UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________



x	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December ~~2, 2017~~1, 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 0-6365

_________________________________

APOGEE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)



Minnesota		41-0919654
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4400 West 78^th Street – Suite 520, Minneapolis, MN		55435
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (952) 835-1874

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

_________________________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	o

Emerging growth company	o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No

As of January ~~10, 2018, 28,417,366~~9, 2019, 27,175,800 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.

Table of Contents

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

Table of Contents

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements

CONSOLIDATED BALANCE SHEETS

(unaudited)


(In thousands, except stock data)	December 2, 2017			March 4, 2017
In thousands, except stock data							December 1, 2018			March 3, 2018
Assets
Current assets
Cash and cash equivalents	$	12,845		$	19,463		$	15,043		$	19,359
Short-term available for sale securities	482			548
Restricted cash	—			7,834
Receivables, net of allowance for doubtful accounts	246,863			185,740			201,498			211,852
Inventories	98,062			73,409			79,847			80,908
Refundable income taxes	—			1,743
Costs and earnings on contracts in excess of billings							60,140			4,120
Other current assets	16,536			8,724			16,247			20,039
Total current assets	374,788			297,461			372,775			336,278
Property, plant and equipment, net	302,904			246,748			302,209			304,063
Available for sale securities	9,766			9,041
Deferred tax assets	6,128			4,025
Restricted cash							26,354			—
Goodwill	152,881			101,334			185,788			180,956
Intangible assets	173,856			106,686			153,605			167,349
Other non-current assets	23,445			19,363			40,249			33,674
Total assets	$	1,043,768		$	784,658		$	1,080,980		$	1,022,320
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	62,655		$	63,182		$	79,072		$	68,416
Accrued payroll and related benefits	33,769			51,244			39,323			36,646
Accrued self-insurance reserves	8,834			8,575			8,060			10,933
Billings on contracts in excess of costs and earnings							26,961			12,461
Other current liabilities	60,923			34,200			59,230			79,696
Billings in excess of costs and earnings on uncompleted contracts	38,830			28,857
Accrued income taxes	4,520			—
Total current liabilities	209,531			186,058			212,646			208,152
Long-term debt	231,276			65,400			232,726			215,860
Unrecognized tax benefits	4,837			3,980
Long-term self-insurance reserves	17,038			8,831			19,329			16,307
Deferred tax liabilities	2,910			4,025
Other non-current liabilities	59,481			45,787			85,405			70,646
Commitments and contingent liabilities (Note 14)
Commitments and contingent liabilities (Note 8)
Shareholders’ equity
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 28,641,445 and 28,680,841 respectively	9,547			9,560
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 27,655,804 and 28,158,042 respectively							9,219			9,386
Additional paid-in capital	154,357			150,111			154,095			152,763
Retained earnings	375,280			341,996			400,289			373,259
Common stock held in trust	(908		)	(875		)	(745		)	(922		)
Deferred compensation obligations	908			875			745			922
Accumulated other comprehensive loss	(20,489		)	(31,090		)	(32,729		)	(24,053		)
Total shareholders’ equity	518,695			470,577			530,874			511,355
Total liabilities and shareholders’ equity	$	1,043,768		$	784,658		$	1,080,980		$	1,022,320

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

(unaudited)


	Three Months Ended					Nine Months Ended				Three Months Ended					Nine Months Ended
(In thousands, except per share data)	December 2, 2017		November 26, 2016			December 2, 2017		November 26, 2016
In thousands, except per share data										December 1, 2018			December 2, 2017		December 1, 2018			December 2, 2017
Net sales	$	356,506	$	274,072		$	972,721	$	800,407	$	357,718		$	356,506	$	1,056,382		$	972,721
Cost of sales	264,947		201,204			724,868		590,581		273,628			264,947		807,096			724,868
Gross profit	91,559		72,868			247,853		209,826		84,090			91,559		249,286			247,853
Selling, general and administrative expenses	57,024		39,609			161,438		117,269		52,682			57,024		167,224			161,438
Operating income	34,535		33,259			86,415		92,557		31,408			34,535		82,062			86,415
Interest income	106		271			390		799		809			106		1,719			390
Interest expense	1,594		150			3,689		495		2,941			1,594		7,514			3,689
Other income (expense), net	303		(158		)	560		350
Other (expense) income, net										(655		)	303		(459		)	560
Earnings before income taxes	33,350		33,222			83,676		93,211		28,621			33,350		75,808			83,676
Income tax expense	9,704		10,670			26,517		30,540		6,730			9,704		18,030			26,517
Net earnings	$	23,646	$	22,552		$	57,159	$	62,671	$	21,891		$	23,646	$	57,778		$	57,159

Earnings per share - basic	$	0.82	$	0.78		$	1.98	$	2.18	$	0.79		$	0.82	$	2.06		$	1.98
Earnings per share - diluted	$	0.82	$	0.78		$	1.98	$	2.17	$	0.78		$	0.82	$	2.04		$	1.98
Weighted average basic shares outstanding	28,736		28,828			28,812		28,807		27,836			28,736		28,030			28,812
Weighted average diluted shares outstanding	28,818		28,892			28,862		28,916		28,156			28,818		28,304			28,862

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(unaudited)

Three Months Ended Nine Months Ended
(In thousands) December 2, 2017 November 26, 2016 December 2,
2017 November 26,
2016
Net earnings $ 23,646
$ 22,552
$ 57,159
$ 62,671
Other comprehensive earnings:
Unrealized loss on marketable securities, net of $78, $139, $28 and $105 of tax benefit, respectively (143 ) (258 ) (51 ) (192 )
Foreign currency translation adjustments (3,838 ) (1,783 ) 10,652
2,742
Other comprehensive earnings (3,981 ) (2,041 ) 10,601
2,550
Total comprehensive earnings $ 19,665
$ 20,511
$ 67,760
$ 65,221



	Three Months Ended						Nine Months Ended
In thousands	December 1, 2018			December 2, 2017			December 1, 2018			December 2, 2017
Net earnings	$	21,891		$	23,646		$	57,778		$	57,159
Other comprehensive (loss) earnings:
Unrealized loss on marketable securities, net of $16, $78, $25 and $28 of tax benefit, respectively	(58		)	(143		)	(90		)	(51		)
Unrealized gain (loss) on foreign currency hedge, net of $10, $-, ($99) and $- of tax expense (benefit), respectively	32			—			(327		)	—
Foreign currency translation adjustments	(3,621		)	(3,838		)	(7,518		)	10,652
Other comprehensive (loss) earnings	(3,647		)	(3,981		)	(7,935		)	10,601
Total comprehensive earnings	$	18,244		$	19,665		$	49,843		$	67,760

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended						Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016
In thousands							December 1, 2018			December 2, 2017
Operating Activities
Net earnings	$	57,159		$	62,671		$	57,778		$	57,159
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	39,774			24,270			38,378			39,774
Share-based compensation	4,645			4,403			4,724			4,645
Deferred income taxes	(3,339		)	(3,335		)	10,600			(3,339		)
Gain on disposal of assets	(78		)	(287		)	(2,499		)	(78		)
Proceeds from New Markets Tax Credit transaction, net of deferred costs	—			5,109			8,850			—
Other, net	(1,286		)	(1,281		)	(799		)	(1,286		)
Changes in operating assets and liabilities:
Receivables	(16,131		)	(15,235		)	9,291			(16,131		)
Inventories	(1,348		)	(9,555		)	4,398			(1,915		)
Costs and earnings on contracts in excess of billings							(54,569		)	567
Accounts payable and accrued expenses	(27,449		)	1,897			(20,072		)	(27,449		)
Billings in excess of costs and earnings on uncompleted contracts	9,869			4,896
Billings on contracts in excess of costs and earnings							14,558			9,869
Refundable and accrued income taxes	7,108			(1,073		)	1,831			7,108
Other, net	(2,685		)	335
Other							(1,825		)	(2,685		)
Net cash provided by operating activities	66,239			72,815			70,644			66,239
Investing Activities
Capital expenditures	(38,946		)	(44,548		)	(33,867		)	(38,946		)
Proceeds from sales of property, plant and equipment	253			1,716			12,332			253
Acquisition of business, net of cash acquired	(184,826		)	—			—			(184,826		)
Change in restricted cash	7,834			(14,884		)
Purchases of marketable securities	(10,154		)	(3,021		)	(9,006		)	(10,154		)
Sales/maturities of marketable securities	9,288			3,703			5,813			9,288
Other, net	941			(2,168		)
Other							(2,209		)	941
Net cash used in investing activities	(215,610		)	(59,202		)	(26,937		)	(223,444		)
Financing Activities
Borrowings on line of credit	314,700			—			294,500			314,700
Payments on line of credit	(150,700		)	—			(278,000		)	(150,700		)
Shares withheld for taxes, net of stock issued to employees	(1,561		)	(910		)	(1,591		)	(1,561		)
Repurchase and retirement of common stock	(10,833		)	(10,817		)	(23,313		)	(10,833		)
Dividends paid	(11,971		)	(10,687		)	(13,180		)	(11,971		)
Other	2,039			(408		)	413			2,039
Net cash provided by (used in) financing activities	141,674			(22,822		)
Decrease in cash and cash equivalents	(7,697		)	(9,209		)
Net cash (used in) provided by financing activities							(21,171		)	141,674
Increase (decrease) in cash and cash equivalents							22,536			(15,531		)
Effect of exchange rates on cash	1,079			338			(498		)	1,079
Cash and cash equivalents at beginning of year	19,463			60,470
Cash and cash equivalents at end of period	$	12,845		$	51,599
Cash, cash equivalents and restricted cash at beginning of year							19,359			27,297
Cash, cash equivalents and restricted cash at end of period							$	41,397		$	12,845
Noncash Activity
Capital expenditures in accounts payable	$	1,859		$	6,683		$	5,771		$	1,859
Deferred payments on acquisition of business	7,500			—

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited)


(In thousands)	Common Shares Outstanding		Common Stock			Additional Paid-In Capital			Retained Earnings			Common Stock Held in Trust			Deferred Compensation Obligation		Accumulated Other Comprehensive (Loss) Income
In thousands																				Common Shares Outstanding		Common Stock			Additional Paid-In Capital			Retained Earnings			Common Stock Held in Trust			Deferred Compensation Obligation			Accumulated Other Comprehensive (Loss) Income
Balance at March 3, 2018																				28,158		$	9,386		$	152,763		$	373,259		$	(922	)	$	922		$	(24,053	)
Cumulative effect adjustment (see Note 1)																				—		—			—			2,999			—			—			—
Reclassification of tax effects (see Note 1)																				—		—			—			737			—			—			(737		)
Net earnings																				—		—			—			57,778			—			—			—
Unrealized loss on marketable securities, net of $25 tax benefit																				—		—			—			—			—			—			(90		)
Unrealized loss on foreign currency hedge, net of $99 tax benefit																				—		—			—			—			—			—			(327		)
Foreign currency translation adjustments																				—		—			—			—			—			—			(7,522		)
Issuance of stock, net of cancellations																				125		42			126			—			177			(177		)	—
Share-based compensation																				—		—			4,724			—			—			—			—
Exercise of stock options																				19		6			177			—			—			—			—
Share repurchases																				(600	)	(200		)	(3,436		)	(19,677		)	—			—			—
Other share retirements																				(46	)	(15		)	(259		)	(1,627		)	—			—			—
Cash dividends																				—		—			—			(13,180		)	—			—			—
Balance at December 1, 2018																				27,656		$	9,219		$	154,095		$	400,289		$	(745	)	$	745		$	(32,729	)

