.2 million during the year ended December 31, 2020 and F-19 Back to top $ 31.8 million during the year ended December 31, 2019. In March 2020, we impaired $ 3.4 million of capitalized software within impairment and restructuring charges in the accompanying consolidated statements of operations due to delays in implementation of certain ERP modules and the uncertainty of its future. In the third quarter 2020, we reduced the estimated useful life of our initial ERP instance from 15 years to 10 years to align with our current plans for our future global ERP system. In the fourth quarter, we placed in service and began amortizing our current global ERP instance over its estimated useful life of 10 years. As of December 31, 2020, we have placed $ 68.7 million in service and are amortizing the cost of our global ERP system over its estimated useful life. The effect on our carrying value of intangible assets due to currency translations for foreign assets was an increase of $ 9.2 million and a decrease of $ 1.5 million for the years ended December 31, 2020 and December 31, 2019, respectively. See Note 2 - Acquisitions for a discussion of our acquisitions and associated intangible assets. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of such assets may not be recoverable. Intangible assets that become fully amortized are removed from the accounts in the period that they become fully amortized. Amortization expense was recorded as follows: (amounts in thousands) 2020 2019 2018 Amortization expense $ 28,541 $ 30,956 $ 22,208 Estimated future amortization expense: (amounts in thousands) 2021 $ 32,501 2022 31,707 2023 30,005 2024 29,243 2025 27,775 Thereafter 94,824 $ 246,055 Note 8. Leases We lease certain warehouses, distribution centers, office spaces, land, vehicles and equipment. Effective January 1, 2019, we adopted ASU No. 2016-02 “Leases” using the modified retrospective approach. Lease ROU assets and liabilities at December 31 were as follows: (amounts in thousands) Balance Sheet Location 2020 2019 Assets: Operating Operating lease assets, net $ 214,727 $ 202,053 Finance Property and equipment, net (1) 5,791 4,045 Total lease assets $ 220,518 $ 206,098 Liabilities: Current: Operating Accrued expense and other current liabilities $ 44,319 $ 45,254 Finance Current maturities of long-term debt 1,740 1,280 Noncurrent: Operating Operating lease liability 177,491 164,026 Finance Long-term debt 4,086 2,820 Total lease liability $ 227,636 $ 213,380 (1) Finance lease assets are recorded net of accumulated depreciation of $ 3.0 million and $ 1.5 million as of December 31, 2020 and December 31, 2019, respectively. During the years ended December 31, 2020 and December 31, 2019, we obtained $ 55.5 million and $ 49.0 million in right-of-use assets, respectively, in exchange for operating lease liabilities, primarily relating to manufacturing equipment. We F-20 Back to top have revised the prior year right-of-use asset in exchange for operating lease liabilities amount to include all noncash operating lease activity. In December 2019, we entered into a 10 year operating lease for a replacement corporate airplane with an ROU asset of $ 11.7 million. During the years ended December 31, 2020 and December 31, 2019, we obtained $ 3.3 million and $ 3.2 million in right-of-use assets, respectively, in exchange for finance lease liabilities. The components of lease expense for the years ended December 31 were as follows: (amounts in thousands) 2020 2019 Operating $ 56,066 $ 54,535 Short term 12,803 11,543 Variable 4,989 3,806 Low value 1,714 1,738 Finance 193 90 Total lease costs $ 75,765 $ 71,712 2020 2019 Weighted average remaining lease terms (years): Operating 6.6 6.7 Finance 3.8 3.7 Weighted average discount rate: Operating 4.2 % 4.7 % Finance 3.5 % 4.4 % Future minimum lease payment obligations under operating and finance leases are as follows: December 31, 2020 (amounts in thousands) Operating Leases (1) Finance Leases Total 2021 $ 53,958 $ 1,950 $ 55,908 2022 47,133 1,529 48,662 2023 39,399 1,416 40,815 2024 30,854 1,107 31,961 2025 24,219 167 24,386 Thereafter 62,856 67 62,923 Total lease payments 258,419 6,236 264,655 Less: Interest 36,609 410 37,019 Present value of lease liability $ 221,810 $ 5,826 $ 227,636 (1) Operating lease payments include $ 8.4 million related to options to extend lease terms that are reasonably certain of being exercised. Note 9. Investments During the first quarter of 2018, we purchased the remaining outstanding shares of a 50 % owned equity method investment and we recognized a gain of $ 20.8 million on the previously held shares. This investment is now eliminated in consolidation. F-21 Back to top The results of operations for the equity method investment as of December 31, 2018 is summarized below: (amounts in thousands) Net sales $ 91,234 Gross profit 18,261 Net income 1,752 Adjustment for profit (loss) in inventory ( 138 ) Net income attributable to Company 738 Sales to affiliates totaled $ 16.5 million, purchases from affiliates totaled $ 1.0 million, and no impairments were recorded in 2018. Note 10. Accrued Payroll and Benefits (amounts in thousands) 2020 2019 Accrued vacation $ 49,902 $ 46,746 Accrued payroll and commissions 29,911 23,854 Accrued bonuses 28,100 11,101 Accrued payroll taxes 26,218 11,372 Other accrued benefits 8,052 8,633 Non-U.S. defined contributions and other accrued benefits 9,559 7,680 Total accrued payroll and benefits $ 151,742 $ 109,386 Accrued payroll taxes relates to provisions included within the CARES Act for the deferral of payroll taxes. Additional information is disclosed within Note 1 - Summary of Significant Accounting Policies within COVID-19. Note 11. Accrued Expenses and Other Current Liabilities (amounts in thousands) 2020 2019 Legal claims provision $ 108,629 $ 79,332 Accrued sales and advertising rebates 87,030 67,250 Current portion of operating lease liability (Note 8) 44,319 45,254 Non-income related taxes 31,436 23,178 Current portion of warranty liability (Note 12) 21,766 21,054 Accrued freight 18,967 10,715 Accrued expenses 15,751 17,278 Deferred revenue 13,453 7,986 Current portion of accrued claim costs relating to self-insurance programs 11,882 12,312 Accrued income taxes payable 11,224 1,999 Current portion of derivative liability (Note 23) 9,778 4,068 Accrued interest payable 3,681 2,126 Current portion of restructuring accrual (Note 20) 1,373 6,051 Total accrued expenses and other current liabilities $ 379,289 $ 298,603 The legal claims provision relates primarily to contingencies associated with the ongoing legal matters disclosed in Note 25 - Commitments and Contingencies . The accrued sales and advertising rebates, accrued interest payable, accrued freight, and non-income related taxes can fluctuate significantly period-over-period due to timing of payments. Note 12. Warranty Liability Warranty terms vary from one year to lifetime on certain window and door components. Warranties are normally limited to servicing or replacing defective components for the original customer. Product defects arising within six months of sale are 22 Back to top classified as manufacturing defects and are not included in the current period expense below. Some warranties are transferable to subsequent owners and are either limited to 10 years from the date of manufacture or require pro-rata payments from the customer. A provision for estimated warranty costs is recorded at the time of sale based on historical experience and is periodically adjusted to reflect actual experience. An analysis of our warranty liability is as follows: (amounts in thousands) 2020 2019 2018 Balance as of January 1 $ 49,716 $ 46,468 $ 46,256 Current period expense 23,906 20,853 21,822 Liabilities assumed due to acquisition — 2,104 1,550 Experience adjustments 3,213 1,890 1,227 Payments ( 25,113 ) ( 21,818 ) ( 23,410 ) Currency translation 574 219 ( 977 ) Balance at period end 52,296 49,716 46,468 Current portion ( 21,766 ) ( 21,054 ) ( 20,529 ) Long-term portion $ 30,530 $ 28,662 $ 25,939 The most significant component of our warranty liability is in the North America segment, which totaled $ 45.6 million at December 31, 2020, after discounting future estimated cash flows at rates between 0.57 % and 4.75 %. Without discounting, the liability would have been higher by approximately $ 2.5 million. Note 13. Long-Term Debt Our long-term debt, net of original issue discount and unamortized debt issuance costs, consisted of the following: December 31, 2020 December 31, 2020 December 31, 2019 (amounts in thousands) Interest Rate Senior Secured Notes and Senior Notes 4.63 % - 6.25 % $ 1,050,000 $ 800,000 Term loans 1.06 % - 2.15 % 588,881 591,153 Finance leases and other financing arrangements 1.25 % - 5.95 % 113,174 108,613 Mortgage notes 1.65 % 29,296 28,175 Installment notes for stock — % — 205 Total Debt 1,781,351 1,528,146 Unamortized debt issuance costs and original issue discounts ( 13,309 ) ( 10,774 ) Current maturities of long-term debt ( 66,702 ) ( 65,846 ) Long-term debt $ 1,701,340 $ 1,451,526 Maturities by year, excluding unamortized debt issuance costs and original issue discounts: 2021 $ 66,702 2022 21,901 2023 58,103 2024 545,172 2025 660,985 Summaries of our significant changes to outstanding debt agreements as of December 31, 2020 are as follows: Senior Secured Notes and Senior Notes In May 2020, we issued $ 250.0 million of Senior Secured Notes bearing interest at 6.25 % and maturing in May 2025 in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act. The proceeds were net of fees and expenses associated with debt issuance, including an underwriting fee of 1.25 %. Interest is payable semiannually, in arrears, each May and November through maturity, beginning November 2020. F-23 Back to top In December 2017, we issued $ 800.0 million of unsecured Senior Notes in two tranches: $ 400.0 million bearing interest at 4.63 % and maturing in December 2025, and $ 400.0 million bearing interest at 4.88 % and maturing in December 2027 in a private placement for resale to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Term Loans U.S. Facility - In December 2017, along with the issuance of the Senior Notes, we re-priced and amended the facility, which resulted in a principal balance of $ 440.0 million. These re-priced term loans were offered at par and bear interest at the further reduced rate of LIBOR (subject to a floor of 0.00 %) plus a margin of 1.75 % to 2.00 %, determined by our corporate credit ratings. This amendment also modified other terms and provisions, including providing for additional covenant flexibility and additional capacity under the facility. In February 2019, we purchased interest rate caps in order to effectively fix a 3.0 % per annum ceiling on the LIBOR component of an aggregate $ 150.0 million of our term loans. The caps became effective March 29, 2019 and expire December 31, 2021. In September 2019, we amended the Term Loan Facility to provide for an incremental aggregate principal amount of $ 125.0 million and used the proceeds primarily to repay $ 115.0 million of outstanding borrowings under the ABL Facility. The proceeds were net of the original issue discount of 0.5 %, or $ 0.6 million, as well as $ 0.6 million in fees and expenses associated with the debt issuance. This amendment requires that approximately $ 1.4 million of the aggregate principal amount be repaid quarterly until the maturity date. There were no other changes to key terms and the facility maintains its original maturity date in December 2024. At December 31, 2020, the outstanding principal balance, net of original issue discount, was $ 549.4 million. In May 2020, we entered into interest rate swap agreements with a weighted average fixed rate of 0.395 % paid against one-month LIBOR floored at 0.00 % with outstanding notional amounts aggregating to $ 370.0 million corresponding to that amount of the debt outstanding under our Term Loan Facility. The interest rate swap agreements are designated as cash flow hedges of a portion of the interest obligations on our Term Loan Facility borrowings and mature in December 2023. See Note 23- Derivative Financial Instruments for additional information on our derivative assets and liabilities. Australia Facility - In June 2019, we reallocated AUD 5.0 million from the term loan commitment to the interchangeable commitment of the Australia Senior Secured Credit Facility. The amended AUD 50.0 million floating rate term loan facility bears interest at a base rate of BBSY plus a margin ranging from 1.00 % to 1.10 %, includes a line fee of 1.25 % on the commitment amount, and matures in February 2023. This facility had an outstanding principal balance of AUD 50.0 million ($ 38.5 million ) as of December 31, 2020. Both the term loan and non-term loan portions of the Australia Senior Secured Credit Facility are secured by guarantees of JWA and its subsidiaries, fixed and floating charges on the assets of JWA group, and mortgages on certain real properties owned by the JWA group. The agreement requires that JWA maintain certain financial ratios, including a minimum consolidated interest coverage ratio and a maximum consolidated debt to EBITDA ratio. The agreement limits dividends and repayments of intercompany loans where the JWA group is the borrower and limits acquisitions without the bank’s consent. Revolving Credit Facilities ABL Facility - In December 2019, we amended the ABL facility, a $ 400 million asset-based loan revolving credit facility maturing in December 2022, which did not have a financial impact. This facility bears interest primarily at LIBOR (subject to a floor of 0.00 %) plus a margin of 1.25 % to 1.75 %, determined by availability. Extensions of credit are limited by a borrowing base calculated based on specified percentages of the value of eligible accounts receivable and inventory, subject to certain reserves and other adjustments. We pay a fee of 0.25 % on the unused portion of the commitments. The ABL Facility has a minimum fixed charge coverage ratio that we are obligated to comply with under certain circumstances. The ABL Facility has various non-financial covenants, including restrictions on liens, indebtedness, dividends, customary representations and warranties, and customary events of defaults and remedies. In March 2020, we drew $ 100.0 million under our ABL Facility as a precautionary measure to ensure funding of our seasonal working capital cash requirements given the significant impact of the COVID-19 pandemic on global financial markets and economies. In May 2020, we utilized a