Balance at March 4, 2017	28,680		$	9,560		$	150,111		$	341,996		$	(875	)	$	875	$	(31,090	)	28,680		$	9,560		$	150,111		$	341,996		$	(875	)	$	875		$	(31,090	)
Net earnings	—		—			—			57,159			—			—		—			—		—			—			57,159			—			—			—
Unrealized loss on marketable securities, net of $28 tax benefit	—		—			—			—			—			—		(51		)	—		—			—			—			—			—			(51		)
Foreign currency translation adjustments	—		—			—			—			—			—		10,652			—		—			—			—			—			—			10,652
Issuance of stock, net of cancellations	106		36			147			—			(33		)	33		—			106		36			147			—			(33		)	33			—
Share-based compensation	—		—			4,645			—			—			—		—			—		—			4,645			—			—			—			—
Exercise of stock options	100		33			801			—			—			—		—			100		33			801			—			—			—			—
Share repurchases	(200	)	(67		)	(1,091		)	(9,675		)	—			—		—			(200	)	(67		)	(1,091		)	(9,675		)	—			—			—
Other share retirements	(45	)	(15		)	(256		)	(2,229		)	—			—		—			(45	)	(15		)	(256		)	(2,229		)	—			—			—
Cash dividends	—		—			—			(11,971		)	—			—		—			—		—			—			(11,971		)	—			—			—
Balance at December 2, 2017	28,641		$	9,547		$	154,357		$	375,280		$	(908	)	$	908	$	(20,489	)	28,641		$	9,547		$	154,357		$	375,280		$	(908	)	$	908		$	(20,489	)

Balance at February 27, 2016	28,684		$	9,561		$	145,528		$	282,477		$	(837	)	$	837	$	(31,371	)
Net earnings	—		—			—			62,671			—			—		—
Unrealized loss on marketable securities, net of $105 tax benefit	—		—			—			—			—			—		(192		)
Foreign currency translation adjustments	—		—			—			—			—			—		2,742
Issuance of stock, net of cancellations	139		46			94			—			(26		)	26		—
Share-based compensation	—		—			4,403			—			—			—		—
Tax deficit associated with stock plans	—		—			(1,229		)	—			—			—		—
Exercise of stock options	125		42			1,211			—			—			—		—
Share repurchases	(250	)	(83		)	(1,357		)	(9,376		)	—			—		—
Other share retirements	(52	)	(17		)	(271		)	(2,015		)	—			—		—
Cash dividends	—		—			—			(10,687		)	—			—		—
Balance at November 26, 2016	28,646		$	9,549		$	148,379		$	323,070		$	(863	)	$	863	$	(28,821	)

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Basis of presentation

The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended March ~~4, 2017~~3, 2018. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. The results of operations for the nine-month period ended December ~~2, 2017~~1, 2018 are not necessarily indicative of the results to be expected for the full year.

~~Subsequent events~~Certain prior-year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the consolidated results of operations.

~~In connection with preparing the unaudited consolidated financial statements~~

Significant accounting policies update

Our significant accounting policies are included in Note 1 "Summary of Significant Accounting Policies and Related Data" of our Annual Report on Form 10-K for the ~~nine months~~year ended ~~December 2, 2017, we evaluated subsequent events for potential recognition and disclosure through the date of this filing.~~March 3, 2018. On December 20, 2017, the Tax Cuts and Jobs Act (the "2017 Act") was signed into law. We are in the process of preparing and analyzing information to determine the impact of the 2017 Act on our accounting for income taxes, including the remeasurement of our deferred tax assets and liabilities. The consolidated financial statements presented herein do not reflect any impact that may result from completing the accounting for the income tax effects of the 2017 Act.

~~Subsequent to the end of the quarter, in late December 2017 and early January~~March 4, 2018, we ~~purchased 246,299 shares of stock under our authorized share repurchase program, at a total cost of $11.1 million.~~

On January 5, 2018, we announced a restructuring plan that involves the closure of our St. George, UT architectural glass manufacturing facility in March 2018, enabled by our investments in productivity and increased capabilities, which have led to an increase in capacity. This and other restructuring activities are expected to have an approximately $4.5 million pre-tax impact in our fiscal fourth quarter.


2.	~~New Accounting Standards~~

~~In May 2014, the FASB issued ASU 2014-09,~~adopted ASC 606, Revenue from Contracts with Customers, ~~which outlines~~and as a ~~single comprehensive model~~result, made updates to ~~use in~~our significant accounting policy for revenue ~~arising~~recognition.

We generate revenue from the design, engineering and fabrication of architectural glass, curtainwall, window, storefront and entrance systems, and from installing those products on commercial buildings. We also manufacture value-added glass and acrylic products. Due to the diverse nature of our operations and various types of contracts with customers, we have businesses that recognize revenue over time and ~~supersedes most~~businesses that recognize revenue at a point in time.

In the current year-to-date period, approximately 46 percent of our total revenue is recognized at the time products are shipped from our manufacturing facilities, which is when control is transferred to our customer, consistent with past practices. These businesses do not generate contract-related assets or liabilities. Variable consideration associated with these contracts and orders, generally related to early pay discounts or volume rebates, is not considered significant.

We also have three businesses which operate under long-term, fixed-price contracts, representing approximately 33 percent of our total revenue in the current year. This includes one business which changed revenue recognition ~~guidance. Under~~practices due to the adoption of the new ~~standard,~~guidance, moving from recognizing revenue at shipment to an ~~entity recognizes~~over-time method of revenue recognition. The contracts for these businesses have a single, bundled performance obligation, as these businesses generally provide interrelated products and services and integrate these products and services into a combined output specified by the customer. The customer obtains control of this combined output, generally integrated window systems or installed window and curtainwall systems, over time. We measure progress on these contracts following an input method, by comparing total costs incurred to-date to ~~depict~~ the ~~transfer~~total estimated costs for the contract, and record that proportion of ~~promised~~the total contract price as revenue in the period. Contract costs include materials, labor and other direct costs related to contract performance. We believe this method of recognizing revenue is consistent with our progress in satisfying our contract obligations.

Due to the nature of the work required under these long-term contracts, the estimation of total revenue and costs incurred throughout a project is subject to many variables and requires significant judgment. It is common for these contracts to contain potential bonuses or penalties which are generally awarded or charged upon certain project milestones or cost or timing targets, and can be based on customer discretion. We estimate variable consideration at the most likely amount to which we expect to be entitled. We include estimated amounts in the transaction price to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on our assessments of anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

Long-term contracts are often modified to account for changes in contract specifications and requirements of work to be performed. We consider contract modifications to exist when the modification, generally through a change order, either creates new or changes existing enforceable rights and obligations, and we evaluate these types of modifications to determine whether they may be considered distinct performance obligations. In many cases, these contract modifications are for goods or services that are not distinct from the existing contract, due to the significant integration service provided in the context of the contract. Therefore, these modifications are accounted for as part of the existing contract. The effect of a contract modification on the transaction price and our measure of progress is recognized as an adjustment to revenue, generally on a cumulative catch-up basis.

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Typically, under these fixed-price contracts, we bill our customers following an agreed-upon schedule based on work performed. Because the progress billings do not generally correspond to our measurement of revenue on a contract, we generate contract assets when we have recognized revenue in excess of the amount billed to the customer. We generate contract liabilities when we have billed the customer in excess of revenue recognized on a contract.

Finally, we have one business, making up approximately 21 percent of our total revenue in the current year, that recognizes revenue following an ~~amount~~over-time output method based upon units produced. The customer is considered to have control over the products at the time of production, as the products are highly customized with no alternative use, and we have an enforceable right to payment for performance completed over the production period. We believe this over-time output method of recognizing revenue reasonably depicts the fulfillment of our performance obligations under our contracts. Previously, this business recognized revenue at the time of shipment. Billings still occur upon shipment. Therefore, contract assets are generated for the unbilled amounts on contracts when production is complete. Variable consideration associated with these orders, generally related to early pay discounts, is not considered significant.

As outlined within the new accounting guidance, we elected several practical expedients in our transition to ASC 606:

We have made an accounting policy election to account for shipping and handling activities that ~~reflects~~occur after control of the ~~consideration~~related goods transfers to ~~which~~ the ~~entity expects~~customer as fulfillment activities, instead of assessing such activities as performance obligations.

We have made an accounting policy election to exclude from the transaction price all sales taxes related to revenue-producing transactions that are collected from the customer for a government authority.

We generally expense incremental costs of obtaining a contract when incurred because the amortization period would be ~~entitled~~less than one year. These costs primarily relate to sales commissions and are included in ~~exchange~~selling, general and administrative expenses.

We have not adjusted contract price for a significant financing component, as we expect the period between when our goods and services are transferred to the customer and when the customer pays for those goods ~~or services. This~~and services to be less than a year.

Adoption of new accounting standards

We adopted the new guidance ~~is effective~~in ASC 606 using the modified retrospective transition method applied to those contracts which were not complete as of March 4, 2018. Prior period amounts were not adjusted and therefore continue to be reported in accordance with the accounting guidance and our accounting policies in effect for ~~annual reporting~~those periods.

Representing the cumulative effect of adopting ASC 606, we recorded a $3.0 million increase to the opening balance of retained earnings as of March 4, 2018. For the three- and nine-month periods ~~beginning after~~ending December ~~15, 2017, our fiscal 2019. We have undertaken a comprehensive assessment process at each of our businesses and have concluded on~~1, 2018, the application of the new accounting guidance ~~at nearly all~~had the following impact on our consolidated financial statements:



	Three Months Ended December 1, 2018				Nine Months Ended December 1, 2018
In thousands	As reported		Without adoption of ASC 606		As reported		Without adoption of ASC 606
Net sales	$	357,718	$	355,765	$	1,056,382	$	1,042,600
Cost of sales	273,628		272,087		807,096		796,802
Gross profit	84,090		83,678		249,286		245,798
Selling, general and administrative expenses	52,682		52,692		167,224		166,560
Operating income	$	31,408	$	30,986	$	82,062	$	79,238

Income tax expense	$	6,730	$	6,627	$	18,030	$	17,355
Net earnings	$	21,891	$	21,572	$	57,778	$	55,628

					December 1, 2018
					As reported		Without adoption of ASC 606
Inventories					$	79,847	$	89,250
Costs and earnings on contracts in excess of billings					60,140		30,756
Billings on contracts in excess of costs and earnings					26,961		25,923
Other current liabilities					59,230		57,802
Retained earnings					400,289		398,139

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These changes are primarily a result of the transition of certain of our ~~businesses. We are in the process of quantifying the impact that this standard will have on our financial statements upon adoption. At this time:~~

We plan to adopt the guidance following a modified retrospective transition method, with a cumulative effect adjustment to opening retained earnings in fiscal 2019. We are in the process of determining this retained earnings adjustment.

We have determined that some of our business units will continue to recognize revenue at the point in time when goods are shipped, as that represents when control is transferred to the customer. We also have business units that continue to recognize revenue over time, following a cost-to-cost percentage of completion method of revenue recognition.

~~We expect that two of our business units will change~~businesses from recognizing revenue at ~~a point in~~the time of shipment to ~~recognizing~~over-time methods of revenue ~~over time, to better reflect transfer of control to~~recognition.

In the customer in line with the new guidance. We are continuing to assess the appropriate measure of progress toward completion, based on the facts and circumstances specific to the performance obligations and terms of sale of each business.

~~We are in the process of evaluating how the revenue recognition guidance applies to EFCO, the business acquired in the second~~first quarter of fiscal ~~2018.~~2019, we elected to early adopt ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This standard permits a company to reclassify the disproportionate income tax effects of the 2017 Tax Cuts and Jobs Act on items within accumulated other comprehensive income ("AOCI") to retained earnings. The FASB refers to these amounts as “stranded tax effects.” As a result of this adoption, we reclassified income tax effects of $0.7 million resulting from tax reform from AOCI to retained earnings following a portfolio approach. These stranded tax effects are derived from the deferred tax balances on our pension obligations as a result of the lower U.S. federal corporate tax rate.

Accounting standards not yet adopted

In February 2016, the FASB issued ASU 2016-02, Leases, which provides for comprehensive changes to lease accounting. The ~~new~~ standard requires that a lessee recognize a lease obligation liability and a ~~right to use~~right-to-use asset for virtually all leases of property, plant and equipment, subsequently amortized over the lease term. The new standard is effective for fiscal years beginning after December 15, 2018, our fiscal year ~~2020, with~~2020. In July 2018, the FASB issued an additional update which allows an entity the option to adopt the guidance on a modified retrospective ~~transition. The~~basis. Under the modified retrospective approach, which we plan to adopt in implementing the new guidance, an entity would recognize a cumulative effect adjustment of initially applying the guidance to the opening balance of retained earnings in the period of adoption. Prior period amounts will not be adjusted.

We are in the process of analyzing our lease arrangements and evaluating our initial right-to-use asset and lease liability balances, including determining estimates and assumptions used in the calculation of the lease asset and liability. We are also in the process of determining modifications to our business processes, accounting policies and systems and controls that are needed to support measurement, recognition and disclosure under this new standard. We expect that the adoption of this standard will result in reflecting ~~assets~~a material right-of-use asset and ~~liabilities for the value of our leased property and equipment~~lease liability on our consolidated balance ~~sheet, but~~sheet. In adopting the new standard, we plan to elect the package of practical expedients, as well as the practical expedient to not separate nonlease components from lease components. We plan to adopt the new guidance following the modified retrospective application approach. We do not ~~currently~~ expect this ~~guidance~~standard to have a significant impact on our consolidated results of ~~operations.~~operations or consolidated statements of cash flows.

~~In August 2016,~~Subsequent events

We have evaluated subsequent events for potential recognition and disclosure through the ~~FASB issued ASU 2016-15,~~ ~~Statement~~date of ~~Cash Flows, and in November 2016, it issued 2016-18,~~ ~~Restricted Cash. Both standards provide guidance for presentation~~this filing. Subsequent to the end of ~~certain topics within~~ the ~~statement~~quarter, we purchased 504,004 shares of ~~cash flows, including presenting~~stock under our authorized share repurchase program, at a total cost of $14.9 million.

~~restricted~~


2.	Acquisition

On June 12, 2017, we acquired 100 percent of the stock of EFCO Corporation, a privately held U.S. manufacturer of architectural aluminum window, curtainwall, storefront and entrance systems for commercial construction projects, for $192 million in cash, ~~within cash and cash equivalents, and are intended to improve consistency~~funded through our committed revolving credit facility. EFCO's results of operations have been included in presentation. The new classification guidance is effective for fiscal years beginning after December 15, 2017, our fiscal year 2019, and is to be applied retrospectively for comparability across all periods. We do not expect this guidance to have a significant impact on our consolidated financial ~~statements.~~

~~In January 2017,~~statements and within the ~~FASB issued ASU 2017-04,~~ ~~Simplifying~~Architectural Framing Systems segment since the ~~Test for Goodwill Impairment~~, which simplifies the accounting for goodwill impairment by requiring impairment charges to be based on the first step in the current two-step impairment test process. The new guidance eliminates the current requirement to calculate a goodwill impairment charge using step 2. The standard is applicable to impairment tests performed in periods beginning after December 15, 2019, our fiscal 2021, with early adoption permitted. We are currently evaluating early adoptiondate of ~~this guidance for our future annual goodwill impairment review process.~~acquisition.


3.	~~Share-Based Compensation~~Revenue, Receivables and Contract Assets and Liabilities

~~Total share-based compensation expense included in the results~~

Revenue

The following table disaggregates total revenue by timing of ~~operations was $4.6 million~~recognition (see Note 13 for ~~the~~ ~~nine-month period ended~~ ~~December 2, 2017~~ ~~and $4.4 million for the nine-month period ended~~ ~~November 26, 2016~~.

~~Stock Options and SARs~~

~~Stock option and SAR activity for the current nine-month period is summarized as follows:~~disclosure of revenue by segment):

Stock Options and SARs Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value
Outstanding at March 4, 2017 229,901
$ 9.90

Awards exercised (100,000 ) 8.34

Outstanding and exercisable at December 2, 2017 129,901
$ 11.10
3.0 Years $ 4,878,738



	Three Months Ended		Nine Months Ended
In thousands	December 1, 2018		December 1, 2018
Recognized at shipment	$	158,164	$	481,565
Recognized over time	199,554		574,817
Total	$	357,718	$	1,056,382

~~Cash proceeds~~Receivables

Trade and construction accounts receivable consist of amounts billed and due from ~~the exercise of stock options were~~ ~~$0.8 million~~ ~~and~~ ~~$1.3 million~~customers. The amounts due are stated at their estimated net realizable value. We maintain an allowance for doubtful accounts to provide for the ~~nine~~ ~~months ended~~ ~~December 2, 2017~~estimated amount of receivables that will not be collected. This allowance is based on an assessment of customer creditworthiness, historical payment experience and ~~November 26, 2016, respectively. The aggregate intrinsic value~~the age of ~~securities exercised (the amount~~outstanding receivables. Retainage on construction contracts represents amounts withheld by ~~which~~our customers on long-term projects until the ~~stock price on the date~~project reaches a level of ~~exercise exceeded the stock price of the award on the date of grant) was~~ ~~$4.8 million~~ ~~during the~~ ~~nine~~ ~~months ended~~ ~~December 2, 2017~~ ~~and~~ ~~$4.5 million~~ ~~during the prior-year period.~~completion where amounts are released.

~~Nonvested Shares and Share Units~~

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~~Nonvested share activity for the current nine-month period is summarized as follows:~~

Nonvested Shares and Units Number of Shares and Units Weighted Average Grant Date Fair Value
Nonvested at March 4, 2017 279,204
$ 44.79
Granted 124,416
55.40
Vested (130,093 ) 45.31
Canceled (7,000 ) 55.89
Nonvested at December 2, 2017 266,527
$ 49.20



In thousands	December 1, 2018			March 3, 2018
Trade accounts	$	155,651		$	157,562
Construction contracts	14,229			26,545
Construction contracts - retainage	33,176			26,388
Other receivables	—			2,887
Total receivables	203,056			213,382
Less: allowance for doubtful accounts	(1,558		)	(1,530		)
Net receivables	$	201,498		$	211,852

At ~~December 2, 2017, there~~Contract assets and liabilities

Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts. Retainage is classified within receivables and deferred revenue is classified within other current liabilities on our consolidated balance sheets.

The time period between when performance obligations are complete and when payment is due is not significant. In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.



In thousands	December 1, 2018		March 3, 2018
Contract assets	$	93,316	$	30,508
Contract liabilities	30,447		20,120

The increase in contract assets was ~~$8.5~~due to additional businesses recognizing revenue in advance of billings, as a result of changing accounting policies for revenue recognition upon adoption of ASC 606 and the timing of costs incurred in advance of billing on a large project. The increase in contract liabilities was due to timing of project activity within our businesses that operate under long-term contracts.

In the first nine months of fiscal 2019, we recognized revenue of $10.4 million ~~of total unrecognized compensation cost~~ related to ~~nonvested share~~contract liabilities at March 4, 2018, and ~~nonvested share unit awards,~~revenue of $3.8 million related to performance obligations satisfied in previous periods due to changes in contract estimates. For the third quarter of fiscal 2019, we did not recognize any revenue related to contract liabilities at March 4, 2018, and recognized revenue of $1.5 million related to performance obligations satisfied in previous periods due to changes in contract estimates.

Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that timeframe. Generally these contracts are in our businesses with long-term contracts which isrecognize revenue over time. As of December 1, 2018, the transaction price associated with unsatisfied performance obligations was approximately $706.3 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over ~~a weighted average period of approximately~~ 21 ~~months. The total fair value of shares vested during~~ the ~~nine~~ ~~months ended December 2, 2017 was $7.0 million.~~following estimated time periods:



In thousands	December 1, 2018
Within one year	$	421,778
Within two years	236,037
Beyond	48,493
Total	$	706,308


4.	~~Earnings per Share~~Supplemental Balance Sheet Information

~~The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:~~Inventories

Three Months Ended Nine Months Ended
(In thousands) December 2, 2017 November 26, 2016 December 2,
2017 November 26,
2016
Basic earnings per share – weighted average common shares outstanding 28,736
28,828
28,812
28,807
Weighted average effect of nonvested share grants and assumed exercise of stock options 82
64
50
109
Diluted earnings per share – weighted average common shares and potential common shares outstanding 28,818
28,892
28,862
28,916



In thousands	December 1, 2018		March 3, 2018
Raw materials	$	43,821	$	35,049
Work-in-process	16,426		17,406
Finished goods	19,600		28,453
Total inventories	$	79,847	$	80,908

~~There were no anti-dilutive stock options excluded from the calculation~~

Table of ~~earnings per share for any of the periods presented, as the average market price exceeded the exercise price of options outstanding.~~Contents

Other current liabilities



In thousands	December 1, 2018		March 3, 2018
Warranties	$	12,796	$	18,110
Acquired contract liabilities	15,541		26,422
Deferred revenue	4,080		7,659
Other	26,813		27,505
Total other current liabilities	$	59,230	$	79,696

Other non-current liabilities



In thousands	December 1, 2018		March 3, 2018
Deferred benefit from New Market Tax Credit transactions	$	26,458	$	16,708
Retirement plan obligations	8,997		8,997
Deferred compensation plan	10,996		10,730
Other	38,954		34,211
Total other non-current liabilities	$	85,405	$	70,646


5.	~~Inventories~~

(In thousands) December 2, 2017 March 4, 2017
Raw materials $ 35,565
$ 22,761
Work-in-process 24,919
16,154
Finished goods 34,951
29,372
Costs and earnings in excess of billings on uncompleted contracts 2,627
5,122
Total inventories $ 98,062
$ 73,409


6.	~~Marketable Securities~~Financial Instruments

Marketable securities ~~are classified as available for sale:~~

We hold the following available-for-sale marketable securities, made up of municipal and corporate bonds:

(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses
Estimated
Fair Value
December 2, 2017
Municipal bonds 10,334
17
(103 ) 10,248
March 4, 2017
Municipal bonds 9,595
91
(97 ) 9,589



In thousands	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses		Estimated Fair Value
December 1, 2018	12,534	4	(249	)	12,289
March 3, 2018	9,183	8	(138	)	9,053

We have a wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), which holds these municipal and corporate bonds. Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements. The reinsurance carrier requires Prism to maintain fixed-maturity investments, which are generally high-quality municipal and corporate bonds, for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

The amortized cost and estimated fair values of municipal bonds at December ~~2, 2017~~1, 2018, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.