portion of the proceeds received from our issuance of the $ 250.0 million of Senior Secured Notes to repay the outstanding balance on our ABL Facility. In the fourth quarter of 2020, we began to include the accounts receivable and inventory balances of certain recently acquired U.S. businesses in determining our availability, which expanded our borrowing base. As of December 31, 2020, we had no outstanding borrowings, $ 38.5 million in letters of credit and $ 346.0 million available under the ABL Facility. Australia Senior Secured Credit Facility - In June 2019, we amended the Australia Senior Secured Credit Facility, reallocating availability from the Australia Term Loan Facility and collapsing the floating rate revolving loan facility into an AUD 35.0 million interchangeable facility to be used for guarantees, asset financing, and loans of 12 months or less. In F-24 Back to top May 2020, we amended this facility to relax certain financial covenants and provide for a supplemental AUD 30.0 million floating rate revolving loan facility to be used for loans bearing interest at BBSY plus a margin of 1.10 %, and a line fee of 0.90 %, and maturing on June 30, 2021. The facility may be used only if and when the AUD 35.0 million interchangeable facility is fully utilized. As of December 31, 2020, we had AUD 30.0 million ($ 23.1 million) available under this facility. In addition, the AUD 35.0 million interchangeable facility was renewed with relaxed financial maintenance covenants to at least June 30, 2021 and its line fee increased to 0.70 %, compared to a line fee of 0.50 % under the previous amendment. The non-term loan portion of the Australia Senior Secured Credit Facility no longer has a set maturity date but is instead subject to an annual review. As of December 31, 2020, we had AUD 21.6 million ($ 16.6 million) available under this facility. At December 31, 2020, we had combined borrowing availability o f $ 385.7 million under our revolving credit facilities. Mortgage Notes – In December 2007, we entered into thirty-year mortgage notes secured by land and buildings with principal payments which began in 2018. At December 31, 2020, we had DKK 177.4 million ( $ 29.3 million) outstanding under these notes. Finance leases and other financing arrangements – In addition to finance leases, we include insurance premium financing arrangements and loans secured by equipment in this category. At December 31, 2020, we had $ 113.2 million outstanding in this category, with maturities ranging from 2021 to 2028. As of December 31, 2020, we were in compliance with the terms of all of our credit facilities and the indentures governing the Senior Notes and Senior Secured Notes. Note 14. Deferred Credits and Other Liabilities Included in deferred credits and other liabilities is the long-term portion of the following liabilities as of December 31: (amounts in thousands) 2020 2019 Warranty liability (Note 12) $ 30,530 $ 28,662 Uncertain tax positions (Note 15) 21,764 20,234 Workers' compensation claims accrual 16,856 14,604 Accrued payroll taxes 10,427 — Environmental contingencies (Note 25) 8,300 — Other liabilities 2,590 3,190 Long term derivative liability (Note 23) 897 — Restructuring accrual (Note 20) 4 992 Total deferred credits and other liabilities $ 91,368 $ 67,682 Accrued payroll taxes relates to provisions included within the CARES Act for the deferral of payroll taxes. Additional information is disclosed within Note 1 - Summary of Significant Accounting Policies within COVID-19. Note 15. Income Taxes Income (loss) before taxes, equity earnings is comprised of the following for the years ended December 31: (amounts in thousands) 2020 2019 2018 Domestic (loss) income $ ( 8,791 ) $ ( 784 ) $ 192 Foreign income 125,466 120,829 130,919 Total income before taxes, equity earnings $ 116,675 $ 120,045 $ 131,111 Our foreign income is primarily driven by our subsidiaries in Australia, Canada, Germany, and the U.K. The statutory tax rates are 30 %, 27 %, 29 %, and 19 %, respectively. Significant components of the provision for income taxes are as follows for the years ended December 31: F-25 Back to top (amounts in thousands) 2020 2019 2018 Federal $ 3,053 $ 5,037 $ ( 9,760 ) State 756 935 764 Foreign 30,343 29,264 34,742 Current taxes 34,152 35,236 25,746 Federal ( 8,134 ) 11,771 ( 24,445 ) State 68 6,620 ( 12,760 ) Foreign ( 997 ) 3,447 1,401 Deferred taxes ( 9,063 ) 21,838 ( 35,804 ) Total provision (benefit) for income taxes $ 25,089 $ 57,074 $ ( 10,058 ) On December 22, 2017, the Tax Act was enacted in the U.S. The specific provisions of the Tax Act had both direct and indirect impacts on our 2017 and 2018 results and continue to materially affect our financial results as regulations continue to be finalized. As of December 31, 2018, we completed our accounting for the income tax effects of the Tax Act as of the enactment date. As further discussed below, we recognized a tax benefit of $ 40.2 million in 2018 which effectively reduced the net charges recorded at December 31, 2017. These adjustments were accounted for as a component of income tax expense from continuing operations. The specific adjustments recorded were (i) an increase to the tax expense recorded related to the revaluation of our net deferred tax assets from $ 21.1 million to $ 55.3 million resulting in an additional charge to 2018 earnings of $ 34.2 million, (ii) a reduction of the estimate of the one-time deemed repatriation tax from $ 11.3 million to zero resulting in a tax benefit recorded in 2018 earnings of $ 11.3 million, and (iii) a reduction of the additional tax expense recorded related to the premised repatriation of funds from foreign subsidiaries from $ 65.8 million to $ 2.7 million resulting in a tax benefit recorded in 2018 earnings of $ 63.1 million. The Tax Act subjects a U.S. shareholder to current U.S. tax on GILTI earned by certain foreign subsidiaries. GILTI had a material effect on our effective tax rate in 2020, 2019, and 2018 and will likely continue to have such an effect in future periods. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that we are permitted to make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to such income in the year the tax is incurred. We have elected to account for the impact of GILTI in the period in which it is incurred. During 2020, the US Treasury issued final regulations governing the treatment of GILTI under IRC§ 951A. Included in these final regulations was a provision to allow taxpayers to make an annual election to exclude certain foreign income which is subject to a threshold level of tax in their respective foreign jurisdiction from US tax as GILTI (the High Tax Exclusion or “HTE election”). While this HTE election had been outlined in the proposed regulations issued in 2019, the final regulations allowed the election to be applied retroactively to tax years 2018 and 2019. By making this election as well as finalizing other related planning steps, we were able to effectively restore certain tax attributes recorded as deferred tax assets consisting primarily of U.S. net operating losses originally impacted by GILTI resulting in net tax benefit of $ 10.8 million. The CARES Act, among other things, increased the limitation on the deductibility of business interest to 50% of "adjusted taxable income" for taxable years beginning after December 31, 2018 and before January 1, 2021 and allows taxpayers to elect to compute the limitation on business interest expense for 2020 by using its "adjusted taxable income" from 2019. The CARES Act also suspends the 80% limitation on the deduction of net operating losses for taxable years beginning before January 1, 2021 and enables taxpayers to carry back net operating losses generated in a taxable year beginning after December 31, 2017 and before January 1, 2021 to each of the five preceding taxable years. The CARES Act also contains provisions relating to refundable payroll tax credits, deferment of employer side social security payments, alternative minimum tax credit refunds, and technical corrections, among others. We have considered the impacts of these provisions with respect to certain deferrals of tax and other payments, as well as the enhanced depreciation provisions for qualified improvement property and certain elections relating to interest expense limitations. The significant components of the deferred income tax benefit attributed to income from continuing operations for the year ended December 31, 2020, were the net increases in deferred tax assets related to the HTE election explained above. The significant components of deferred income tax expense attributed to income from continuing operations for the year ended December 31, 2019, were increases to the valuation allowances for deferred tax assets, primarily in the U.S. The significant components of the deferred income tax benefit attributed to income from continuing operations for the year ended December 31, 2018, were the adjustments related to the provisional amounts of the income tax effects of the Tax Act and the additional release of valuation allowances, primarily in the U.S. F-26 Back to top Reconciliation of the U.S. federal statutory income tax rate to our effective tax rate is as follows for the years ended December 31: 2020 2019 2018 (amounts in thousands) Amount % Amount % Amount % Statutory rate $ 24,502 21.0 $ 25,209 21.0 $ 27,515 21.0 State income tax, net of federal benefit ( 444 ) ( 0.4 ) 3,180 2.6 ( 1,207 ) ( 0.9 ) Foreign source dividends and deemed inclusions 11,170 9.6 10,797 9.0 16,295 12.4 Valuation allowance ( 17,489 ) ( 15.0 ) 10,144 8.4 ( 85,876 ) ( 65.5 ) Nondeductible expenses 1,653 1.4 1,276 1.1 1,097 0.8 Acquisition of ABS — — — — ( 10,189 ) ( 7.8 ) Equity based compensation 2,185 1.9 2,526 2.1 54 — Foreign tax rate differential 1,613 1.4 1,964 1.6 3,557 2.7 Tax rate differences and credits 26,001 22.3 ( 1,867 ) ( 1.5 ) 96,231 73.4 Uncertain tax positions ( 2,685 ) ( 2.3 ) 1,604 1.3 5,443 4.2 Termination of hedge accounting — — 4,533 3.8 — — U.S. Tax Reform ( 21,797 ) ( 18.7 ) — — ( 62,836 ) ( 47.9 ) Disposition of subsidiary — — ( 2,384 ) ( 2.0 ) — — Other 380 0.3 92 0.1 ( 142 ) ( 0.1 ) Effective rate for continuing operations $ 25,089 21.5 % $ 57,074 47.5 % $ ( 10,058 ) ( 7.7 )% In 2020, we recorded tax benefit of $ 10.8 million related to the HTE election and related planning. Specifically, this benefit consisted of 1) benefits directly related to the HTE election of $ 21.8 million disclosed as U.S. Tax Reform above, 2) reduction of the U.S. valuation allowance in the amount of $ 20.1 million disclosed as a component of the Valuation Allowance line above, partially offset by 3) tax expense related to a reduction in U.S. foreign tax credit carryforwards totaling $ 28.0 million, and 4) additional state tax expense related to the adjustments above totaling $ 3.1 million. In 2019, we recorded tax expense of $ 4.5 million upon the termination of hedge accounting to relieve the disproportionate tax effect previously in Accumulated Other Comprehensive Income. The tax benefit arising from the disposition of our subsidiary, CMD, is $ 2.4 million and included in the “Disposition of subsidiary” line in the reconciliation of tax expense table above. In 2018, we recorded a tax benefit of $ 40.2 million to revise the provisional estimates recorded under the Tax Act. The “U.S. Tax Reform” line in the reconciliation of tax expense above totals $ 62.8 million and is comprised of tax benefit of $ 11.3 million for the reduction of the estimated one-time deemed repatriation tax, tax benefit of $ 85.7 million attributed to the restoration of the Company’s net operating losses, offset by tax expense of $ 34.2 million for the revaluation of our deferred tax assets. The remaining tax expense is comprised of: additional tax expense of $ 97.6 million for the reduction of foreign tax credits included in “Tax rate differences and credits”, offset by tax benefit of $ 75.0 million included above as “Valuation allowance”. In 2018, we recorded a benefit of $ 10.2 million related to certain tax effects of ABS transitioning to a wholly-owned subsidiary and the tax effects of the gain recognized on the acquisition. Deferred income taxes are provided for the temporary differences between the financial reporting basis and tax basis of our assets, liabilities, and operating loss carryforwards. Significant deferred tax assets and liabilities are as follows as of December 31: F-27 Back to top (amounts in thousands) 2020 2019 Net operating loss and tax credit carryforwards $ 180,203 $ 199,889 Operating lease liabilities 58,405 54,448 Employee benefits and compensation 53,135 47,760 Accrued liabilities and other 52,057 38,494 Inventory 6,855 5,842 Investments and marketable securities 2,392 2,768 Allowance for doubtful accounts and notes receivable 3,887 1,641 Gross deferred tax assets 356,934 350,842 Valuation allowance ( 51,847 ) ( 67,664 ) Deferred tax assets 305,087 283,178 Depreciation and amortization ( 56,844 ) ( 55,994 ) Operating lease assets ( 56,370 ) ( 52,635 ) Deferred tax liabilities ( 113,214 ) ( 108,629 ) Net deferred tax assets $ 191,873 $ 174,549 Balance sheet presentation: Long-term assets $ 199,194 $ 183,837 Long-term liabilities ( 7,321 ) ( 9,288 ) Net deferred tax assets $ 191,873 $ 174,549 Valuation Allowance – The realization of deferred tax assets is based on historical tax positions and estimates of future taxable income. We evaluate both the positive and negative evidence that we believe is relevant in assessing whether we will realize the deferred tax assets. A valuation allowance is recorded when it is more likely than not that some portion of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences are deductible. We consider the scheduled reversal of deferred tax liabilities (including the effect of available carryback and carryforward periods), and projected taxable income in making this assessment. To fully utilize the NOL and tax credits carryforwards, we will need to generate sufficient future taxable income in each respective jurisdiction before the expiration of the deferred tax assets governed by the applicable tax code. Our valuation allowance was $ 51.8 million as of December 31, 2020, which represents a decrease of $ 15.8 million from December 31, 2019 and was allocated to continuing operations. The decrease in the valuation allowance primarily relates to a decrease of $ 20.1 million for U.S. foreign tax credits, partially offset by an increase of $ 1.1 million for state net operating losses ("NOL") and credits due to the