(In thousands)	Amortized Cost		Estimated Fair Value
In thousands					Amortized Cost		Estimated Fair Value
Due within one year	$	482	$	482	$	447	$	441
Due after one year through five years	4,418		4,385		8,781		8,598
Due after five years through 10 years	4,627		4,578		2,541		2,493
Due after 10 years through 15 years	141		141		—		—
Due beyond 15 years	666		662		765		757
Total	$	10,334	$	10,248	$	12,534	$	12,289


7.	~~Fair Value Measurements~~

Fair value measurements

Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities.

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(In thousands)
Quoted Prices in
Active Markets
(Level 1)
Other Observable Inputs (Level 2) Total Fair Value
December 2, 2017
Cash equivalents
Money market funds $ 1,696
$ —
$ 1,696
Commercial paper —
—
—
Total cash equivalents 1,696
—
1,696
Short-term securities
Municipal bonds —
482
482
Long-term securities
Municipal bonds —
9,766
9,766
Total assets at fair value $ 1,696
$ 10,248
$ 11,944
March 4, 2017
Cash equivalents
Money market funds $ 4,423
$ —
$ 4,423
Commercial paper —
5,500
5,500
Total cash equivalents 4,423
5,500
9,923
Short-term securities
Municipal bonds —
548
548
Long-term securities
Municipal bonds —
9,041
9,041
Total assets at fair value $ 4,423
$ 15,089
$ 19,512



In thousands	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value
December 1, 2018
Cash equivalents
Money market funds	$	2,145	$	—	$	2,145
Commercial paper	—		400		400
Total cash equivalents	2,145		400		2,545
Short-term securities
Municipal and corporate bonds	—		442		442
Long-term securities
Municipal and corporate bonds	—		11,847		11,847
Total assets at fair value	$	2,145	$	12,689	$	14,834
March 3, 2018
Cash equivalents
Money market funds	$	2,901	$	—	$	2,901
Commercial paper	—		400		400
Total cash equivalents	2,901		400		3,301
Short-term securities
Municipal and corporate bonds	—		423		423
Long-term securities
Municipal and corporate bonds	—		8,630		8,630
Total assets at fair value	$	2,901	$	9,453	$	12,354

Cash equivalents

Fair value of money market funds was determined based on quoted prices for identical assets in active markets. Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets.

Short- and long-term securities

Mutual funds were measured at fair value based on quoted prices for identical assets in active markets. Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified as short-term or long-term based on maturity date.


8.	~~Acquisitions~~

Foreign currency instruments

~~EFCO~~

~~In line~~We periodically enter into forward purchase foreign currency contracts, generally with our strategic objectives, on June 12, 2017, we acquired 100 percent of the stock of EFCO Corporation, a privately held U.S. manufacturer of architectural aluminum window, curtainwall, storefront and entrance systems for commercial construction projects, for $192 million in cash. The acquisition was funded through our committed revolving credit facility, with $7.5 million of the purchase price payable in equal installments over the next three years. EFCO's results of operations have been included in our consolidated financial statements and within the Architectural Framing Systems segment since thean original maturity date of ~~acquisition. Those results include $135.3~~less than one year, to hedge foreign currency exchange rate risk. As of December 1, 2018, we held foreign exchange forward contracts with a U.S. dollar notional value of $16.0 million, with the objective of ~~sales~~reducing the exposure to fluctuations in the Canadian dollar and ~~$6.1~~the Euro. The fair value of these contracts was a liability of $0.4 million ~~of operating income since the date of acquisition.~~

~~The assets and liabilities of EFCO were recorded in our consolidated balance sheet~~ as of ~~the acquisition date,~~December 1, 2018. These forward contracts are measured at their respective fair values. Fair value is estimated based on one or a combination of income, cost and/or market approaches, as determined based on the nature of the asset or liability, and the level of inputs available. With respect to assets and liabilities, the determination of fair value ~~requires management to make subjective judgments~~using unobservable market inputs, such as ~~to projections of future operating performance, the appropriate discount rate to apply, long-term growth~~quotations on forward foreign exchange points and foreign currency exchange rates, ~~etc. (i.e. - unobservable inputs~~and would be classified as Level ~~3 inputs under~~2 within the fair value hierarchy described in Note 7), which affect the amounts recorded in the purchase price allocation. The excess of the consideration transferred over the fair value of the identifiable assets, net of liabilities, is recorded as goodwill, which is indicative of the expected continued growth and development of EFCO. The purchase price allocation is based on these estimated fair values of assets acquired and liabilities assumed, as follows:above.

(In thousands)
Net working capital $ 34,156
Property, plant and equipment 43,815
Goodwill 57,460
Other intangible assets 71,500
Less: Long-term liabilities acquired, net 14,605
Net assets acquired $ 192,326

~~Other intangible assets reflect the following:~~

(In thousands) Estimated fair value Estimated useful life (in years)
Customer relationships $ 34,800
16
Tradename 32,400
Indefinite
Backlog 4,300
1.5
$ 71,500

~~These fair values are based on preliminary estimates and are subject to change based on finalization~~Table of ~~net working capital items included in the purchase price allocation.~~Contents

~~Sotawall~~

On December 14, 2016, we acquired substantially all the assets of Sotawall, Inc., now operating under the name Sotawall Limited ("Sotawall"). Sotawall specializes in the design, engineering, fabrication, assembly and installation of unitized curtainwall systems for industrial, commercial and institutional buildings, primarily serving the Canadian and northeastern U.S. geographic regions. Sotawall's results of operations have been included in our consolidated financial statements and within the Architectural Framing Systems segment since the date of acquisition. Purchase accounting related to the acquisition of Sotawall was finalized during the the first quarter of fiscal 2018.

The following table sets forth certain unaudited pro forma consolidated data for the combined company for the third quarters and first nine-month periods of fiscal 2018 and 2017, as if the EFCO and Sotawall acquisitions were consummated pursuant to each of their respective same terms at the beginning of the fiscal year preceding their respective acquisition dates.

Three Months Ended Nine Months Ended
In thousands, except per share data December 2, 2017 November 26, 2016 December 2, 2017 November 26, 2016
Net sales $ 356,506
$ 368,387
$ 1,044,465
$ 1,083,352
Net earnings 24,453
25,971
59,564
72,171
Earnings per share
Basic 0.85
0.90
2.07
2.50
Diluted 0.85
0.90
2.06
2.50

We have provided this unaudited pro forma information for comparative purposes only. This information does not necessarily reflect what the combined results of operations actually would have been had the acquisitions occurred at the beginning of fiscal year 2017. The information does not reflect the effect of any synergies or integration costs that will result from the acquisitions.


9.6.	Goodwill and Other Identifiable Intangible Assets

The carrying amount of goodwill attributable to each reporting segment was:


(In thousands)	Architectural Framing Systems			Architectural Glass		Architectural Services		Large-Scale Optical		Total
Balance at February 27, 2016	$	36,680		$	25,639	$	1,120	$	10,557	$	73,996
In thousands													Architectural Framing Systems			Architectural Glass			Architectural Services		Large-Scale Optical		Total
Balance at March 4, 2017													$	63,701		$	25,956		$	1,120	$	10,557	$	101,334
Goodwill acquired	27,444			—		—		—		27,444			84,162			—			—		—		84,162
Goodwill adjustments for purchase accounting													(5,859		)	—			—		—		(5,859		)
Foreign currency translation	(423		)	317		—		—		(106		)	1,304			15			—		—		1,319
Balance at March 4, 2017	63,701			25,956		1,120		10,557		101,334
Goodwill acquired, net	49,256			—		—		—		49,256
Balance at March 3, 2018													143,308			25,971			1,120		10,557		180,956
Goodwill adjustments for purchase accounting													6,267			—			—		—		6,267
Foreign currency translation	2,241			50		—		—		2,291			(1,110		)	(325		)	—		—		(1,435		)
Balance at December 2, 2017	115,198			$	26,006	$	1,120	$	10,557	$	152,881
Balance at December 1, 2018													$	148,465		$	25,646		$	1,120	$	10,557	$	185,788

The gross carrying amount of other intangible assets and related accumulated amortization was:


(In thousands)	Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation			Net
December 2, 2017
In thousands											Gross Carrying Amount		Accumulated Amortization			Foreign Currency Translation			Net
December 1, 2018
Definite-lived intangible assets:
Debt issue costs	$	4,516	$	(3,169	)	$	—		$	1,347
Non-compete agreements	6,286		(6,122		)	10			174
Customer relationships	120,273		(18,753		)	3,788			105,308		$	122,816	$	(24,937	)	$	(2,609	)	$	95,270
Trademarks and other intangibles	30,250		(13,616		)	1,055			17,689
Other intangibles											41,697		(31,033		)	(899		)	9,765
Total definite-lived intangible assets	$	161,325	$	(41,660	)	$	4,853		$	124,518	164,513		(55,970		)	(3,508		)	105,035
Indefinite-lived intangible assets:
Trademarks	48,461		—			877			49,338		49,077		—			(507		)	48,570
Total intangible assets	$	209,786	$	(41,660	)	$	5,730		$	173,856	$	213,590	$	(55,970	)	$	(4,015	)	$	153,605
March 4, 2017
March 3, 2018
Definite-lived intangible assets:
Debt issue costs	$	4,066	$	(2,960	)	$	—		$	1,106
Non-compete agreements	6,286		(6,025		)	(65		)	196
Customer relationships	82,479		(14,013		)	(145		)	68,321		$	122,816	$	(20,277	)	$	(56	)	$	102,483
Trademarks and other intangibles	25,950		(4,917		)	(31		)	21,002
Other intangibles											41,697		(25,879		)	(30		)	15,788
Total definite-lived intangible assets	$	118,781	$	(27,915	)	$	(241	)	$	90,625	164,513		(46,156		)	(86		)	118,271
Indefinite-lived intangible assets:
Trademarks	16,022		—			39			16,061		48,461		—			617			49,078
Total intangible assets	$	134,803	$	(27,915	)	$	(202	)	$	106,686	$	212,974	$	(46,156	)	$	531		$	167,349

Amortization expense on definite-lived intangible assets was ~~$12.8~~$10.5 million and ~~$1.2~~$12.8 million for the nine-month periods ended December ~~2, 2017~~1, 2018 and ~~November 26, 2016~~December 2, 2017~~, respectively.~~. The amortization expense associated with debt issue costs is included in interest expense while the remainder is in selling, general and administrative expenses in the consolidated results of operations. At December ~~2, 2017~~1, 2018, the estimated future amortization expense for definite-lived intangible assets was:


(In thousands)	Remainder of Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022
In thousands											Remainder of Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023
Estimated amortization expense	$	4,922	$	13,235	$	8,219	$	8,213	$	7,904	$	2,266	$	8,091	$	8,084	$	7,928	$	7,539


~~10.~~7.	Debt

We maintain a committed revolving credit facility with maximum borrowings of up to $335.0 million, maturing in November 2021. Outstanding borrowings under our committed revolving credit facility were $~~209.0~~211.5 million, as of December ~~2, 2017~~1, 2018, and ~~$45.0~~$195.0 million, as of March ~~4, 2017~~3, 2018. Under this facility, we are subject to two financial covenants that require us to stay below a

maximum debt-to-EBITDA ratio and maintain a minimum ratio of interest expense-to-EBITDA. Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis. At December ~~2, 2017,~~1, 2018, we were in compliance with both financial covenants. Additionally, at December ~~2, 2017,~~1, 2018, we had a total of ~~$26.3~~$25.1 million of ongoing letters of credit related to industrial revenue bonds and construction contracts that expire in fiscal ~~2018~~2020 and reduce availability of funds under our committed credit facility.