impact of forecasted taxable income in the carry-forward period, an increase of $ 1.5 million for changes in current year earnings for certain other subsidiaries, and foreign exchange. Our valuation allowance was $ 67.7 million as of December 31, 2019, which represents an increase of $ 10.1 million from December 31, 2018 and was allocated to continuing operations. The increase in the valuation allowance primarily relates to an increase of $ 3.9 million due to expiring foreign tax credits, an increase of $ 3.6 million for state net operating losses ("NOL") and credits due to the impact of forecasted taxable income in the carry-forward period, an increase of $ 1.8 million for our Chilean subsidiary, and other changes to existing valuation allowances totaling approximately $ 0.8 million for changes in current year earnings for certain other subsidiaries and foreign exchange. The following is the activity in our valuation allowance: (amounts in thousands) 2020 2019 2018 Balance as of January 1, $ ( 67,664 ) $ ( 57,571 ) $ ( 144,701 ) Valuation allowances established — ( 2,001 ) ( 260 ) Changes to existing valuation allowances ( 2,622 ) ( 8,043 ) 85,828 Release of valuation allowances 20,111 — — Currency translation ( 1,672 ) ( 49 ) 1,562 Balance as of December 31, $ ( 51,847 ) $ ( 67,664 ) $ ( 57,571 ) F-28 Back to top Loss Carryforwards – We reduced our income tax payments by utilizing NOL carryforwards of $ 97.7 million in 2020, $ 208.0 million in 2019 and $ 163.7 million in 2018. The 2020 utilization is offset by the restoration of certain NOL’s totaling approximately $ 203.4 million primarily as a result of the HTE election and related planning as outlined above and differences arising from tax return filings. At December 31, 2020, our federal, state and foreign NOL carryforwards totaled $ 1,428.9 million, of which $ 94.1 million does not expire and the remainder expires as follows: (amounts in thousands) 2021 $ 15,323 2022 16,079 2023 29,905 2024 60,070 Thereafter 1,213,430 Total loss carryforwards $ 1,334,807 We utilized approximately $ 146.2 million of NOL carryforwards in the U.S. in 2018; however, the deferred tax asset related to these NOLs actually increased due to the restoration of certain loss carryforwards upon the finalization of the accounting for effects of the Tax Act. At December 31, 2020, our capital loss carryforwards totaled $ 22.4 million, which are all foreign and do not expire. Section 382 Net Operating Loss Limitation – On November 20, 2017 and October 3, 2011, we had a change in ownership pursuant to Section 382 of the Code. Under this provision of the Code, the utilization of any of our NOL or tax credit carryforwards, incurred prior to the date of ownership change, may be limited. Analyses of the respective limits for each ownership change indicated no reason to believe the annual limitation would impair our ability to utilize our NOL carryforward or net tax credit carryforwards as provided. We have concluded the limitation under Section 382 should not prevent us from fully utilizing these historical NOLs. Tax Credit Carryforwards – Our tax credit carryforwards expire as follows: (amounts in thousands) EZ Credit R & E credit Foreign Tax Credit Work Opportunity & Welfare to Work Credit State Investment Tax Credits Tip Credit TOTAL 2021 $ — $ 194 $ — $ — $ 24 $ — $ 218 2022 — 173 1,061 — 11 — 1,245 2023 — 14 5,735 — 1,687 — 7,436 2024 — 147 3,514 — 87 — 3,748 2025 — 164 4,863 — 4 — 5,031 Thereafter 68 11,277 3,108 7,326 66 102 21,947 $ 68 $ 11,969 $ 18,281 $ 7,326 $ 1,879 $ 102 $ 39,625 Earnings of Foreign Subsidiaries – Historically, we have not provided for U.S. tax impacts of any unremitted earnings of its foreign subsidiaries. The Tax Act made significant changes to the taxation of undistributed foreign earnings, including that all previously untaxed earnings and profits of our controlled foreign corporations be subjected to a one-time deemed repatriation tax in 2017. In its final analysis of the effects of the Tax Act, the Company provided for U.S. income taxes on approximately $ 121.0 million of earnings of our foreign subsidiaries deemed to be repatriated. Beginning in 2018, the Tax Act provides for a 100% dividends received deduction for untaxed earnings received from most foreign corporations. The repatriation tax substantially eliminated the basis difference that existed previously for purposes of ASC Topic 740. Although dividend income is now generally exempt from U.S. federal income tax in the hands of U.S. corporate shareholders, the guidance of ASC 740-30 still applies to account for the tax consequences of outside basis differences and other tax impacts of investments in non-U.S. subsidiaries. Although likely not subject to U.S. federal taxation, there are limited other taxes that could continue to apply such as foreign income and withholding as well as certain state taxes. The Company routinely evaluates its indefinite reversal assertion on the outside basis difference in non-U.S. subsidiaries that allows the nonrecognition of associated deferred taxes. As of December 31, 2020, the Company has not recorded deferred tax liabilities or assets for the outside basis difference in any foreign subsidiary. We have concluded that a majority of the unremitted earnings of our foreign subsidiaries are indefinitely reinvested, with certain minor exceptions that do not have an associated tax cost. We hold a combined book-over-tax outside basis difference of $ 449.4 million in F-29 Back to top our investment in foreign subsidiaries and may incur up to $ 22.0 million of local country income and withholding taxes in case of distribution of unremitted earnings. Dual-Rate Jurisdiction – Estonia and Latvia tax the corporate profits of resident corporations at different rates depending upon whether the profits are distributed. The undistributed profits of resident corporations are exempt from taxation while any distributed profits are subject to a 20% corporate income tax rate. The liability for the tax on distributed profits is recorded as an income tax expense in the period in which a dividend is declared. The amount of retained earnings at December 31, 2020 and 2019 for our Estonia subsidiary, which, if distributed, would be subject to this tax was $ 74.8 million and $ 69.2 million, respectively. The amount of retained earnings at December 31, 2020 and 2019 for our Latvian subsidiary which, if distributed, would be subject to a 20% corporate income tax rate is $ 24.3 million and $ 21.4 million, respectively. Tax Payments and Balances – We made tax payments of $ 26.8 million in 2020, $ 32.1 million in 2019, and $ 49.7 million in 2018 primarily for foreign liabilities. We received tax refunds of $ 6.4 million in 2020, $ 5.6 million in 2019, and $ 3.3 million in 2018 and the primary jurisdictions for which refunds were received in the current year are Australia, Austria, and the U.S. We recorded global receivables for refunds of $ 4.1 million at December 31, 2020 and $ 9.0 million at December 31, 2019, which is included in other current assets on the accompanying consolidated balance sheets. We recorded foreign payables for taxes of $ 11.2 million at December 31, 2020 and $ 2.0 million at December 31, 2019, which is included in accrued income taxes payable in the accompanying consolidated balance sheets. We do not have any non-current taxes receivable or payable as of December 31, 2020. Accounting for Uncertain Tax Positions – A reconciliation of the beginning and ending amounts of unrecognized tax benefits excluding interest and penalties is as follows: (amounts in thousands) 2020 2019 2018 Balance as of January 1, $ 16,205 $ 15,500 $ 12,616 Increase for tax positions taken during the prior period 1,105 1,383 3,397 Decrease for settlements with taxing authorities ( 34 ) ( 426 ) ( 157 ) (Decrease) increase for tax positions taken during the current period — ( 38 ) 300 Decrease due to statute expiration ( 1,569 ) — — Other decreases — — ( 92 ) Currency translation 1,288 ( 214 ) ( 564 ) Balance at period end - unrecognized tax benefit 16,995 16,205 15,500 Accrued interest and penalties 5,567 5,671 3,677 $ 22,562 $ 21,876 $ 19,177 The prior period information in the table above has been reclassified to conform with current period presentation. Unrecognized tax benefits were $ 17.0 million, $ 16.2 million, and $ 15.5 million at December 31, 2020, 2019, and 2018, respectively. The changes during the current period relate to the establishment of an uncertain tax positions for accounting method changes and currency translation during the period, offset by the release due to the expiration of applicable statutes of limitation. Interest and penalties related to uncertain tax positions are reported as a component of tax expense and included in the total uncertain tax position balance within deferred credits and other liabilities in the accompanying consolidated balance sheets. A significant portion of our uncertain tax positions relates to the implementation of the Capacity Management Agreements within the European business (“CMA”) which took place in January 1, 2015. The CMA changed the manner in which we manage our manufacturing capacity and the distribution and sale of our products in Europe. The reorganization of our Europe segment was part of our review of our operations structure and management that began in 2014 and resulted in changes in taxable income for certain of our subsidiaries within that reportable segment. Effective January 1, 2015, our subsidiary JELD-WEN U.K. Limited (the “Managing Subsidiary”) entered into an agreement (the “Managing Agreement”) with several of our other subsidiaries in Europe (collectively, the “Operating Subsidiaries”). The Managing Agreement provides that the Managing Subsidiary will receive a fee from the Operating Subsidiaries in exchange for performing various management and decision-making services for the Operating Subsidiaries. As a result, the Managing Agreement shifts certain risks (and correlated benefits) from the Operating Subsidiaries to the Managing Subsidiary. In exchange, the Managing Subsidiary guarantees a specific return to each Operating Subsidiary on a before interest and taxes basis, commensurate with such Operating Subsidiary’s functions and risk profile. While there is no impact on the consolidated reporting of the Europe segment due to the Managing Agreement, there may be changes in taxable income of the Operating Subsidiaries. Therefore, we have reserved for a potential loss resulting from such uncertainty. F-30 Back to top Included in the balance of unrecognized tax benefits as of December 31, 2020, 2019, and 2018, are $ 14.5 million, $ 13.8 million, and $ 14.2 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. We cannot reasonably estimate the conclusion of certain non-US income tax examinations and its outcome at this time. We operate in multiple foreign tax jurisdictions and are generally open to examination for tax years 2015 and forward. In the U.S., we are open to examination at the federal level for tax years 2013 and forward and at state and local jurisdictions for tax years 2015 and forward. We are under examination in Austria, the Czech Republic, Denmark, Germany, Hong Kong, Hungary, Indonesia, Latvia, Switzerland, and the United Kingdom for tax years 2011 through 2017, and generally remain open to examination for other non-US jurisdictions for tax years 2015 forward. Note 16. Segment Information We report our segment information in the same way management internally organizes the business in assessing performance and making decisions regarding allocation of resources in accordance with ASC 280-10- Segment Reporting . We determined that we have three reportable segments, organized and managed principally by geographic region. Our reportable segments are North America, Europe, and Australasia. We report all other business activities in Corporate and unallocated costs. Factors considered in determining the three reportable segments include the nature of business activities, the management structure accountable directly to the CODM, the discrete financial information available and the information regularly reviewed by the CODM. Management reviews net revenues and Adjusted EBITDA to evaluate segment performance and allocate resources. We define Adjusted EBITDA as net income (loss), adjusted for the following items: loss from discontinued operations, net of tax; equity earnings of non-consolidated entities; income tax (benefit) expense; depreciation and amortization; interest expense, net; impairment and restructuring charges; gain on previously held shares of equity investment; (gain) loss on sale of property and equipment; share-based compensation expense; non-cash foreign exchange transaction/translation (income) loss; other items; other non-cash items; and costs related to debt restructuring and debt refinancing. F-31 Back to top The following tables set forth certain information relating to our segments’ operations: (amounts in thousands) North America Europe Australasia Total Operating Segments Corporate and Unallocated Costs Total Consolidated Year Ended December 31, 2020 Total net revenues $ 2,529,960 $ 1,189,974 $ 529,882 $ 4,249,816 $ — $ 4,249,816 Intersegment net revenues ( 967 ) ( 2,197 ) ( 10,975 ) ( 14,139 ) — ( 14,139 ) Net revenues from external customers $ 2,528,993 $ 1,187,777 $ 518,907 $ 4,235,677 $ — $ 4,235,677 Depreciation and amortization $ 77,361 $ 29,712 $ 19,341 $ 126,414 $ 8,209 $ 134,623 Impairment and restructuring charges 3,164 3,682 320 7,166 3,303 10,469 Adjusted EBITDA 315,952 136,363 62,449 514,764 ( 68,350 ) 446,414 Capital expenditures 34,815 32,353 10,207 77,375 19,521 96,896 Segment assets $ 1,498,778 $ 1,152,251 $ 598,411 $ 3,249,440 $ 715,245 $ 3,964,685 Year Ended December 31, 2019 Total net revenues $ 2,535,810 $ 1,178,589 $ 585,341 $ 4,299,740 $ — $ 4,299,740 Intersegment net revenues ( 1,474 ) ( 148 ) ( 8,357 ) ( 9,979 ) — ( 9,979 ) Net revenues from external customers $ 2,534,336 $ 1,178,441 $ 576,984 $ 4,289,761 $ — $ 4,289,761 Depreciation and amortization $ 81,905 $ 28,944 $ 17,787 $ 128,636 $ 5,333 $ 133,969 Impairment and restructuring charges 7,301 6,182 7,111 20,594 957 21,551 Adjusted EBITDA 267,335 116,193 74,484 458,012 ( 42,974 ) 415,038 Capital expenditures 46,799 23,611 32,619 103,029 33,163 136,192 Segment assets $ 1,530,135 $ 974,076 $ 510,845 $ 3,015,056 $ 366,276 $ 3,381,332 Year Ended December 31, 2018 Total net revenues $ 2,462,914 $ 1,216,204 $ 681,160 $ 4,360,278 $ — $ 4,360,278 Intersegment net revenues ( 1,281 ) ( 905 ) ( 11,245 ) ( 13,431 ) — ( 13,431 ) Net revenues from external customers $ 2,461,633 $ 1,215,299 $ 669,915 $ 4,346,847 $ — $ 4,346,847 Depreciation and amortization $ 71,945 $ 31,132 $ 17,730 $ 120,807 $ 4,293 $ 125,100 Impairment and restructuring charges 4,933 6,111 7,170 18,214 ( 886 ) 17,328 Adjusted EBITDA 279,526 122,810 90,885 493,221 ( 34,003 ) 459,218 Capital expenditures 57,805 25,369 12,146 95,320 23,380 118,700 Segment assets $ 1,355,101 $ 898,901 $ 482,493 $ 2,736,495 $ 311,030 $ 3,047,525 F-32 Back to top Reconciliations of net income to Adjusted EBITDA are as follows: Year Ended (amounts in thousands) 2020 2019 2018 Net income $ 91,586 $ 62,971 $ 141,907 Equity earnings of non-consolidated entities — — ( 738 ) Income tax expense (benefit) 25,089 57,074 ( 10,058 ) Depreciation and amortization 134,623 133,969 125,100 Interest expense, net 74,800 71,778 70,818 Impairment and restructuring charges (1) 10,732 22,748 17,328 Gain on previously held shares of equity investment — — ( 20,767 ) (Gain) loss on sale of property and equipment ( 4,153 ) 1,745 144 Share-based compensation expense 16,399 13,315 15,052 Non-cash foreign exchange transaction/translation loss (income) 12,904 3,438 ( 1,267 ) Other items (2) 84,282 47,266 117,546 Costs relating to debt restructuring and debt refinancing 170 — 294 Other non-cash items (3) ( 18 ) 734 3,859 Adjusted EBITDA $ 446,414 $ 415,038 $ 459,218 (1) Impairment and restructuring charges consist of (i) impairment and restructuring charges that are included in our accompanying audited consolidated statements of operations plus (ii) additional charges relating to inventory and/or manufacturing of our products that are included in cost of sales in our accompanying audited consolidated statements of operations $ 263 , $ 1,197 , and $ 0 for the years ended December 31, 2020, 2019, and 2018, respectively. For further explanation of impairment and restructuring charges that are included in our consolidated statements of operations, see Note 20 - Impairment and Restructuring Charges in our financial statements. (2) Other non-recurring items not core to ongoing business activity include: (i) i n the year ended December 31, 2020 (1) $ 67,130 in legal costs and accruals and professional expenses relating primarily to litigation, (2) $ 7,467 in expenses related to environmental matters, (3) $ 6,724 in facility closure, consolidation, and startup costs , (4) $ 1,235 one-time lease termination charges, and (5) $ 1,142 of realized losses on hedges of intercompany notes; (ii) i n the year ended December 31, 2019, (1) $ 19,147 in facility closure, consolidation, and startup costs, (2) $ 14,963 in acquisition and integration costs including $ 7,077 related to purchase price structured by the former owners as retention payments for key employees of a recent acquisition, (3) $ 12,860 in legal costs and professional expenses relating primarily to litigation, (4) ($ 3,053 ) of realized gains on hedges of intercompany notes, (5) $ 1,893 in miscellaneous costs, (6) $ 731 in equity compensation to employees in our Australasia region, and (7) $ 725 in costs related to departure of former executives; (iii) i n the year ended December 31, 2018, (1) $ 76,500 in litigation contingency accruals, (2) $ 26,529 in legal costs and professional expenses relating primarily to litigation, (3) $ 10,324 in acquisition and integration costs, (4) ($ 5,396 ) of realized gains on hedges of intercompany notes, (5) $ 3,856 in costs related to the departure of former executives, (6) $ 2,901 in entity consolidation and reorganization costs , (7) $ 2,347 in miscellaneous costs, and (8) $ 485 in stock compensation payroll taxes. (3) Other non-cash items include $ 734 and $ 3,740 for inventory adjustments in the years ended December 31, 2019 and December 31, 2018, respectively. The prior period information has been reclassified to conform with current period presentation. Net revenues by locality are as follows for the years ended December 31,: (amounts in thousands) 2020 2019 2018 Net revenues by location of external customer Canada $ 188,041 $ 187,095 $ 201,134 U.S. 2,322,079 2,327,186 2,228,748 South America (including Mexico) 22,323 29,637 34,422 Europe 1,212,810 1,195,207 1,239,732 Australia 485,852 544,140 634,976 Africa and other 4,572 6,496 7,835 Total $ 4,235,677 $ 4,289,761 $ 4,346,847 Geographic information regarding property, plant, and equipment which exceed 10% of consolidated property, plant, and equipment used in continuing operations is as follows for the years ended December 31,: F-33 Back to top (amounts in thousands) 2020 2019 2018 U.S. $ 469,092 $ 485,278 $ 459,506 Other 27,722 28,096 24,911 North America 496,814 513,374 484,417 Europe 203,424 181,390 181,038 Australia 118,778 115,335 113,922 Other 32,944 28,786 10,297 Australasia 151,722 144,121 124,219 Corporate (U.S.) 20,625 25,490 53,729 Total property and equipment, net $ 872,585 $ 864,375 $ 843,403 Note 17. Capital Stock Preferred Stock - Our Board of Directors is authorized to issue Preferred Stock from time to time in one or more series and with such rights, privileges, and preferences as the Board of Directors shall from time to time determine. We have not issued any shares of Preferred Stock. Common Stock - Common Stock includes the basis of shares outstanding plus amounts recorded as additional paid-in capital. Shares outstanding exclude the shares issued to the Employee Benefit Trust that are considered similar to treasury shares and total 193,941 shares at both December 31, 2020 and December 31, 2019 with a total original issuance value of $ 12.4 million. We record share repurchases on their trade date and reduce shareholders’ equity and increase accounts payable. Repurchased shares are retired, and the excess of the repurchase price over the par value of the shares is charged to retained earnings. In April 2018, our Board of Directors authorized the repurchase of up to $ 250.0 million of our Common Stock through December 2019. On November 4, 2019, the Board of Directors authorized an increase to the remaining authorization under the share repurchase program to a total of $ 175.0 million with no expiration date. As of December 31, 2020, $ 170.0 million was remaining under the repurchase authorization. During the year ended December 31, 2020, December 31, 2019, and December 31, 2018, we repurchased 265,589 , 1,192,419 , and 5,287,964 shares of our Common Stock, respectively, at an average price per share of $ 18.83 , $ 16.77 , and $ 23.64 , respectively. Note 18. Earnings Per Share The basic and diluted income per share calculations were determined based on the following share data : 2020 2019 2018 Weighted average outstanding shares of Common Stock basic 100,633,392 100,618,105 104,530,572 Restricted stock units, performance share units, and options to purchase Common Stock 1,048,589 846,220 1,830,085 Weighted average outstanding shares of Common Stock diluted 101,681,981 101,464,325 106,360,657 F-34 Back to top The following table provides the securities that could potentially dilute basic earnings per share in the future but were not included in the computation of diluted income per share as their inclusion would be anti-dilutive: 2020 2019 2018 Common Stock options 1,721,921 1,657,437 1,019,930 Restricted stock units 367,461 50,113 87,720 Performance share units 249,084 9,704 84,809 Note 19. Stock Compensation Prior to the IPO, our Amended and Restated Stock Incentive Plan, (the “Stock Incentive Plan”), allowed us to offer common options, B-1 common options and common RSUs for the benefit of our employees, affiliate employees and key non-employees. Under the Stock Incentive Plan, we could award up to an aggregate of 2,761,000 common shares and 4,732,200 B-1 common shares. The Stock Incentive Plan provided for accelerated vesting of awards upon the occurrence of certain events. Through December 31, 2016, we issued 5,156,976 options and 385,220 RSUs under the Stock Incentive Plan. In connection with our IPO, the Board adopted, and our shareholders approved, the JELD-WEN Holding, Inc. 2017 Omnibus Equity Plan, (the “Omnibus Equity Plan”). Under the Omnibus Equity Plan, equity awards may be made in respect of 7,500,000 shares of our Common Stock and may be granted in the form of options, restricted stock, RSUs, stock appreciation rights, dividend equivalent rights, share awards, and performance-based awards (including performance share units and performance-based restricted stock). Share-based compensation expense included in SG&A expenses totaled $ 16.4 million, $ 13.3 million, and $ 15.1 million in 2020, 2019, and 2018, respectively. There were no material related tax benefits for the years ended December 31, 2020, December 31, 2019, and December 31, 2018. As of December 31, 2020, there was $ 24.4 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements. This cost is expected to be recognized over the remaining weighted-average vesting period of 1.8 years. Stock Options – Generally, stock option awards vest ratably each year on the anniversary date over a 3 to 5 -year period, have an exercise term of 10 years, and any vested options must be exercised within 90 days of the employee leaving the Company. The compensation cost of option awards is charged to expense based upon the graded-vesting method over the vesting periods applicable to the option awards. The graded-vesting method provides for vesting of portions of the overall awards at interim dates and results in greater expense in earlier years than the straight-line method. When options are granted, we calculate the fair value of common and Class B-1 Common Stock options using multiple Black-Scholes option valuation models. Expected volatilities are based upon a selection of public guideline companies. The risk-free rate was based upon U.S. Treasury rates. Key assumptions used in the valuation models were as follows for the years ended December 31: 2020 2019 2018 Expected volatility 37.52 % - 37.66 % 37.90 % - 40.02 % 34.81 % - 39.68 % Expected dividend yield rate 0.00 % 0.00 % 0.00 % Weighted average term (in years) 5.5 - 6.5 5.5 - 6.5 5.5 - 6.5 Weighted average grant date fair value $ 9.45 $ 8.32 $ 12.98 Risk free rate 1.39 % - 1.44 % 1.79 % - 2.50 % 2.04 % - 2.96 % F-35 Back to top The following table represents stock option activity: Shares Weighted Average Exercise Price Per Share Aggregate Intrinsic Value (millions) Weighted Average Remaining Contract Term in Years Outstanding as of January 1, 2018 4,926,668 $ 14.56 Granted 838,912 32.16 Exercised ( 1,548,484 ) 13.79 Forfeited ( 884,391 ) 18.80 Balance as of December 31, 2018 3,332,705 $ 18.22 Granted 443,170 20.94 Exercised ( 641,706 ) 10.56 Forfeited ( 301,370 ) 26.07 Balance as of December 31, 2019 2,832,799 $ 19.55 Granted 407,607 24.30 Exercised ( 335,553 ) 12.27 Forfeited ( 273,022 ) 27.53 Balance as of December 31, 2020 2,631,831 $ 20.41 $ 16.5 5.6 Exercisable as of December 31, 2020 1,781,797 $ 18.47 $ 14.7 4.3 RSUs – RSUs are subject to the continued service of the recipient through the vesting date, which is generally 1 to 5 years from issuance. Once vested, the recipient will receive one share of Common Stock for each restricted stock unit. The grant-date fair value per share used for RSUs was determined using the closing price of our Common Stock on the NYSE on the date of the grant. We apply this grant-date fair value per share to the total number of shares that we anticipate will fully vest and amortize the fair value to compensation expense over the vesting period using the straight-line method. In February 2018, we granted 314,267 RSUs to our then Chairman of the Board and interim CEO which vested daily through the first anniversary of the date of grant, subject to continuous employment. On June 30, 2018, 208,364 RSUs were forfeited at the end of his interim service. The following table represents RSU activity: Shares Weighted Average Grant-Date Fair Value Per Share Outstanding as of January 1, 2018 562,368 $ 27.51 Granted 766,927 29.14 Vested ( 124,560 ) 25.21 Forfeited ( 530,867 ) 29.69 Balance as of December 31, 2018 673,868 $ 28.07 Granted 952,801 20.07 Vested ( 232,666 ) 30.08 Forfeited ( 154,498 ) 23.38 Balance as of December 31, 2019 1,239,505 $ 22.13 Granted 865,091 19.62 Vested ( 138,245 ) 26.22 Forfeited ( 179,554 ) 23.63 Balance as of December 31, 2020 1,786,797 $ 21.43 F-36 Back to top PSUs – In 2018, 2019, and 2020, we issued PSUs pursuant to the Omnibus Equity Plan. The PSUs are subject to continued employment of the recipient through the vesting date, which is on the third anniversary of the grant. Once vested, the recipient will receive one share of Common Stock for each vested PSU. The number of PSUs that vest is determined by a payout factor consisting of equally weighted performance measures of Adjusted EBITDA and free cash flow, each as reported over the applicable three year performance period and is adjusted based upon a market condition measured by our relative total shareholder return (“TSR”) over the applicable three year performance period as compared to the TSR of the Russell 3000 index. The fair value of the award is estimated using a Monte Carlo simulation approach in a risk-neutral framework to model future stock price movements based on historical volatility, risk free rates of return, and correlation matrix. The following table represents PSU activity for the awarded shares at target performance measures: Shares Weighted Average Grant-Date Fair Value Per Share Outstanding as of January 1, 2018 — $ — Granted 193,763 31.60 Forfeited ( 19,093 ) 33.31 Balance as of December 31, 2018 174,670 $ 31.41 Granted 401,935 22.21 Forfeited ( 65,832 ) 25.24 Balance as of December 31, 2019 510,773 $ 24.97 Granted 311,275 25.50 Forfeited ( 77,585 ) 25.96 Balance as of December 31, 2020 744,463 $ 25.09 Note 20. Impairment and Restructuring Charges During 2020, 2019, and 2018, we engaged in restructuring activities intended to improve productivity, operating margins, and working capital levels. Restructuring costs primarily relate to workforce reductions, repositioning of management structure, and costs associated with plant consolidations and closures. Asset impairment charges were recorded in addition to our restructuring costs. In the year ended December 31, 2020, impairment charges primarily related to capitalized costs of certain ERP modules due to delays in implementation and uncertainty of their future use. In the year ended December 31, 2019, impairment charges were primarily related to ROU assets and property and equipment held by operations impacted by restructuring. During 2018, lease costs were recorded within other exit costs in the tales below in accordance with effective restructuring and leasing guidance during the time period. F-37 Back to top (amounts in thousands) North America Europe Australasia Corporate and Unallocated Costs Total Consolidated Year Ended December 31, 2020 Severance costs $ 2,057 $ 2,503 $ 564 $ ( 10 ) $ 5,114 Other exit costs ( 1 ) 235 ( 370 ) ( 46 ) ( 182 ) Total restructuring costs 2,056 2,738 194 ( 56 ) 4,932 Impairments 1,108 944 126 3,359 5,537 Total impairment and restructuring charges $ 3,164 $ 3,682 $ 320 $ 3,303 $ 10,469 Year Ended December 31, 2019 Severance costs $ 3,595 $ 5,391 $ 3,542 $ 1,012 $ 13,540 Other exit costs ( 220 ) 634 1,027 ( 55 ) 1,386 Total restructuring costs 3,375 6,025 4,569 957 14,926 Impairments 3,926 157 2,542 — 6,625 Total impairment and restructuring charges $ 7,301 $ 6,182 $ 7,111 $ 957 $ 21,551 Year Ended December 31, 2018 Severance costs $ 2,779 $ 5,877 $ 2,884 $ 226 $ 11,766 Other exit costs 1,460 256 4,286 ( 1,670 ) 4,332 Total restructuring costs 4,239 6,133 7,170 ( 1,444 ) 16,098 Impairments 694 ( 22 ) — 558 1,230 Total impairment and restructuring charges $ 4,933 $ 6,111 $ 7,170 $ ( 886 ) $ 17,328 The following is a summary of the restructuring accruals recorded and charges incurred: (amounts in thousands) Beginning Accrual Balance Additions Charged to Expense Payments or Utilization Ending Accrual Balance December 31, 2020 Severance costs $ 5,314 $ 5,114 $ ( 9,096 ) $ 1,332 Other exit costs 1,729 ( 182 ) ( 1,502 ) 45 Total $ 7,043 $ 4,932 $ ( 10,598 ) $ 1,377 December 31, 2019 Severance costs $ 5,352 $ 13,540 $ ( 13,578 ) $ 5,314 Other exit costs 3,287 1,386 ( 2,944 ) 1,729 Total $ 8,639 $ 14,926 $ ( 16,522 ) $ 7,043 December 31, 2018 Severance costs $ 7,232 $ 11,766 $ ( 13,646 ) $ 5,352 Other exit costs 3,807 4,332 ( 4,852 ) 3,287 Total $ 11,039 $ 16,098 $ ( 18,498 ) $ 8,639 Further detail regarding restructuring accruals is disclosed within Note 11- Accrued Expenses and Other Current Liabilities and Note 14 - Deferred Credits and Other Liabilities . F-38 Back to top Note 21. Interest Expense Interest expense is net of capitalized interest. Capitalized interest incurred during the construction phase of significant property and equipment additions totaled $ 1.0 million, $ 2.5 million, and $ 1.8 million in 2020, 2019, and 2018, respectively. We made interest payments of $ 71.7 million, $ 71.2 million, and $ 68.9 million in 2020, 2019 and 2018, respectively. Interest expense also includes amortization of debt issuance costs that are amortized using the effective interest method and amortization of original issue discounts. Note 22. Other Income The table below summarizes the amounts included in other income in the accompanying consolidated statements of operations: (amounts in thousands) 2020 2019 2018 Foreign currency losses (gains) $ 11,858 $ ( 7,361 ) $ ( 11,258 ) Governmental pandemic assistance reimbursement ( 7,377 ) — — (Gain) loss on sale of business units, property, and equipment ( 4,122 ) ( 1,506 ) 556 Pension expense 1,646 10,738 6,975 Insurance reimbursement ( 1,388 ) — — Other items ( 3,369 ) ( 2,033 ) ( 2,852 ) Legal settlement income — ( 1,247 ) ( 7,541 ) Gain on previously held shares of an equity investment — — ( 20,767 ) Total other income $ ( 2,752 ) $ ( 1,409 ) $ ( 34,887 ) Governmental pandemic assistance reimbursement for the year ended December 31, 2020 primarily consisted of cash received from governmental pandemic assistance programs within our North America and Europe segments as a result of COVID-19. The gain on previously held shares of an equity investment relates to an equity method investment that was remeasured on the date we acquired the company in 2018. The prior period information has been reclassified to conform to current period presentation. Note 23. Derivative Financial Instruments Foreign currency derivatives – We are exposed to the impact of foreign currency fluctuations in certain countries in which we operate. In most of these countries, the exposure to foreign currency movements is limited because the operating revenues and expenses of our business units are substantially denominated in the local currency. To the extent borrowings, sales, purchases, or other transactions are not executed in the local currency of the operating unit, we are exposed to foreign currency risk. To mitigate the exposure, we enter into a variety of foreign currency derivative contracts, such as forward contracts, option collars, and cross-currency hedges. To manage the effect of exchange fluctuations on forecasted sales, purchases, acquisitions, inventory and capital expenditures, and certain intercompany transactions that are denominated in foreign currencies, we have foreign currency derivative contracts with a total notional amount of $ 96.6 million. We have foreign currency derivative contracts, with a total notional amount of $ 23.7 million, to hedge the effects of translation gains and losses on intercompany loans and interest. To mitigate the impact to the consolidated earnings of the Company from the effect of the translation of certain subsidiaries’ local currency results into U.S. dollars, we have foreign currency derivative contracts with a total notional amount of $ 55.7 million. We do not use derivative financial instruments for trading or speculative purposes. We have not elected hedge accounting for any foreign currency derivative contracts. We record mark-to-market changes in the values of these derivatives in other (income) expense. We recorded mark-to-market losses of $ 5.4 million in the year ended December 31, 2020, losses of $ 9.8 million in the year ended December 31, 2019, and gains of $ 7.8 million in the year ended December 31, 2018. Interest rate derivatives – We are exposed to interest rate risk in connection with our variable rate long-term debt and partially mitigate this risk through interest rate derivatives such as swaps and caps. In May 2020, we entered into interest rate swap agreements to manage this risk. The interest rate swaps have outstanding notional amounts aggregating to $ 370.0 million and mature in December 2023 with a weighted average fixed rate of 0.395 % paid against one-month LIBOR floored at 0.00 %. The interest rate swap agreements are designated as cash flow hedges and will effectively fix the interest rate on a corresponding portion of the aggregate debt outstanding under our Term Loan Facility. F-39 Back to top No portion of these interest rate contracts were deemed ineffective during the year ended December 31, 2020. We recorded a cumulative pre-tax mark-to-market loss of $ 2.3 million, offset by a cumulative tax benefit of $ 0.6 million in consolidated other comprehensive income during the year ended December 31, 2020. We reclassified $ 0.5 million previously recorded in other comprehensive income to interest expense and $ 0.1 million as a benefit to income tax expense, resulting in a $ 0.4 million decrease in net income during the year ended December 31, 2020, respectively. As of December 31, 2020, approximately $ 1.0 million is expected to be reclassified to interest expense over the next 12 months. The derivative agreements with our swap counterparties contain a provision whereby we could be declared in default on our derivative obligations if we either default or, in certain cases, are capable of being declared in default of any of our indebtedness greater than specified thresholds. These agreements also contain a provision where we could be declared in default subsequent to a merger or restructuring type event if the creditworthiness of the resulting entity is materially weaker. During the first quarter of 2019, we entered into two interest rate cap contracts against three-month U.S.-dollar LIBOR, each with a cap rate of 3.00 %. These caps have a combined notional amount of $ 150.0 million, were effective as of March 2019, and terminate in December 2021. We have not elected hedge accounting and have recorded insignificant mark-to-market adjustments in the year ended December 31, 2020 and December 31, 2019. In conjunction with the December 2017 refinancing of the Term Loan Facility, we terminated all of the interest rate swaps which had outstanding notional amounts aggregating to $ 914.3 million and recorded a loss on termination of $ 3.6 million in consolidated other comprehensive income (loss), which was being amortized as interest expense over the pre-termination life of the interest rate swaps. As of December 31, 2019, the loss on termination was fully amortized. The unamortized, pre-tax balance of this loss recorded in consolidated comprehensive income (loss) was $ 1.3 million at December 31, 2018. We recorded interest expense deriving from the amortization of the loss on termination of interest rate swaps of $ 1.3 million and $ 2.1 million during the year ended December 31, 2019 and 2018, respectively. The fair values of derivative instruments held are as follows: Derivative assets (amounts in thousands) Balance Sheet Location December 31, 2020 December 31, 2019 Derivatives not designated as hedging instruments: Foreign currency forward contracts Other current assets $ 542 $ 1,372 Interest rate cap contracts Other assets $ — $ 6 Derivatives liabilities (amounts in thousands) Balance Sheet Location December 31, 2020 December 31, 2019 Derivatives designated as hedging instruments: Interest rate contracts Accrued expenses and other current liabilities $ 955 $ — Interest rate contracts Deferred credits and other liabilities $ 897 $ — Derivatives not designated as hedging instruments: Foreign currency forward contracts Accrued expenses and other current liabilities $ 8,823 $ 4,068 Note 24. Fair Value of Financial Instruments We record financial assets and liabilities at fair value based on FASB guidance related to fair value measurements. The guidance requires fair value to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Three levels of inputs may be used to measure fair value: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Quoted market-based inputs or unobservable inputs that are corroborated by market data. Level 3 – Unobservable inputs that are not corroborated by market data. F-40 Back to top The recorded carrying amounts and fair values of these instruments were as follows: December 31, 2020 (amounts in thousands) Carrying Amount Total Fair Value Level 1 Level 2 Level 3 Assets measured at NAV (1) Assets: Cash equivalents $ 380,236 $ 380,236 $ — $ 380,236 $ — $ — Derivative assets, recorded in other current assets 542 542 — 542 — — Pension plan assets: Cash and short-term investments 8,157 8,157 — 8,157 — — U.S. Government and agency obligations 25,629 25,629 25,629 — — — Corporate and foreign bonds 118,458 118,458 — 118,458 — — Equity securities 33,099 33,099 33,099 — — — Mutual funds 78,810 78,810 — 78,810 — — Common and collective funds 144,171 144,171 — — — 144,171 Liabilities: Debt, recorded in long-term debt and current maturities of long-term debt $ 1,781,351 $ 1,834,057 $ — $ 1,834,057 $ — $ — Derivative liabilities, recorded in accrued expenses and other current liabilities 9,778 9,778 — 9,778 — — Derivative liabilities, recorded in deferred credits and other liabilities 897 897 — 897 — December 31, 2019 (amounts in thousands) Carrying Amount Total Fair Value Level 1 Level 2 Level 3 Assets measured at NAV (1) Assets: Cash equivalents $ — $ — $ — $ — $ — $ — Derivative assets, recorded in other current assets 1,372 1,372 — 1,372 — — Derivative assets, recorded in other assets 6 6 — 6 — — Pension plan assets: Cash and short-term investments 8,787 8,787 — 8,787 — — U.S. Government and agency obligations 25,206 25,206 25,206 — — — Corporate and foreign bonds 104,430 104,430 — 104,430 — — Equity securities 28,249 28,249 28,249 — — — Mutual funds 70,230 70,230 — 70,230 — — Common and collective funds 132,600 132,600 — — — 132,600 Liabilities: Debt, recorded in long-term debt and current maturities of long-term debt $ 1,528,146 $ 1,554,425 $ — $ 1,554,425 $ — $ — Derivative liabilities, recorded in accrued expenses and other current assets 4,068 4,068 — 4,068 — — (1) Certain pension assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. These include investments in large cap equity and commingled real estate funds, which are valued using the NAV provided by the administrator of the funds. Redemption of these funds is not subject to restriction. Derivative assets and liabilities reported in level 2 include foreign currency and interest rate contracts. See Note 23- Derivative Financial Instruments for additional information about our derivative assets and liabilities. There are no material non-financial assets or liabilities as of December 31, 2020 or December 31, 2019. F-41 Back to top Note 25. Commitments and Contingencies Litigation – We are involved in various legal proceedings, claims, and government audits arising in the ordinary course of business. We record our best estimate of a loss when the loss is considered probable and the amount of such loss can be reasonably estimated. When a loss is probable and there is a range of estimated loss with no best estimate within the range, we record the minimum estimated liability related to the lawsuit or claim. As additional information becomes available, we reassess the potential liability and revise our accruals, if necessary. Because of uncertainties related to the resolution of lawsuits and claims, the ultimate outcome may differ materially from our estimates. Other than the matters described below, as of December 31, 2020, there are no current proceedings or litigation matters involving the Company or its property that we believe would have a material adverse effect on our consolidated financial position or cash flows, although they could have a material adverse effect on our operating results for a particular reporting period. Steves & Sons, Inc. vs JELD-WEN, Inc. – We sell molded door skins to certain customers pursuant to long-term contracts, and these customers in turn use the molded door skins to manufacture interior doors and compete directly against us in the marketplace. We gave notice of termination of one of these contracts and, on June 29, 2016, the counterparty to the agreement, Steves and Sons, Inc. (“Steves”) filed a claim against JWI in the U.S. District Court for the Eastern District of Virginia, Richmond Division (“Eastern District of Virginia”). The complaint alleged that our acquisition of CMI, a competitor in the molded door skins market, together with subsequent price increases and other alleged