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At December ~~2, 2017,~~1, 2018, our debt also included $20.4 million of industrial revenue bonds that mature in fiscal years 2021 through 2043 and ~~$0.4~~$0.5 million of long-term debt in Canada. The fair value of the industrial revenue bonds approximated carrying value at December ~~2, 2017,~~1, 2018, due to the variable interest rates on these instruments. All debt would be classified as Level 2 within the fair value hierarchy described in Note 7.5.

We also maintain two Canadian ~~revolving~~ demand credit facilities totaling $12.0 million Canadian dollars. As of December ~~2, 2017, $1.5~~1, 2018, $0.4 million was outstanding under these facilities, and no borrowings were outstanding as of March ~~4, 2017.~~3, 2018. Borrowings under these facilities are made available at the sole discretion of the lenders and are payable on demand. The Company classifies any outstanding balances under ~~this~~these demand ~~facility~~facilities as long-term debt, as outstanding amounts can be refinanced through our committed revolving credit facility.

Interest payments were $~~3.6~~7.2 million and ~~$0.5~~$3.6 million for the nine months ended December ~~2, 2017~~1, 2018 and ~~November 26, 2016~~December 2, 2017, respectively.


~~11.~~8.	~~Employee Benefit Plans~~Commitments and Contingent Liabilities

The Company sponsors two frozen defined-benefit pension plans: an unfunded Officers’ Supplemental Executive Retirement Plan and the Tubelite Inc. Hourly Employees’ Pension Plan. Components of net periodic benefit cost were:

Three Months Ended Nine Months Ended
(In thousands) December 2, 2017 November 26, 2016 December 2,
2017 November 26,
2016
Interest cost $ 133
$ 139
$ 399
$ 417
Expected return on assets (10 ) (10 ) (30 ) (30 )
Amortization of unrecognized net loss 57
56
171
168
Net periodic benefit cost $ 180
$ 185
$ 540
$ 555


~~12.~~	~~Income Taxes~~

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2015, or U.S. state and local income tax examinations for years prior to fiscal 2011. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2014, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.

The total liability for unrecognized tax benefits at December 2, 2017 and March 4, 2017 was approximately $5.4 million and $4.5 million, respectively. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.3 million during the next 12 months due to lapsing of statutes.

~~13. Other Non-Current Liabilities~~

(In thousands) December 2, 2017 March 4, 2017
Deferred benefit from New Market Tax Credit transactions $ 16,708
$ 16,708
Retirement plan obligations 9,635
9,635
Deferred compensation plan 10,104
7,463
Other 23,034
11,981
Total other non-current liabilities $ 59,481
$ 45,787

~~14.Commitments and Contingent Liabilities~~

Operating lease ~~commitments.~~commitments

As of December ~~2, 2017~~1, 2018, the Company was obligated under non-cancelable operating leases for buildings and equipment. Certain leases provide for increased rental payments based upon increases in real estate taxes or operating costs. Future minimum rental payments under non-cancelable operating leases are:


(In thousands)	Remainder of Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Thereafter		Total
In thousands															Remainder of Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Thereafter		Total
Total minimum payments	$	3,615	$	13,546	$	11,493	$	8,477	$	7,626	$	21,232	$	65,989	$	3,890	$	14,759	$	11,522	$	9,353	$	8,459	$	23,308	$	71,291

Bond ~~commitments.~~commitments and installation project contingencies

In the ordinary course of business, predominantly in our Architectural Services and Architectural Framing Systems segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance. At December ~~2, 2017, $86.4~~1, 2018, $224.0 million of our backlog was bonded by ~~performance~~these types of bonds with a face value of ~~$310.0~~$478.8 million. ~~Performance~~These bonds do not have stated expiration dates, as we are generally released from the bonds upon completion of the contract. We have ~~never~~not been required to make any payments ~~related to~~under these ~~performance~~ bonds with respect to ~~any~~our existing businesses.

Additionally, we also are subject to project management and installation-related contingencies as a result of our ~~current portfolio~~fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of ~~businesses.~~our Architectural Framing Systems businesses, including those taken on with our acquisition of EFCO. We actively manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages.

Warranties

~~Warranties.~~We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework cost, based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume. A warranty rollforward follows:


	Nine Months Ended						Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016
In thousands							December 1, 2018			December 2, 2017
Balance at beginning of period	$	21,933		$	16,340		$	22,517		$	21,933
Additional accruals	3,443			6,082			3,437			3,443
Claims paid	(8,254		)	(4,878		)	(8,398		)	(8,254		)
Acquired reserves	5,571			—			—			5,571
Balance at end of period	$	22,693		$	17,544		$	17,556		$	22,693

Letters of ~~credit.~~credit

At December ~~2, 2017~~,1, 2018, we had $25.1 million of ongoing letters of credit, ~~related to construction contracts and certain industrial revenue bonds. The total value of letters of credit under which we were obligated as of December 2, 2017 was approximately $26.3 million,~~ all of which have been issued under our committed revolving credit ~~facility. Availability under this credit~~ facility, ~~is reduced by borrowings under the facility and also by letters of credit issued under the facility.~~as discussed in Note 7.

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Purchase ~~obligations.~~obligations

Purchase obligations for raw material commitments and capital expenditures totaled ~~$120.9~~$163.2 million as of December ~~2, 2017.~~1, 2018.

~~Litigation.~~New Markets Tax Credit transactions

In September 2018, we entered into a transaction with SunTrust Community Capital (STCC) under a qualified New Markets Tax Credit (NMTC) program related to an investment in plant and equipment within our Architectural Framing Systems segment. STCC contributed $3.2 million to this project, which is included in other non-current liabilities on our consolidated balance sheets. We have completed two NMTC transactions this fiscal year. Under the terms of these arrangements, we are required to hold cash dedicated to fund the related capital projects which is classified as restricted cash on our consolidated balance sheets.

Since fiscal 2014, we have entered into four separate NMTC programs to support our operational expansion. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. Therefore, upon the termination of each arrangement at the end of the seven-year period, proceeds received from investors will be recognized in earnings in exchange for the transfer of tax credits. Direct and incremental costs incurred in structuring these arrangements have been deferred and will be recognized in conjunction with the recognition of the related profits.

Variable-interest entities have been created as a result of the transaction structure, which have been included within our consolidated financial statements as investors in the program do not have a material interest in the underlying economics of the respective projects.

Litigation

In November 2018, a purported class action lawsuit was filed claiming the Company and certain named executive officers made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business and operations during the period June 28, 2018 to September 17, 2018. In December 2018, a derivative lawsuit was filed against certain of our executive officers and directors claiming breach of fiduciary duty, waste of corporate assets and unjust enrichment. We intend to vigorously defend against these matters. Due to the preliminary nature of these matters, we are unable to estimate any potential loss at this time.

In addition to the foregoing, the Company is a party to various legal proceedings incidental to ~~our~~its normal operating activities. In particular, like others in the construction supply and services industry, ~~our businesses are~~the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. ~~We are~~The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability ~~employment practices, workers' compensation and automobile claims.~~matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no ~~such claims~~matters will result in losses that would have a material adverse effect on ~~our~~the results of operations, cash flows or financial ~~condition.~~condition of the Company.


9.	Share-Based Compensation

Total share-based compensation expense included in the results of operations was $4.7 million for the nine-month period ended December 1, 2018 and $4.6 million for the nine-month period ended December 2, 2017.

Stock options and SARs

Stock option and SAR activity for the current nine-month period is summarized as follows:



Stock options and SARs	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at March 3, 2018	129,901		$	11.10
Awards exercised	(29,560	)	20.43
Outstanding and exercisable at December 1, 2018	100,341		8.34		2.8 years	$	2,820,586

Cash proceeds from the exercise of stock options were $0.2 million and $0.8 million for the nine months ended December 1, 2018 and December 2, 2017, respectively. The aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $0.6 million during the nine months ended December 1, 2018 and $4.8 million during the prior-year period.

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Nonvested shares and share units

Nonvested share activity for the current nine-month period is summarized as follows:



Nonvested shares and units	Number of Shares and Units		Weighted Average Grant Date Fair Value
Nonvested at March 3, 2018	266,180		$	49.22
Granted	152,487		43.50
Vested	(116,266	)	46.57
Canceled	(17,942	)	48.65
Nonvested at December 1, 2018	284,459		47.24

At December 1, 2018, there was $7.9 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 20 months. The total fair value of shares vested during the nine months ended December 1, 2018 was $4.9 million.


~~15.~~10.	Employee Benefit Plans



	Three Months Ended						Nine Months Ended
In thousands	December 1, 2018			December 2, 2017			December 1, 2018			December 2, 2017
Interest cost	$	127		$	133		$	381		$	399
Expected return on assets	(10		)	(10		)	(30		)	(30		)
Amortization of unrecognized net loss	57			57			171			171
Net periodic benefit cost	$	174		$	180		$	522		$	540


11.	Income Taxes

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2016, or state and local income tax examinations for years prior to fiscal 2012. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2015, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.

The total liability for unrecognized tax benefits was approximately $5.3 million at December 1, 2018 and $5.1 million at March 3, 2018. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.6 million during the next 12 months due to lapsing of statutes.


12.	Earnings per Share

The following table presents a reconciliation of the share amounts used in the computation of basic and diluted earnings per share:



	Three Months Ended		Nine Months Ended
In thousands	December 1, 2018	December 2, 2017	December 1, 2018	December 2, 2017
Basic earnings per share – weighted average common shares outstanding	27,836	28,736	28,030	28,812
Weighted average effect of nonvested share grants and assumed exercise of stock options	320	82	274	50
Diluted earnings per share – weighted average common shares and potential common shares outstanding	28,156	28,818	28,304	28,862
Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)	170	—	92	—

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13.	Segment Information

The Company has four reporting segments: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).

The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings. The Company has aggregated six operating segments into this reporting segment based on their similar products, customers, distribution methods, production processes and economic characteristics.

The Architectural Glass segment fabricates coated, high-performance glass used in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.

The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.

The LSO segment manufactures value-added glass and acrylic products primarily for framing and display applications.


	Three Months Ended						Nine Months Ended						Three Months Ended						Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016			December 2, 2017			November 26, 2016
In thousands													December 1, 2018			December 2, 2017			December 1, 2018			December 2, 2017
Net sales from operations
Architectural Framing Systems	$	194,157		$	90,850		$	493,672		$	264,212		$	181,306		$	194,157		$	550,193		$	493,672
Architectural Glass	96,940			107,002			292,026			299,567			98,524			96,940			263,533			292,026
Architectural Services	49,077			64,380			146,056			204,934			72,828			49,077			220,051			146,056
Large-Scale Optical	26,003			22,084			64,897			63,382			23,377			26,003			64,522			64,897
Intersegment eliminations	(9,671		)	(10,244		)	(23,930		)	(31,688		)	(18,317		)	(9,671		)	(41,917		)	(23,930		)
Net sales	$	356,506		$	274,072		$	972,721		$	800,407		$	357,718		$	356,506		$	1,056,382		$	972,721
Operating income (loss) from operations
Architectural Framing Systems	$	18,452		$	11,838		$	46,958		$	35,070		$	12,903		$	18,452		$	43,554		$	46,958
Architectural Glass	9,107			11,708			28,687			30,855			5,851			9,107			9,168			28,687
Architectural Services	2,547			4,918			4,102			14,336			8,659			2,547			21,435			4,102
Large-Scale Optical	6,724			5,910			15,022			15,613			6,628			6,724			15,845			15,022
Corporate and other	(2,295		)	(1,115		)	(8,354		)	(3,317		)	(2,633		)	(2,295		)	(7,940		)	(8,354		)
Operating income	$	34,535		$	33,259		$	86,415		$	92,557		$	31,408		$	34,535		$	82,062		$	86,415

Due to the varying combinations and integration of individual window, storefront and curtainwall systems, it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported.