acts and omissions, violated antitrust laws, and constituted a breach of contract and breach of warranty. Specifically, the complaint alleged that our acquisition of CMI substantially lessened competition in the molded door skins market. The complaint sought declaratory relief, ordinary and treble damages, and injunctive relief, including divestiture of certain assets acquired in the CMI acquisition. In February 2018, a jury in the Eastern District of Virginia returned a verdict that was unfavorable to JWI with respect to Steves’ claims that our acquisition of CMI violated Section 7 of the Clayton Act and found that JWI breached the supply agreement between the parties (the “Original Action”). The verdict awarded Steves $ 12.2 million for past damages under both the Clayton Act and breach of contract claims and $ 46.5 million in future lost profits under the Clayton Act claim. During the course of the proceedings in the Eastern District of Virginia, we discovered certain facts that led us to conclude that Steves, its principals, and certain former employees of the Company had misappropriated Company trade secrets, violated the terms of various agreements between the Company and those parties, and violated other laws. On May 11, 2018, a jury in the Eastern District of Virginia returned a verdict on our trade secrets claims against Steves and awarded damages in the amount of $ 1.2 million. The presiding judge entered a judgment in our favor for those damages and the entire amount has been paid by Steves. On August 16, 2019, the presiding judge granted Steves’ request for an injunction, prohibiting us from pursuing certain claims against individual defendants pending in Bexar County, Texas (the “Steves Texas Trade Secret Theft Action”). These claims have been stayed pending appeal. On March 13, 2019, the presiding judge entered an Amended Final Judgment Order in the Original Action, awarding $ 36.5 million in past damages under the Clayton Act (representing a trebling of the jury’s verdict) and granting divestiture of CMI, subject to appeal. The judgment also conditionally awarded damages in the event the judgment was overturned on appeal. Specifically, the court awarded $ 139.4 million as future antitrust damages in the event the divestiture order was overturned on appeal and $ 9.9 million as past contract damages in the event both the divestiture and antitrust claims were overturned on appeal. On April 12, 2019, the plaintiffs filed a petition requesting an award of their fees and a bill of costs seeking $ 28.4 million in attorneys’ fees and $ 1.7 million in costs in connection with the Original Action. That petition remains pending and subject to further appeal. On November 19, 2019, the presiding judge entered an order for further relief awarding Steves an additional $ 7.1 million in damages for pricing differences from the date of the underlying jury verdict through May 31, 2019 (the “Pricing Action”). We also appealed that ruling. On April 14, 2020, Steves filed a motion for further supplemental relief for pricing differences from the date of the prior order and going forward through the end of the parties’ current supply agreement (the “Future Pricing Action”). We opposed that request for further relief. JELD-WEN filed a supersedeas bond and notice of appeal of the judgment, which was heard by the Fourth Circuit Court of Appeals (the “Fourth Circuit”) on May 29, 2020. On February 18, 2021, the Fourth Circuit issued its decision on appeal in the Original Action, affirming the Amended Final Judgment Order in part and vacating and remanding in part. The Fourth Circuit vacated the Eastern District of Virginia’s alternative $ 139.4 million lost-profits award, holding that award was premature because Steves has not suffered the purported injury on which its claim for future lost profits rests. The Fourth Circuit also vacated the Eastern District of Virginia’s judgment for Sam Steves, Edward Steves, and John Pierce on JELD-WEN’s trade secrets claims, which will allow JELD-WEN to continue pursuing the Texas Trade Secrets Theft Action. The Fourth Circuit affirmed the Eastern District of Virginia’s finding of antitrust injury and its award of $ 36.5 million in past antitrust damages, which continues to accrue post-judgment interest. It also affirmed the Eastern District of Virginia’s F-42 Back to top divestiture order, while clarifying that JELD-WEN retains the right to challenge the terms of any divestiture, including whether a sale to any particular buyer will serve the public interest, and made clear that the Eastern District of Virginia may need to revisit its divestiture order if the special master cannot locate a satisfactory buyer. We continue to believe that Steves’ claims lack merit and Steves is not entitled to the extraordinary remedy of divestiture of CMI. We believe that multiple pretrial and trial rulings were erroneous and improperly limited the Company’s defenses and that the judgment in accordance with the verdict was improper for several reasons under applicable law, and we intend to pursue appellate remedies available to us. It is not possible to estimate the impact of any final divestiture order if ultimately upheld, or whether such an order would have a material adverse effect on our financial position, operating results, or cash flows. During the pendency of the Original Action, on February 14, 2020, Steves filed a complaint and motion for preliminary injunction in the Eastern District of Virginia alleging that we breached the long-term supply agreement between the parties, among other claims, including by incorrectly calculating the allocation of door skins owed to Steves (the “Allocation Action”). Steves sought an additional allotment of door skins and damages for violation of antitrust laws, tortious interference, and breach of contract. On April 10, 2020, the presiding judge granted Steves’ motion for preliminary injunction and the parties settled the issues underlying the preliminary injunction on April 30, 2020 and reserved the right to appeal the ruling in the Fourth Circuit Court of Appeals. The Company believed all the claims lacked merit and moved to dismiss the antitrust and tortious interference claims. On June 2, 2020, we entered into a settlement agreement with Steves to resolve the Pricing Action, the Future Pricing Action, and the Allocation Action. As a result of the settlement, Steves filed a notice of satisfaction of judgment in the Pricing Action, withdrew its Future Pricing Action with prejudice, and filed a stipulated dismissal with prejudice in the Allocation Action. The Company also withdrew its appeal of the Pricing Action. The parties agreed to bear their own respective attorneys’ fees and costs in these actions. In partial consideration of the settlement, JWI and Steves entered into an amended supply agreement satisfactory to both parties that ends on September 10, 2021. This settlement had no effect on the Original Action between the parties except to agree that certain specific terms of the Amended Final Judgment Order in the Original Action will apply to the amended supply agreement during the pendency of the appeal of the Original Action, nor does this settlement have any effect on the Steves Texas Trade Secret Theft Action, which remains on appeal in the Fourth Circuit. We continue to believe the claims in the settled actions lacked merit and made no admission of liability in these matters. Cambridge Retirement System v. JELD-WEN Holding, Inc., et al. – On February 19, 2020, Cambridge Retirement System filed a putative class action lawsuit in the U.S. District Court for the Eastern District of Virginia against the Company, current and former Company executives, and various Onex-related entities alleging violations of Section 10(b) and Rule 10b-5 of the Exchange Act, as well as violations of Section 20(a) of the Exchange Act against the individual defendants and Onex-related entities. The lawsuit seeks compensatory damages, equitable relief and an award of attorneys’ fees and costs. The Company believes the claims lack merit and intends to vigorously defend against the action. On May 8, 2020, the Public Employees Retirement System of Mississippi and the Plumbers and Pipefitters National Pension Fund were named as co-lead plaintiffs and filed an amended complaint on June 22, 2020. We filed a motion to dismiss the amended complaint on July 29, 2020, which was denied on October 26, 2020. Discovery is ongoing, and trial in this matter is currently set for July 12, 2021. In re Interior Molded Doors Antitrust Litigation – On October 19, 2018, Grubb Lumber Company, on behalf of itself and other similarly situated, filed a putative class action lawsuit against us and one of our competitors in the doors market, Masonite Corporation (“Masonite”), in the Eastern District of Virginia. We subsequently received additional complaints from and on behalf of direct and indirect purchasers of interior molded doors. The suits were consolidated into two separate actions, a Direct Purchaser Action and an Indirect Purchaser Action. The suits allege that Masonite and JELD-WEN violated Section 1 of the Sherman Act, and in the Indirect Purchaser Action, related state law antitrust and consumer protection laws, by engaging in a scheme to artificially raise, fix, maintain, or stabilize the prices of interior molded doors in the United States. The complaints sought ordinary and treble damages, declaratory relief, interest, costs, and attorneys’ fees. The Company believes the claims lack merit and vigorously defended against the actions. On September 18, 2019, the court granted in part and denied in part the defendants’ motions to dismiss the lawsuits, dismissing various state law claims and limiting plaintiffs’ damages claims to a four-year period (from 2014-2018) under the applicable statute of limitations. Together with Masonite, we filed motions to oppose class certification in both the Direct Purchaser and Indirect Purchaser Actions on May 19, 2020. On August 31, 2020, JELD-WEN and Masonite entered into a settlement agreement to resolve the Direct Purchaser Action. In exchange for a full release of claims through the date of preliminary court approval of the settlement, each defendant originally agreed to pay $ 28.0 million to the named plaintiffs and the settlement class. On January 27, 2021, the parties to the Direct Purchaser Action revised the settlement agreement to modify certain terms, and each defendant agreed to pay a total of $ 30.8 million to the named plaintiffs and the settlement class in exchange for a full release of claims through the F-43 Back to top date of preliminary approval of the revised settlement, which the court granted on February 5, 2021. In addition, on September 4, 2020, JELD-WEN and Masonite entered into a separate settlement agreement to resolve the Indirect Purchaser Action. Each defendant agreed to pay $ 9.75 million to the named plaintiffs and the settlement class in exchange for a full release of claims through the execution date of the settlement agreement, and the court has granted preliminary approval of this settlement in the Indirect Purchaser Action. The Company continues to believe that the plaintiffs’ claims lack merit and has denied any liability or wrongdoing for the claims made against the Company. The settlement agreements remain subject to final court approval and other conditions. The final fairness hearing in the Direct Purchaser Action is scheduled to be in June 2021, and the final fairness hearing in the Indirect Purchaser Action is scheduled to be in July 2021. Canadian Antitrust Litigation – On May 15, 2020, Développement Émeraude Inc., on behalf of itself and others similarly situated, filed a putative class action lawsuit against us and Masonite in the Superior Court of the Province of Quebec, Canada, which was served on us on September 18, 2020 (“the Quebec Action”). The putative class consists of any person in Canada who, since October 2012, purchased one or more interior molded doors from us or Masonite. The suit alleges an illegal conspiracy between us and Masonite to agree on prices, the distribution of market shares and/or the production levels of interior molded doors and that the plaintiffs suffered damages in that they were charged and paid higher prices for interior molded doors than they would have had to pay but for the alleged anti-competitive conduct. The plaintiffs are seeking compensatory and punitive damages, attorneys’ fees and costs. On September 9, 2020, Kate O’Leary Swinkels, on behalf of herself and others similarly situated, filed a putative class action against JELD-WEN and Masonite in federal court in the province of Ontario, which was served on us on September 29, 2020 (the “Ontario Action”). The Ontario Action makes substantially similar allegations to the Quebec Action and the putative class is represented by the same counsel. In February 2021, the plaintiff in the Ontario Action noticed a proposed Amended Statement of Claim that replaces the named plaintiff, Kate O’Leary Swinkels, with David Regan. The plaintiff further anticipates staying the Quebec Action while the Ontario Action proceeds, although we do not anticipate a hearing on the certification of the Ontario Action until early 2022.The Company believes both the Quebec Action and the Ontario Action lack merit and intends to vigorously defend against them. We have evaluated the claims against us and recorded provisions based on management’s judgment about the probable outcome of the litigation and have included our estimates in accrued expenses in the accompanying balance sheets. See Note 11 - Accrued Expenses and Other Current Liabilities . While we expect a favorable resolution to these matters, the dispute resolution process could be lengthy, and if the plaintiffs were to prevail completely or substantially in the respective matters described above, such an outcome could have a material adverse effect on our operating results, consolidated financial position, or cash flows. Self-Insured Risk – We self-insure substantially all of our domestic business liability risks including general liability, product liability, warranty, personal injury, auto liability, workers’ compensation and employee medical benefits. Excess insurance policies from independent insurance companies generally cover exposures between $ 3.0 million and $ 200.0 million for domestic product liability risk and exposures between $ 0.5 million and $ 200.0 million for auto, general liability, personal injury and workers’ compensation. We have no stop