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Forward-Looking Statements~~Forward-looking statements

This discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All forecasts and projections in this document are “forward-looking statements,” and are based on management’s current expectations or beliefs of the Company’s near-term results, based on current information available pertaining to the Company, including the risk factors noted under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017~~3, 2018. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public, such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results.

Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to, the risks and uncertainties set forth under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017~~3, 2018.

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We wish to caution investors that other factors might in the future prove to be important in affecting the Company’s results of operations. New factors emerge from time to time; it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a world leader in certain technologies involving the design and development of value-added glass and metal products and ~~services.~~services for enclosing commercial buildings and framing and displays. Our four reporting segments are: Architectural Framing Systems, Architectural Glass, Architectural Services and Large-Scale Optical (LSO).

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended March ~~4, 2017~~3, 2018 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Highlights of Third Quarter and First Nine Months of Fiscal ~~2018~~2019 Compared to Third Quarter and First Nine Months of Fiscal ~~2017~~2018

Net sales

Consolidated net sales increased ~~30.1~~0.3 percent, or ~~$82.4~~$1.2 million, for the third quarter ended December ~~2, 2017,~~1, 2018, and ~~21.5~~8.6 percent, or ~~$172.3~~$83.7 million, for the nine-month period, ~~ended December 2, 2017,~~ compared to the same periods in the prior year. ~~Sales~~In the three-month period, sales growth was ~~primarily due to~~driven by the ~~addition of EFCO~~Architectural Services segment, largely offset by volume-related declines in ~~June 2017 and Sotawall in December 2016 within~~ the Architectural Framing ~~Systems~~and Large Scale Optical segments. In the nine-month period, the increase in sales was primarily driven by the Architectural Services segment, as well as growth from our Architectural Framing segment, partially offset by ~~the decline~~lower sales in ~~our~~ Architectural ~~Services segment. Foreign currency did not have a meaningful impact on sales results in the current-year period or the prior-year period.~~

Glass.

The relationship between various components of operations, as a percentage of net sales, is ~~illustrated~~presented below:


	Three Months Ended				Nine Months Ended				Three Months Ended				Nine Months Ended
(Percent of net sales)	December 2, 2017		November 26, 2016		December 2, 2017		November 26, 2016
									December 1, 2018		December 2, 2017		December 1, 2018		December 2, 2017
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	74.3		73.4		74.5		73.8		76.5		74.3		76.4		74.5
Gross profit	25.7		26.6		25.5		26.2		23.5		25.7		23.6		25.5
Selling, general and administrative expenses	16.0		14.5		16.6		14.7		14.7		16.0		15.8		16.6
Operating income	9.7		12.1		8.9		11.5		8.8		9.7		7.8		8.9
Interest and other (expense) income, net	(0.3	)	—		(0.3	)	—		(0.8	)	(0.3	)	(0.6	)	(0.3	)
Earnings before income taxes	9.4		12.1		8.6		11.5		8.0		9.4		7.2		8.6
Income tax expense	2.7		3.9		2.7		3.8		1.9		2.7		1.7		2.7
Net earnings	6.6	%	8.2	%	5.9	%	7.7	%	6.1	%	6.6	%	5.5	%	5.9	%
Effective tax rate	29.1	%	32.1	%	31.7	%	32.8	%	23.5	%	29.1	%	23.8	%	31.7	%

Gross profit

Gross profit as a percent of sales was ~~25.7~~23.5 percent and ~~25.5~~23.6 percent for the three- and nine-month periods, respectively, ended December ~~2, 2017,~~1, 2018, compared to ~~26.6~~25.7 percent and ~~26.2~~25.5 percent for each of the three- and nine-month periods ended ~~November 26, 2016.~~December 2, 2017. Gross profit as a percent of sales declined from the prior-year periods primarily due to ~~the inclusion of the lower gross margin EFCO business~~higher operating costs in the ~~three-month period ended December 2, 2017,~~Architectural Glass segment and negative leverage on reduced volumes in the Architectural Framing segment, somewhat offset by volume leverage and good project performance in the Architectural Services ~~segment in both the three- and nine-month periods ended December 2, 2017.~~segment.

Selling, general and administrative (SG&A) expenses

SG&A expenses as a percent of sales ~~were~~declined to 14.7 percent and 15.8 percent for the three- and nine-month periods, respectively, ended December 1, 2018, compared to 16.0 percent and 16.6 percent in the three- and nine-month periods, ~~ended December 2, 2017, compared to 14.5 percent of sales and 14.7~~respectively, last year. The decline as a percent of sales in ~~the three- and nine-month~~both periods ~~respectively, last year. The increases in the current year periods were~~was primarily due to reduced amortization on short-lived intangibles and a gain on the sale of a property. In the ~~intangible assets acquired~~year-to-date period, SG&A expense as a percent of sales also decreased due to the acquisition-related costs incurred in the Sotawall and EFCO transactions and EFCO acquisition-related costs. These two factors combined made up approximately 170 basis points of the increase in each of the three- and nine-month periods of fiscal 2018, compared to the prior-year periods.prior year.

Income tax expense

The effective tax rate in the third quarter of fiscal ~~2018~~2019 was ~~29.1~~23.5 percent, compared to ~~32.1~~29.1 percent in the same period last year, and ~~31.7~~23.8 percent for the first nine months of fiscal ~~2018,~~2019, compared to ~~32.8~~31.7 percent in the prior-year period. The ~~decline~~reduction in the effective tax rate in both periods was ~~due mainly to a tax benefit on~~primarily driven by the ~~recognition~~provisions of ~~a foreign currency loss.~~the Tax Cuts and Jobs Act, enacted in December 2017.

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Segment Analysis

Architectural Framing Systems


	Three Months Ended								Nine Months Ended						Three Months Ended								Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016			% Change		December 2, 2017		November 26, 2016		% Change
In thousands															December 1, 2018			December 2, 2017			% Change		December 1, 2018			December 2, 2017			% Change
Net sales	$	194,157		$	90,850		113.7	%	493,672		264,212		86.8	%	$	181,306		$	194,157		(6.6	)%	$	550,193		$	493,672		11.4	%
Operating income	18,452			11,838			55.9	%	46,958		35,070		33.9	%	12,903			18,452			(30.1	)%	43,554			46,958			(7.2	)%
Operating margin	9.5		%	13.0		%			9.5	%	13.3	%			7.1		%	9.5		%			7.9		%	9.5		%

Architectural Framing Systems net sales ~~increased $103.3~~decreased $12.9 million, or ~~113.7~~6.6 percent, for the three-month period ended December 1, 2018, and ~~$229.5~~increased $56.5 million, or ~~86.8~~11.4 percent, for the nine-month period this year, compared to the respective prior year periods. The sales decline in the current-year third quarter was primarily due to lower volumes reflecting project timing delays in some of the segment's end markets. For the nine-month period, the sales increase was primarily due to the addition of EFCO (acquired in June 2017) for the full period.

Operating margin decreased 240 and 160 basis points, respectively, for the three- and nine-month periods respectively, ended December 2, 2017, over the same periods in the prior year. The addition of the net sales of EFCO and Sotawall provided over 80 percent of the growth in both periods. The remaining growth was from share gains and geographic growth in North America within our legacy businesses.

~~Operating margin declined 350 basis points and 380 basis points for the three- and nine-month periods, respectively,~~ of the current year, compared to the same periods in the prior year. ~~The decline in~~For the three-month period, ~~resulted from 280 basis points of amortization of acquired intangible assets and, for~~the operating margin decline compared to the prior year was primarily driven by negative operating leverage on reduced volume. For the nine-month period, the ~~amortization of acquired intangible assets resulted~~decline in ~~240 basis points of the decline. Additionally,~~ operating margin ~~in both periods~~ was ~~impacted~~driven by the inclusion in the current year of a full period of EFCO at lower operating ~~margins.~~margins, partially offset by operating improvements in our businesses existing prior to our acquisitions of Sotawall (in December 2016) and EFCO.

~~Backlog in this segment, as~~As of December ~~2, 2017,~~1, 2018, segment backlog was approximately ~~$449~~$392 million, compared to approximately ~~$245~~$406 million ~~at fiscal year-end, with the addition of EFCO contributing over 90 percent of the increase.~~last quarter.

Architectural Glass


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016			% Change		December 2, 2017			November 26, 2016			% Change
In thousands																	December 1, 2018			December 2, 2017			% Change		December 1, 2018			December 2, 2017			% Change
Net sales	$	96,940		$	107,002		(9.4	)%	$	292,026		$	299,567		(2.5	)%	$	98,524		$	96,940		1.6	%	$	263,533		$	292,026		(9.8	)%
Operating income	9,107			11,708			(22.2	)%	28,687			30,855			(7.0	)%	5,851			9,107			(35.8	)%	9,168			28,687			(68.0	)%
Operating margin	9.4		%	10.9		%			9.8		%	10.3		%			5.9		%	9.4		%			3.5		%	9.8		%

Net sales ~~declined $10.1~~increased $1.6 million, or ~~9.4~~1.6 percent, for the quarter-ended December 2, 2017, over the same period in the prior year, due to delays in the timing of certain larger projects in the United States, partially as a result of hurricane-related project delays in Florida. Sales for the nine-month period ended December 2, 2017 decreased $7.5and declined $28.5 million, or ~~2.5~~9.8 percent, over the prior-year period due to delays in timing of larger projects, partly offset by share gains in mid-size projects. Foreign currency impact on sales was nominal in the current-year periods compared to the respective prior-year periods.

~~Operating margin declined 150 basis points and 50 basis points~~ for the three- and nine-month periods, respectively, ended December 1, 2018, compared to the same periods in the prior year. The decline in the year-to-date period was the result of changes in the timing of customer orders as well as volume declines stemming from operational challenges within the segment (described in the next paragraph).

Operating margin declined 350 and 630 basis points, respectively, for the three- and nine-month periods of the current year, compared to the same periods in the prior ~~year. The declines in both periods were~~year, primarily driven by ~~reduced~~significantly increased labor costs, continued lower productivity and higher cost of quality, as the segment has been challenged to efficiently ramp-up production in a tight labor market to meet higher than expected order intake and customer demand. In the third quarter of fiscal 2019, we made progress toward overcoming these operational challenges, resulting in operating ~~leverage on lower volume,~~margin improvement compared to the prior quarter and ~~pricing and mix declines. These negative factors were partially offset by improved manufacturing productivity.~~

~~Given the short lead times in this segment,~~ we ~~do not consider backlog~~expect these improvements to ~~be a significant metric.~~continue into early fiscal 2020.