loss insurance covering our self-insured employee medical plan and are responsible for all claims thereunder. We estimate our provision for self-insured losses based upon an evaluation of current claim exposure and historical loss experience. Actual self-insurance losses may vary significantly from these estimates. At December 31, 2020 and December 31, 2019, our accrued liability for self-insured risks was $ 81.0 million and $ 76.6 million, respectively. Indemnifications – At December 31, 2020, we had commitments related to certain representations made in contracts for the purchase or sale of businesses or property. These representations primarily relate to past actions such as responsibility for transfer taxes if they should be claimed, and the adequacy of recorded liabilities, warranty matters, employment benefit plans, income tax matters, or environmental exposures. These guarantees or indemnification responsibilities typically expire within one to three years . We are not aware of any material amounts claimed or expected to be claimed under these indemnities. From time to time and in limited geographic areas, we have entered into agreements for the sale of our products to certain customers that provide additional indemnifications for liabilities arising from construction or product defects. We cannot estimate the potential magnitude of such exposures, but to the extent specific liabilities have been identified related to product sales, liabilities have been provided in the warranty accrual in the accompanying consolidated balance sheets. Other Financing Arrangements – At times we are required to provide letters of credit, surety bonds, or guarantees to meet various performance, legal, warranty, environmental, workers compensation, licensing, utility, and governmental requirements. Stand-by letters of credit are provided to certain customers and counterparties in the ordinary course of business as credit support for contractual performance guarantees, advanced payments received from customers, and future funding commitments. The stated values of these letters of credit agreements, surety bonds, and guarantees were F-44 Back to top $ 122.7 million and $ 122.6 million at December 31, 2020 and December 31, 2019, respectively. We have revised our 2019 value to include additional insured guarantees and guarantees associated with our Australia Senior Secured Credit Facility. Environmental Contingencies – We periodically incur environmental liabilities associated with remediating our current and former manufacturing sites as well as penalties for not complying with environmental rules and regulations. We record a liability for remediation costs when it is probable that we will be responsible for such costs and the costs can be reasonably estimated. These environmental liabilities are estimated based on current available facts and current laws and regulations. Accordingly, it is likely that adjustments to the estimated liabilities will be necessary as additional information becomes available. Short-term environmental liabilities and settlements are recorded in accrued expenses in the accompanying consolidated balance sheets and totaled $ 0.7 million at both December 31, 2020 and December 31, 2019. Long-term environmental liabilities are recorded in deferred credits and other liabilities in the accompanying consolidated balance sheets and totaled $ 8.3 million at December 31, 2020. No long-term environmental liabilities were recorded at December 31, 2019. Everett, Washington WADOE Action –In 2008, we entered into an Agreed Order with the WADOE to assess historic environmental contamination and remediation feasibility at our former manufacturing site in Everett, Washington. As part of this agreement, we also agreed to develop a Corrective Action Plan (“CAP”), arising from the feasibility assessment. On April 30, 2020, we provided the WADOE with a revised draft of our feasibility assessment. On June 19, 2020, we received substantive comments from the WADOE that included additional remedial alternatives and changes to the scoring of the alternatives. We worked with WADOE on its comments with respect to and the scoring of the remedial alternatives, and we submitted the draft final feasibility assessment to the WADOE in December 2020, which we considered substantially complete. The draft final feasibility assessment included remedial alternatives ranging from $ 8.3 million to $ 57.0 million. We expect to deliver a draft CAP to the WADOE in late-April 2021. The final feasibility assessment and draft final of the CAP are expected to be delivered to the WADOE in May 2021. At that time, the WADOE will release the documents to the public for a 30-day comment period. Once the public comment period has expired and any comments incorporated, the WADOE will select the remedial actions we will be required to perform, and a final CAP will be developed and delivered to the WADOE 15 days thereafter. While we have made provisions in our financial statements within the range of possible outcomes for this matter, it is unclear at this time which remedial actions we will be required to undertake or the cost thereof. As a result, the cost of the final CAP could vary materially from our provisions and have a material impact on our statement of operations and statement of cash flows. Towanda, Pennsylvania Consent Order – In December 2020, we entered into a COA with the PaDEP to remove a pile of wood fiber waste from our site in Towanda, Pennsylvania, which we acquired in connection with our acquisition of CMI in 2013, by using it as fuel for a boiler at that site. The COA replaced a 2018 Consent Decree between PaDep and us. Under the COA, we are required to achieve certain periodic removal objectives and ultimately remove the entire pile by August 31, 2025. There are currently $ 2.3 million in bonds posted in connection with these obligations. If we are unable to remove this pile by August 31, 2025, then the bonds will be forfeited, and we may be subject to penalties by PaDEP. We currently anticipate meeting all applicable removal deadlines; however, if our operations at this site decrease and we burn less fuel than currently anticipated, we may not be able to meet such deadlines. Employee Stock Ownership Plan – We have historically provided cash to our U.S. ESOP in order to fund required distributions to participants through the repurchase of shares of our Common Stock. Following our February 2017 IPO, the value of a share of Common Stock held through the ESOP is now based on our public share price. We do not anticipate that we will fund future distributions. Purchase Obligations - As of December 31, 2020, we have purchase obligations of $ 9.9 million due in 2021 and $ 21.6 million due in 2022 and thereafter. These purchase obligations are primarily relating to raw materials purchase agreements and software hosting services. Purchase obligations are defined as purchase agreements that are enforceable and legally binding and that specify all significant terms, including quantity, price, and the approximate timing of the transaction. Note 26. Employee Retirement and Pension Benefits U.S. Defined Benefit Pension Plan Certain U.S. hourly employees participate in our defined benefit pension plan. The plan is not open to new employees. In 2020, we elected to utilize the alternative method when calculating the Pension Benefit Guarantee Corporation premiums for 2020 and the succeeding 4 years, rather than the stand alone method utilized during the previous 5 years, resulting in a reduction to pension benefit expenses in 2020. We use a spot rate yield curve to estimate the pension benefit obligation and net periodic benefits costs. F-45 Back to top The components of net periodic benefit cost are summarized as follows for the years ended December 31: (amounts in thousands) Components of pension benefit expense - U.S. benefit plan 2020 2019 2018 Service cost $ 3,090 $ 4,890 $ 4,170 Interest cost 12,236 14,861 13,180 Expected return on plan assets ( 21,860 ) ( 18,622 ) ( 20,769 ) Amortization of net actuarial pension loss 6,852 8,919 9,314 Pension benefit expense $ 318 $ 10,048 $ 5,895 Discount rate used to determine benefit costs 3.31 % 4.27 % 3.47 % Expected long-term rate of return on assets 6.25 % 6.25 % 6.25 % Compensation increase rate N/A N/A N/A In October 2019, the Society of Actuaries released the PRI-2012 Mortality Tables (update to RP-2014 mortality tables), which were adopted in 2019 and represent our best estimate of future experience for the base mortality table. The Society of Actuaries has released annual updates to the mortality improvement projection scale that was first released in 2014, with the most recent annual update being Scale MP-2020. We adopted the use of Scale MP-2020 as of December 31, 2020 as it represents our best estimate of future mortality improvement projection experience as of the measurement date. We developed the discount rate based on the plan’s expected benefit payments using the Willis Towers Watson RATE:Link 10:90 Yield Curve. Based on this analysis, we selected a 2.55 % discount rate for our projected benefit obligation. As the discount rate is reduced or increased, the pension obligation would increase or decrease, respectively, and future pension expense would increase or decrease, respectively. We maintain policies for investment of pension plan assets. The policies set forth stated objectives and a structure for managing assets, which includes various asset classes and investment management styles that, in the aggregate, are expected to produce a sufficient level of diversification and investment return over time and provide for the availability of funds for benefits as they become due. The policies also provide guidelines for each investment portfolio that control the level of risk assumed in the portfolio and ensure that assets are managed in accordance with stated objectives. The plan invests primarily in publicly traded equity and debt securities as directed by the plan’s investment committee. The pension plan’s expected return assumption is based on the weighted average aggregate long-term expected returns of various actively managed asset classes corresponding to the plan’s asset allocation. We have selected an expected return on plan assets based on a historical analysis of rates of return, our investment mix, market conditions and other factors. The fair value of plan assets increased in 2020 and 2019 due primarily to investment returns and contributions in excess of our benefit payments. (amounts in thousands) Change in fair value of plan assets - U.S. benefit plan 2020 2019 Balance as of January 1, $ 358,577 $ 302,763 Actual return on plan assets 47,391 69,767 Company contribution 12,619 7,760 Benefits paid ( 18,538 ) ( 16,751 ) Administrative expenses paid ( 3,196 ) ( 4,962 ) Balance at period end $ 396,853 $ 358,577 The plan’s investments as of December 31 are summarized below: % of Plan Assets Summary of plan investments - U.S. benefit plan 2020 2019 Equity securities 8.3 7.9 Debt securities 36.3 36.1 Other 55.4 56.0 100.0 100.0 The plan’s projected benefit obligation is determined by using weighted-average assumptions made on December 31, of each year as summarized below: F-46 Back to top (amounts in thousands) Change in projected benefit obligation - U.S. benefit plan 2020 2019 Balance as of January 1, $ 433,408 $ 383,936 Service cost 3,090 4,890 Interest cost 12,236 14,861 Actuarial loss 47,085 51,434 Benefits paid ( 18,538 ) ( 16,751 ) Administrative expenses paid ( 3,196 ) ( 4,962 ) Balance at period end $ 474,085 $ 433,408 Discount rate 2.55 % 3.31 % Compensation increase rate N/A N/A As of December 31, 2020, the plan’s estimated benefit payments for the next ten years are as follows (amounts in thousands): 2021 $ 18,142 2022 19,052 2023 19,836 2024 20,595 2025 21,251 2026-2030 112,711 The company made cash contributions to the plan of $ 12.6 million and $ 7.8 million for the year ended December 31, 2020 and December 31, 2019, respectively. During fiscal year 2021, no cash contributions are required to be made to the plan. The plan’s accumulated benefit obligation of $ 474.1 million is determined by taking the projected benefit obligation and removing the impact of the assumed compensation increases. The plan’s funded status as of December 31 is as follows: (amounts in thousands) Unfunded pension liability - U.S. benefit plan 2020 2019 Projected benefit obligation at end of period $ 474,085 $ 433,408 Fair value of plan assets at end of period ( 396,853 ) ( 358,577 ) Unfunded pension liability $ 77,232 $ 74,831 Net actuarial pension losses are recorded in consolidated other comprehensive income (loss) for the years ended December 31 are as follows: (amounts in thousands) Accumulated other comprehensive loss - U.S. benefit plan 2020 2019 2018 Net actuarial pension loss beginning of period $ 87,459 $ 96,090 $ 112,632 Amortization of net actuarial loss ( 6,852 ) ( 8,919 ) ( 9,314 ) Net loss (gain) occurring during year 21,554 288 ( 7,228 ) Net actuarial pension loss at end of period 102,161 87,459 96,090 Tax benefit ( 6,860 ) ( 3,145 ) ( 5,344 ) Net actuarial pension loss at end of period, net of tax $ 95,301 $ 84,314 $ 90,746 Non-U.S. Defined Benefit Plans – We have several other defined benefit plans located outside the U.S. that are country specific. Some of these plans remain open to participants and others are closed. The expenses related to these plans are recorded in the consolidated statements of operations and are determined by using weighted-average assumptions made on January 1 of each year as summarized below for the years ended December 31. F-47 Back to top (amounts in thousands) Components of pension benefit expense - Non-U.S. benefit plans 2020 2019 2018 Service cost $ 2,548 $ 2,386 $ 2,070 Interest cost 908 1,398 1,417 Expected return on plan assets ( 435 ) ( 589 ) ( 833 ) Amortization of net actuarial pension loss 849 225 189 Pension benefit expense $ 3,870 $ 3,420 $ 2,843 Discount rate 0.2 % - 7.8 % 0.6 % - 8.5 % 0.2 % - 9.0 % Expected long-term rate of return on assets 0.0 % - 4.6 % 0.0 % - 5.8 % 0.0 % - 5.3 % Compensation increase rate 0.5 % - 7.0 % 0.5 % - 7.0 % 0.5 % - 7.0 % (amounts in thousands) Change in fair value of plan assets - Non-U.S. benefit plans 2020 2019 Balance as of January 1, $ 10,924 $ 12,676 Actual (loss) return on plan assets ( 106 ) 1,398 Company contribution 190 236 Benefits paid ( 547 ) ( 3,272 ) Administrative expenses paid ( 13 ) ( 21 ) Cumulative translation adjustment 1,023 ( 93 ) Balance at period end $ 