Architectural Services


	Three Months Ended								Nine Months Ended								Three Months Ended								Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016			% Change		December 2, 2017			November 26, 2016			% Change
In thousands																	December 1, 2018			December 2, 2017			% Change		December 1, 2018			December 2, 2017			% Change
Net sales	$	49,077		$	64,380		(23.8	)%	$	146,056		$	204,934		(28.7	)%	$	72,828		$	49,077		48.4	%	$	220,051		$	146,056		50.7	%
Operating income	2,547			4,918			(48.2	)%	4,102			14,336			(71.4	)%	8,659			2,547			240.0	%	21,435			4,102			422.5	%
Operating margin	5.2		%	7.6		%			2.8		%	7.0		%			11.9		%	5.2		%			9.7		%	2.8		%

Architectural Services net sales ~~decreased $15.3~~increased $23.8 million, or ~~23.8~~48.4 percent, and ~~$58.9~~$74.0 million, or ~~28.7~~50.7 percent, for the three- and ~~nine-month~~nine- month periods, respectively, ended December ~~2, 2017,~~1, 2018, over the same periods in the prior year, ~~primarily due~~as the business continued to ~~year-on-year timing~~experience strong execution on projects.

Table of ~~project activity.~~Contents

Operating margin ~~declined 240~~increased 670 and 690 basis points, ~~and 420 basis points for the three- and nine-month periods,~~ respectively, ~~of the current year, over the same periods in the prior year, due to lower volume leverage on fixed project management, engineering and manufacturing costs.~~

~~As of December 2, 2017, backlog in this segment grew to approximately $346 million, compared to approximately $255 million at fiscal year-end.~~

~~Large-Scale Optical (LSO)~~

Three Months Ended Nine Months Ended
(In thousands) December 2, 2017 November 26, 2016
%
Change
December 2, 2017 November 26, 2016
%
Change
Net sales $ 26,003
$ 22,084
17.7 % $ 64,897
$ 63,382
2.4 %
Operating income 6,724
5,910
13.8 % 15,022
15,613
(3.8 )%
Operating margin 25.9 % 26.8 % 23.1 % 24.6 %

LSO net sales increased $3.9 million, or 17.7 percent, and $1.5 million, or 2.4 percent, for the three- and nine-month periods ended December 2, 2017, respectively, over the comparable prior-year periods, as a result of strong customer orders, partly due to timing, and success in new display markets.

~~Operating margin declined 90 basis points and 150 basis points~~ for the three- and nine-month periods of the current year, ~~respectively, over~~compared to the same periods in the prior year, due to ~~accrual~~volume leverage and strong project execution.

As of ~~additional incentive compensation on stronger current-year performance. In~~December 1, 2018, segment backlog was approximately $419 million, compared to approximately $405 million last quarter.

Large-Scale Optical (LSO)



	Three Months Ended								Nine Months Ended
In thousands	December 1, 2018			December 2, 2017			% Change		December 1, 2018			December 2, 2017			% Change
Net sales	$	23,377		$	26,003		(10.1	)%	$	64,522		$	64,897		(0.6	)%
Operating income	6,628			6,724			(1.4	)%	15,845			15,022			5.5	%
Operating margin	28.4		%	25.9		%			24.6		%	23.1		%

LSO net sales decreased $2.6 million, or 10.1 percent, and $0.4 million, or 0.6 percent, for the three- and nine-month periods ended December 1, 2018, over the same periods in the prior year.

Operating margin increased 250 basis points for the three months ended December 1, 2018, compared to the third quarter of last year and increased 150 basis points for the nine-month period of the current ~~quarter, this was partially offset~~year compared to the same period in the prior year, driven by ~~improved operating leverage on increased volume.~~

~~Given the short lead times in this segment, we do not consider backlog to be a significant metric.~~good operational performance and an insurance recovery.

Liquidity and Capital Resources


Selected cash flow data	Nine Months Ended						Nine Months Ended
(In thousands)	December 2, 2017			November 26, 2016
In thousands							December 1, 2018			December 2, 2017
Operating Activities
Net cash provided by operating activities	$	66,239		$	72,815		$	70,644		$	66,239
Investing Activities
Capital expenditures	(38,946		)	(44,548		)	(33,867		)	(38,946		)
Acquisition of business, net of cash acquired	(184,826		)	—			—			(184,826		)
Change in restricted cash	7,834			(14,884		)
Proceeds from sale of property, plant and equipment							12,332			253
Financing Activities
Proceeds from issuance of debt	314,700			—			294,500			314,700
Payments on debt	(150,700		)	—			(278,000		)	(150,700		)
Repurchase and retirement of common stock	(10,833		)	(10,817		)	(23,313		)	(10,833		)
Dividends paid	(11,971		)	(10,687		)	(13,180		)	(11,971		)

Operating Activities. Cash provided by operating activities was ~~$66.2~~$70.6 million for the first nine months of fiscal ~~2018, decreasing $6.6~~2019, increasing $4.4 million compared to the prior-year period, ~~as a result of increased working capital investment~~primarily due to ~~reduced accrued expenses.~~proceeds received on our two New Market Tax Credit transactions.

Investing Activities. Net cash used in investing activities was ~~$215.6~~$26.9 million for the first nine months of fiscal ~~2018,~~2019, primarily due to capital expenditures and net purchases of marketable securities, offset by proceeds received from the ~~cash paid for the acquisition~~sale of ~~EFCO,~~property, while in the first nine months of the prior year, net cash used by investing activities ~~of $59.2~~was $223.4 million, ~~was~~ driven by ~~capital expenditures. Additionally, in fiscal 2018, we released~~ the ~~remaining $7.8 million of cash that was restricted for investment in our oversized glass fabrication project within our Architectural Glass segment.~~EFCO acquisition. We estimate fiscal ~~2018~~2019 capital expenditures to be ~~$55 to~~approximately $60 million, as we continue to ~~invest~~make investments in projects that will add capabilities, improve productivity and ~~capabilities.~~expand capacity.

We ~~continually~~continue to review our portfolio of businesses and their assets in comparison to our internal strategic and performance objectives. As part of this review, we may ~~acquire other businesses,~~take actions to adjust capacity, pursue geographic expansion, ~~take actions to manage capacity and/or~~ further invest in, fully divest ~~and/~~or sell parts of our current businesses and/or acquire other businesses. As a result, on January 5, 2018 we announced a plan to close the St. George, UT architectural glass manufacturing facility in March 2018, enabled by our investments in productivity and increased capabilities, which have led to an increase in capacity.

Financing Activities. At December ~~2, 2017,~~1, 2018, we had outstanding borrowings under our credit facility of ~~$209.0 million.~~$211.5 million and $25.1 million of ongoing letters of credit that reduce availability of funds under our $335.0 million committed credit facility. As defined within our amended committed revolving credit facility, we are required to comply with two financial covenants. These financial covenants require us to stay below a maximum leverage ratio and to maintain a minimum interest coverage ratio. At December ~~2, 2017,~~1, 2018, we were in compliance with both financial covenants.

Table of Contents

We paid dividends totaling ~~$12.0~~$13.2 million ($~~0.42~~0.4725 per share) in the first nine months of fiscal ~~2018.~~2019. As of December ~~2, 2017,~~1, 2018, we repurchased 600,000 shares under our authorized share repurchase program, for a total cost of $23.3 million; all such purchases were made in the third quarter. In the first nine months of fiscal 2018, we repurchased 200,000 shares under our authorized share repurchase program, for a total cost of $10.8 million; all such repurchases were made in the second quarter. In fiscal 2017, we repurchased 250,001 shares under this program, for a total cost of $10.8 million; all such repurchases were made in the third quarter.million. Subsequent to the end of the quarter, we purchased ~~246,299~~504,004 shares under the program, at a total cost of ~~$11.1~~$14.9 million. Including these shares, we have purchased a total of ~~3,753,932~~5,113,936 shares, at a cost of ~~$94.2~~$144.1 million, since the fiscal 2004 inception of this program. ~~In January 2018, our repurchase authority under this program increased by 1,000,000 shares. As a result of both of these actions, we~~We currently have remaining authority to repurchase ~~1,496,068 shares.~~an additional 2,136,064 shares under this program.

Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of December ~~2, 2017~~1, 2018:


	Payments Due by Fiscal Period														Payments Due by Fiscal Period
(In thousands)	Remainder of Fiscal 2018		Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Thereafter		Total
Long-term debt obligations	$	597	$	1,583	$	108	$	5,508	$	211,108	$	13,022	$	231,926
In thousands															Remainder of Fiscal 2019		Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Thereafter		Total
Debt obligations															$	30	$	120	$	5,520	$	214,091	$	1,084	$	12,000	$	232,845
Operating leases (undiscounted)	3,615		13,546		11,493		8,477		7,626		21,232		65,989		3,890		14,759		11,522		9,353		8,459		23,308		71,291
Purchase obligations	48,572		67,615		2,247		1,230		1,230		—		120,894		54,913		99,393		7,625		1,231		—		—		163,162
Total cash obligations	$	52,784	$	82,744	$	13,848	$	15,215	$	219,964	$	34,254	$	418,809	$	58,833	$	114,272	$	24,667	$	224,675	$	9,543	$	35,308	$	467,298

~~The long-term debt obligations due in fiscal 2022 relate primarily to borrowings under our committed revolving credit facility. From time to time, we~~We acquire the use of certain assets through operating leases, such as warehouses, vehicles, forklifts, office equipment, hardware, software and some manufacturing equipment. ~~Many~~While many of these operating leases have termination penalties. However, because the assets are used in the conduct of our business operations, it is unlikely that any significant portion of these operating leases would be terminated prior to the normal expiration of their lease terms. Therefore,penalties, we consider the risk related to termination penalties to be minimal.

Purchase obligations in the table above relate to raw material commitments and capital expenditures.

We expect to make contributions of $1.0 million to our defined-benefit pension plans in fiscal ~~2018,~~2019, which will equal or exceed our minimum funding requirements.

As of December ~~2, 2017~~1, 2018, we had reserves of ~~$5.4~~$5.3 million and ~~$1.4~~$1.2 million for unrecognized tax benefits and environmental liabilities, respectively. We currently expect approximately ~~$0.3~~$0.6 million of the unrecognized tax benefits to lapse during the next 12 months. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits and environmental liabilities will ultimately be settled. ~~We are currently in the process of evaluating information to determine the impact the recently enacted Tax Cuts and Jobs Act will have on our accounting for income taxes.~~

At ~~December 2, 2017~~, we had a total of $26.3 million of ongoing letters of credit related to industrial revenue bonds and construction contracts that expire in fiscal 2018 and reduce availability of funds under our committed credit facility.

~~In addition to the above standby letters of credit, we~~We are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any ~~non-performance by us.~~non-performance. At December ~~2, 2017, $86.4~~1, 2018, $224.0 million of our backlog was bonded by ~~performance~~these types of bonds with a face value of ~~$310.0~~$478.8 million. ~~Performance~~These bonds do not have stated expiration dates, as we are generally released from the bonds upon completion of the contract. We have ~~never~~not been required to make any payments ~~related to~~under these ~~performance~~ bonds with respect to ~~any of~~ our ~~current portfolio of~~existing businesses.

Due to our ability to generate strong cash from operations and borrowing capability under our committed revolving credit facility, we believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments for at least the next 12 months.

Non-GAAP ~~Measures~~measures

We analyze non-GAAP measures for adjusted net earnings, adjusted earnings per diluted common share, adjusted EBITDA and adjusted operating income. These measures are used by management to evaluate the Company's financial performance on a more consistent basis and improve comparability of results from period to period, because they exclude certain amounts that management does not consider to be part of the Company's core operating results. Examples of items excluded to arrive at these adjusted measures may include the impact of acquisition-related costs, amortization of short-lived acquired intangibles associated with backlog and non-recurring restructuring costs. We also monitor and disclose a non-GAAP measure for backlog, which represents the dollar amount of signed contracts or firm orders which we expect to recognize as revenue in the future. Backlog is used as one of the metrics to evaluate sales trends in our longer lead time operating segments. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the reported financial results of the ~~company~~Company prepared in accordance with GAAP. The non-GAAP measures presented below may differ from similar measures used by other companies.