11,471 $ 10,924 The investments of the non-U.S. plans as of December 31 are summarized below: % of Plan Assets Summary of plan investments - Non-U.S. benefit plans 2020 2019 Equity securities 50.3 45.8 Debt securities 19.8 20.7 Other 29.9 33.5 100.0 100.0 The projected benefit obligation for the non-U.S. plans is determined by using weighted-average assumptions made on December 31, 2020 of each year as summarized below: (amounts in thousands) Change in projected benefit obligation - Non-U.S. benefit plans 2020 2019 Balance as of January 1, $ 47,707 $ 42,803 Service cost 2,548 2,655 Interest cost 908 1,405 Actuarial loss 786 6,084 Benefits paid ( 2,756 ) ( 5,240 ) Administrative expenses paid ( 15 ) ( 21 ) Cumulative translation adjustment 4,693 21 Balance at period end $ 53,871 $ 47,707 Discount rate 0.2 % - 7.8 % 0.6 % - 8.5 % Compensation increase rate 1.0 % - 7.0 % 0.5 % - 7.0 % As of December 31, 2020, the estimated benefit payments for the non-U.S. plans over the next ten years are as follows (amounts in thousands): F-48 Back to top 2021 $ 1,991 2022 2,114 2023 2,523 2024 2,631 2025 2,483 2026-2030 11,901 The accumulated benefit obligations of $ 42.5 million for the non-U.S. plans are determined by taking the projected benefit obligation and removing the impact of the assumed compensation increases. We expect to contribute $ 1.1 million to the non-U.S. plans in 2021. The funded status of these plans as of December 31 are as follows: (amounts in thousands) Unfunded pension liability - Non-U.S. benefit plans 2020 2019 Projected benefit obligation at end of period $ 53,871 $ 47,707 Fair value of plan assets at end of period ( 11,471 ) ( 10,924 ) Net pension liability $ 42,400 $ 36,783 Long-term unfunded pension liability $ 37,845 $ 33,106 Current portion 6,234 5,605 Total unfunded pension liability $ 44,079 $ 38,711 Total overfunded pension liability $ 1,679 $ 1,928 The current portion of the unfunded pension liability is recorded in accrued payroll and benefits in the accompanying consolidated balance sheets. The overfunded pension liability is recorded in long-term other assets in the accompanying consolidated balance sheets. Net actuarial pension losses are recorded in consolidated other comprehensive income (loss) for the years ended December 31 are as follows: (amounts in thousands) Accumulated other comprehensive loss - Non-U.S. benefit plans 2020 2019 2018 Net actuarial pension loss beginning of period $ 12,237 $ 7,450 $ 7,359 Amortization of net actuarial loss ( 849 ) ( 553 ) ( 1,442 ) Net gain occurring during year 1,339 5,232 1,462 Cumulative translation adjustment 84 108 71 Net actuarial pension loss at end of period 12,811 12,237 7,450 Tax benefit ( 3,043 ) ( 2,958 ) ( 1,911 ) Net actuarial pension loss at end of period, net of tax $ 9,768 $ 9,279 $ 5,539 Other Defined Contribution Plans –We have several other defined contribution plans located outside the U.S. that are country specific. Other plans that are characteristically defined contribution plans have accrued liabilities of $ 2.2 million and $ 1.3 million, respectively, at December 31, 2020 and December 31, 2019. The total compensation expense for non-U.S. defined contribution plans was $ 21.1 million in 2020, $ 24.6 million in 2019, and $ 27.0 million in 2018. F-49 Back to top Note 27. Supplemental Cash Flow Information Year Ended (amounts in thousands) December 31, 2020 December 31, 2019 December 31, 2018 Cash Operating Activities: Operating leases $ 58,235 $ 55,141 $ — Finance leases 193 131 — Cash paid for amounts included in the measurement of lease liabilities $ 58,428 $ 55,272 $ — Cash Investing Activities: Issuances of notes receivable $ ( 57 ) $ ( 58 ) $ ( 77 ) Cash received on notes receivable 642 469 351 Change in notes receivable $ 585 $ 411 $ 274 Non-cash Investing Activities: Property, equipment and intangibles purchased in accounts payable $ 5,862 $ 10,439 $ 6,961 Property, equipment and intangibles purchased for debt 18,813 40,323 32,262 Customer accounts receivable converted to notes receivable 843 565 110 Cash Financing Activities: Proceeds from issuance of new debt $ 250,000 $ 124,375 $ 38,823 Borrowings on long-term debt 100,941 358,027 464,119 Payments of long-term debt ( 135,250 ) ( 468,637 ) ( 432,122 ) Payments of debt issuance and extinguishment costs, including underwriting fees ( 4,833 ) ( 664 ) ( 352 ) Change in long-term debt $ 210,858 $ 13,101 $ 70,468 Cash paid for amounts included in the measurement of finance lease liabilities $ 1,721 $ 917 $ — Non-cash Financing Activities: Prepaid insurance funded through short-term debt borrowings $ 10,785 $ 4,948 $ 2,757 Prepaid ERP costs funded through short-term debt borrowings — 3,919 — Shares surrendered for tax obligations for employee share-based transactions in accrued liabilities — 469 7 Accounts payable converted to installment notes 914 757 12,886 Other Supplemental Cash Flow Information: Cash taxes paid, net of refunds $ 20,443 $ 26,656 $ 46,295 Cash interest paid 71,659 71,181 68,892 We have revised prior year borrowings and payments of long-term debt to reflect gross activity relating to our ABL Facility. There is no impact to the disclosed Change in long-term debt amount for any previously reported period. F-50 Back to top Note 28. Related Party Transactions Sale of subsidiary – In May 2019, we sold Creative Media Development, Inc. (“CMD”), a subsidiary, which was part of our North America segment, for $ 6.5 million, resulting in a gain of $ 2.8 million in the second quarter of 2019. A minority shareholder of the buying group also serves on our Board of Directors. Under the Stock Purchase Agreement for CMD, we agreed to use CMD for certain advertising services totaling $ 7.0 million between 2019 and 2023. As of December 31, 2020, the remaining balance is $ 1.2 million. At December 31, 2020, there is no amount due from the related party. This sale did not have a material impact on our results of operations. Acquired lease – In conjunction with our acquisition of VPI, we assumed operating leases on two buildings with a former shareholder of VPI and current employee. The leases are at market rates and resulted in an operating lease asset of $ 3.6 million as of the opening balance sheet. One of the leases was modified in August 2019, which increased the value by $ 0.6 million. At December 31, 2020, the operating lease asset was $ 3.5 million. F-51 Back to top SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF JELD-WEN HOLDING, INC. Parent Company Information CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) For the Years Ended December 31, (amounts in thousands, except share and per share data) 2020 2019 2018 Selling, general and administrative $ 18,359 $ 15,397 $ 15,924 Equity in earnings of subsidiaries 109,509 77,950 157,429 Other (income) expense Interest income — ( 32 ) ( 36 ) Interest expense — 12 45 Other ( 436 ) ( 398 ) ( 411 ) Income before taxes 91,586 62,971 141,907 Income tax expense — — — Net income $ 91,586 $ 62,971 $ 141,907 Comprehensive income (loss): Net income $ 91,586 $ 62,971 $ 141,907 Other comprehensive (loss) income, net of tax Equity in comprehensive (loss) income of subsidiaries 92,582 ( 6,470 ) ( 50,312 ) Total other comprehensive (loss) income, net of tax 92,582 ( 6,470 ) ( 50,312 ) Total comprehensive income $ 184,168 $ 56,501 $ 91,595 See accompanying notes to the Condensed Financial Information F-52 Back to top SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF JELD-WEN HOLDING, INC. Parent Company Information CONDENSED BALANCE SHEETS (amounts in thousands, except share and per share data) December 31, 2020 December 31, 2019 ASSETS Current assets Cash and cash equivalents $ 4,216 $ 4,818 Other current assets — 10 Total current assets 4,216 4,828 Property and equipment, net 2,947 3,074 Investment in subsidiaries 1,059,437 959,001 Long-term notes receivable — 35 Total assets $ 1,066,600 $ 966,938 LIABILITIES AND EQUITY Current liabilities Accounts payable $ 483 $ 510 Current payable to subsidiaries 2,911 2,431 Accrued expenses and other current liabilities 49 430 Notes payable and current maturities of long-term debt — 205 Total current liabilities 3,443 3,576 Total liabilities 3,443 3,576 Commitments and contingencies (Note 5) Shareholders’ equity Common Stock: 900,000,000 shares authorized, par value $ 0.01 per share, 100,806,068 shares outstanding as of December 31, 2020; 900,000,000 shares authorized, par value $ 0.01 per share, 100,668,003 shares outstanding as of December 31, 2019 1,008 1,007 Additional paid-in capital 690,687 671,772 Retained earnings 371,462 290,583 Total shareholders’ equity 1,063,157 963,362 Total liabilities, convertible preferred shares, and shareholders’ equity $ 1,066,600 $ 966,938 See accompanying notes to the Condensed Financial Information F-53 Back to top SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF JELD-WEN HOLDING, INC. Parent Company Information CONDENSED STATEMENTS OF CASH FLOWS For the Years Ended December 31, (amounts in thousands) 2020 2019 2018 OPERATING ACTIVITIES Net income $ 91,586 $ 62,971 $ 141,907 Adjustments to reconcile net income to cash used in operating activities: Depreciation 127 128 161 Income from subsidiaries investment ( 109,509 ) ( 77,950 ) ( 157,429 ) Other items, net ( 470 ) 436 538 Stock-based compensation 16,399 13,315 15,052 Net change in operating assets and liabilities, net of effect of acquisitions: Receivables and payables from subsidiaries 3,891 19,564 123,366 Other assets 3 10 ( 5 ) Accounts payable and accrued expenses ( 408 ) 829 ( 859 ) Net cash provided by operating activities 1,619 19,303 122,731 INVESTING ACTIVITIES Distribution received from subsidiaries — 2,000 1,500 Net cash provided by investing activities — 2,000 1,500 FINANCING ACTIVITIES Payments of long-term debt ( 205 ) ( 757 ) ( 982 ) Employee note repayments — — 39 Common stock issued for exercise of options 2,984 1,977 201 Common stock repurchased ( 5,000 ) ( 19,994 ) ( 125,030 ) Net cash (used in) financing activities ( 2,221 ) ( 18,774 ) ( 125,772 ) Net (decrease) increase in cash and cash equivalents ( 602 ) 2,529 ( 1,541 ) Cash, cash equivalents and restricted cash, beginning 4,818 2,289 3,830 Cash, cash equivalents and restricted cash, ending $ 4,216 $ 4,818 $ 2,289 See accompanying notes to the Condensed Financial Information F-54 Back to top SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF JELD-WEN HOLDING, INC. Parent Company Information NOTES TO CONDENSED FINANCIAL INFORMATION Note 1. Description of Company and Summary of Significant Accounting Policies Accounting policies adopted in the preparation of this condensed parent company only financial information are the same as those adopted in the consolidated financial statements and described in Note 1 - Description of Company and Summary of Significant Accounting Policies, of the consolidated financial statements included in this Form 10-K. Nature of Business – JELD-WEN Holding, Inc., (the “Parent Company”) (a Delaware corporation) was formed by Onex Partners III LP to effect the acquisition of JELD-WEN, Inc. and had no activities prior to the acquisition of JELD-WEN, Inc. on October 3, 2011. The Parent Company is a holding company with no material operations of its own that conducts substantially all of its activities through its direct subsidiary, JELD-WEN Inc. and its subsidiaries. The accompanying condensed parent-only financial information includes the accounts of the Parent Company and, on an equity basis, its direct and indirect subsidiaries and affiliates. Accordingly, these condensed financial statements have been presented on a “parent-only” basis. Under a parent-only presentation, the Parent Company’s investments in subsidiaries are presented under the equity method of accounting. These parent-only financial statements should be read in conjunction with the JELD-WEN Holding, Inc. and subsidiaries consolidated financial statements included elsewhere herein. The condensed parent-only financial statements have been prepared in accordance with Rule 12-04, Schedule I of Regulation S-X as the restricted net assets of the subsidiaries of the Company exceed 25% of the consolidated net assets of the Company. The ability of the Company’s operating subsidiaries to pay dividends may be restricted due to the terms of the subsidiaries’ financing arrangements (see Note 13 - Long-Term Debt to the consolidated financial statements). Property and Equipment – Property and equipment is recorded at cost. The cost of major additions and betterments are capitalized and depreciated using the straight-line method over their estimated useful lives while replacements, maintenance and repairs that do not improve or extend the useful lives of the related assets or adapt the property to a new or different use are expensed as incurred. Depreciation is generally provided over the following estimated useful service lives: Buildings 15 - 45 years Note 2. Property and Equipment, Net (amounts in thousands) 2020 2019 Buildings $ 3,632 $ 3,632 Total depreciable assets 3,632 3,632 Accumulated depreciation ( 685 ) ( 558 ) Total property and equipment, net $ 2,947 $ 3,074 Depreciation expense was $ 0.1 million in the year ended December 31, 2020, $ 0.1 million in the year ended December 31, 2019, and $ 0.2 million in the year ended December 31, 2018. Note 3. Long-Term Debt 2020 Year-end Effective Interest Rate December 31, 2020 December 31, 2019 (amounts in thousands) Installment notes for stock — % $ — $ 205 Current maturities of long-term debt $ — $ ( 205 ) Installment Notes for Stock - We entered into installment notes for stock representing amounts due to former or retired employees for repurchases of our stock that are payable over 10 years depending on the amount with payments through 2020. As of December 31, 2020, we had no outstanding notes. F-55 Back to top Note 4. Stock Compensation For discussion of stock compensation expense of the Parent Company and its subsidiaries, see Note 19 - Stock Compensation , to the consolidated financial statements. Note 5. Commitments and Contingencies For discussion of the commitments and contingencies of the subsidiaries of the Parent Company see Note 25 - Commitments and Contingencies , to the consolidated financial statements. Note 6. Supplemental Cash Flow (amounts in thousands) 2020 2019 2018 Non-cash Investing Activities: Dividend from subsidiary settled with payable to subsidiary $ 3,410 $ 22,090 $ 132,295 Non-cash Financing Activities: Shares surrendered for tax obligations for employee share-based transactions in accrued liabilities $ — $ 469 $ 7 F-56