Table of Contents

The following table reconciles net earnings to adjusted net earnings and earnings per diluted common share to adjusted earnings per diluted common share.


	Three Months Ended							Nine Months Ended								Three Months Ended						Nine Months Ended
(In thousands, except per share data)	December 2, 2017			November 26, 2016		% Change		December 2, 2017			November 26, 2016		% Change
In thousands, except per share data																December 1, 2018			December 2, 2017			December 1, 2018			December 2, 2017
Net earnings	$	23,646		$	22,552	5	%	$	57,159		$	62,671	(9	)%		$	21,891		$	23,646		$	57,778		$	57,159
Amortization of short-lived acquired intangibles	2,924			—		N/M		7,608			—		N/M			717			2,924			4,655			7,608
Acquisition-related costs	423			—		N/M		4,840			—		N/M			—			423			—			4,840
Income tax impact on above adjustments⁽¹⁾	(974		)	—		N/M		(4,120		)	—		N/M			(168		)	(974		)	(1,108		)	(4,120		)
Adjusted net earnings	$	26,019		$	22,552	15	%	$	65,487		$	62,671	4	%		$	22,440		$	26,019		$	61,325		$	65,487

Earnings per diluted common share	$	0.82		$	0.78	5	%	$	1.98		$	2.17	(9	)%		$	0.78		$	0.82		$	2.04		$	1.98
Amortization of short-lived acquired intangibles	0.10			—		N/M		0.26			—		N/M			0.03			0.10			0.16			0.26
Acquisition-related costs	0.01			—		N/M		0.17			—		N/M			—			0.01			—			0.17
Income tax impact on above adjustments⁽¹⁾	(0.03		)	—		N/M		(0.14		)	—		N/M			(0.01		)	(0.03		)	(0.04		)	(0.14		)
Adjusted earnings per diluted common share	$	0.90		$	0.78	15	%	$	2.27		$	2.17	5	%		$	0.80		$	0.90		$	2.17		$	2.27
⁽¹⁾ Income tax impact on adjustments was calculated using the quarterly effective income tax rate of 29.1% and the nine-month period effective income tax rate of 33.1%.
⁽¹⁾ Income tax impact on adjustments was calculated using our effective income tax rates of 23.5% and 29.1% for the quarters ended December 1, 2018 and December 2, 2017, respectively, and 23.8% and 33.1% for the nine-month periods ended December 1, 2018 and December 2, 2017, respectively.															⁽¹⁾ Income tax impact on adjustments was calculated using our effective income tax rates of 23.5% and 29.1% for the quarters ended December 1, 2018 and December 2, 2017, respectively, and 23.8% and 33.1% for the nine-month periods ended December 1, 2018 and December 2, 2017, respectively.

The following table reconciles earnings before interest, income taxes and depreciation and amortization, or EBITDA, to adjusted EBITDA.



	Three Months Ended					Nine Months Ended
In thousands	December 1, 2018		December 2, 2017			December 1, 2018		December 2, 2017
Net earnings	$	21,891	$	23,646		$	57,778	$	57,159
Income tax expense	6,730		9,704			18,030		26,517
Other expense (income), net	655		(303		)	459		(560		)
Interest expense, net	2,132		1,488			5,795		3,299
Depreciation and amortization	11,921		14,712			38,378		39,774
EBITDA	43,329		49,247			120,440		126,189
Acquisition-related costs	—		423			—		4,840
Adjusted EBITDA	$	43,329	$	49,670		$	120,440	$	131,029

Table of Contents

The following table reconciles operating income (loss) to adjusted operating income (loss).


	Framing Systems Segment				Corporate			Consolidated				Framing Systems Segment				Corporate			Consolidated
(In thousands)	Operating income		Operating margin		Operating income (loss)			Operating income		Operating margin
In thousands												Operating income		Operating margin		Operating income (loss)			Operating income		Operating margin
Three Months Ended December 1, 2018
Operating income (loss)												$	12,903	7.1	%	$	(2,633	)	$	31,408	8.8	%
Amortization of short-lived acquired intangibles												717		0.4		—			717		0.2
Acquisition-related costs												—		—		—			—		—
Adjusted operating income (loss)												$	13,620	7.5	%	$	(2,633	)	$	32,125	9.0	%
Three Months Ended December 2, 2017
Operating income (loss)	$	18,452	9.5	%	$	(2,295	)	$	34,535	9.7	%	$	18,452	9.5	%	$	(2,295	)	$	34,535	9.7	%
Amortization of short-lived acquired intangibles	2,924		1.5		—			2,924		0.8		2,924		1.5		—			2,924		0.8
Acquisition-related costs	—		—		423			423		0.1		—		—		423			423		0.1
Adjusted operating income (loss)	$	21,376	11.0	%	$	(1,872	)	$	37,882	10.6	%	$	21,376	11.0	%	$	(1,872	)	$	37,882	10.6	%
Three Months Ended November 26, 2016
Operating income (loss)⁽¹⁾	$	11,838	13.0	%	$	(1,115	)	$	33,259	12.1	%

Nine Months Ended December 1, 2018
Operating income (loss)												$	43,554	7.9	%	$	(7,940	)	$	82,062	7.8	%
Amortization of short-lived acquired intangibles												4,655		0.8		—			4,655		0.4
Acquisition-related costs												—		—		—			—		—
Adjusted operating income (loss)												$	48,209	8.8	%	$	(7,940	)	$	86,717	8.2	%
Nine Months Ended December 2, 2017
Operating income (loss)	$	46,958	9.5	%	$	(8,354	)	$	86,415	8.9	%	$	46,958	9.5	%	$	(8,354	)	$	86,415	8.9	%
Amortization of short-lived acquired intangibles	7,608		1.5		—			7,608		0.8		7,608		1.5		—			7,608		0.8
Acquisition-related costs	—		—		4,840			4,840		0.5		—		—		4,840			4,840		0.5
Adjusted operating income (loss)	$	54,566	11.1	%	$	(3,514	)	$	98,863	10.2	%	$	54,566	11.1	%	$	(3,514	)	$	98,863	10.2	%
Nine Months Ended November 26, 2016
Operating income (loss)⁽¹⁾	$	35,070	13.3	%	$	(3,317	)	$	92,557	11.5	%
(1) Expenses related to amortization of short-lived acquired intangibles and acquisition-related costs are not applicable to the three- and nine-month periods ended November 26, 2016, and therefore no adjustments have been made.

Outlook

The following statements are based on our current expectations for full-year fiscal ~~2018 results, not including any estimated impact from the 2017 Tax Cuts and Jobs Act.~~2019 results. These statements are forward-looking, and actual results may differ materially. We are currently expecting:

Revenue growth of ~~approximately 20 percent over fiscal 2017.~~6 to 7 percent.

Operating margin of ~~8.6 percent to 8.9~~approximately 8.4 percent.

Earnings per diluted share of ~~$2.58 to $2.68.~~approximately $3.00.


•	Adjusted operating margin of ~~10.1 to 10.4~~approximately 8.7 percentand adjusted earnings per diluted common share of ~~$3.04 to $3.14~~approximately $3.13⁽¹⁾.

Capital expenditures of ~~$55 to~~approximately $60 million.

⁽¹⁾Adjusted operating margin and adjusted earnings per diluted share exclude the impact of amortization of short-lived acquired intangible assets associated with the acquired backlog of Sotawall and EFCO of $7$3.8 million (after tax, ~~$0.24~~$0.13 per diluted share) and acquisition-related costs for EFCO of approximately $3.1 million (after tax, $0.11 per diluted share). These two adjustments have a combined approximate 100 basis point negative impact on operating margin. Adjusted operating margin and adjusted earnings per diluted share also exclude the impact of planned fourth-quarter restructuring charges of approximately $4.5 million (after tax, $0.11 per dilutedcommon share). These non-GAAP measures are used by management to evaluate the Company's historical and prospective financial performance, measure operational profitability on a more consistent basis, and provide enhanced transparency to the investment community. These non-GAAP measures should be viewed in addition to, and not as an alternative to, the financial results of the company prepared in accordance with GAAP.

Related Party Transactions

No material changes have occurred in the disclosure with respect to our related party transactions set forth in our Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017.~~3, 2018.

Critical Accounting Policies

Refer to an update to our critical accounting policies included within Item 1, Notes to the Consolidated Financial Statements (Note 1). No ~~material~~other changes have occurred into the ~~disclosure of our~~ critical accounting policies set forth in our Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017.~~3, 2018.

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Item 3.	Quantitative and Qualitative Disclosures About Market Risk

No material changes have occurred to the disclosures of quantitative and qualitative market risk set forth in our Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017.~~3, 2018.


Item 4.	Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in applicable rules and forms, and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


b)	Changes in internal controls: There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter ended December ~~2, 2017~~1, 2018, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings

Murray Mayer v. Apogee Enterprises, Inc., et al

On November 5, 2018, Murray Mayer, individually and on behalf of all others similarly situated, filed a purported class action lawsuit against the Company and our Chief Executive Officer and our Chief Financial Officer in the United States District Court for the District of Minnesota. The complaint generally alleges that, throughout the purported class period of June 28, 2018 to September 17, 2018, the Company and the named executive officers made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects, particularly with respect to our Architectural Glass business segment and alleges that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint seeks unspecified sums of damages, award of counsel fees and costs, and equitable relief. As of the date of filing of this Report, this complaint has not been served on any named defendant. If and when the complaint is served on the Company, we intend to vigorously defend against this matter.

Justin Buley v. Apogee Enterprises, Inc. et al

On December 17, 2018, Justin Buley filed a derivative lawsuit, purportedly on behalf of the Company, against our Chief Executive Officer, our Chief Financial Officer and eight of the nine non-executive members of our Board of Directors, in the Fourth Judicial District of the State of Minnesota. The complaint alleges claims for breach of fiduciary duty, waste of corporate assets and unjust enrichment, arising from substantially similar allegations as those described above. The complaint seeks an unspecified sum of damages and equitable relief, including requiring the Company to offer our shareholders the opportunity to vote for certain amendments to our Bylaws or Articles of Incorporation purporting to improve identified corporate governance practices. We intend to vigorously defend against this matter.

Other Matters

In addition to the foregoing, the Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the ~~Company’s construction supply and services businesses are~~Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability ~~and automobile claims.~~matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no ~~such claims~~matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

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Item 1A.	Risk Factors

There have been no material changes or additions to our risk factors discussed in our Annual Report on Form 10-K for the fiscal year ended March ~~4, 2017~~3, 2018.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information with respect to purchases made by the Company of its own stock during the third quarter of fiscal ~~2018:~~2019:

Period
Total Number
of Shares
Purchased (a)

Average Price
Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)
Maximum
Number of
Shares that May
Yet Be
Purchased
under the Plans
or Programs (b)
September 3, 2017 to September 30, 2017 —
$ —
—
742,367
October 1, 2017 to October 28, 2017 —
—
—
742,367
October 29, 2017 to December 2, 2017 304
46.80
—
742,367
Total 304
$ 46.80
—
742,367



Period	Total Number of Shares Purchased (a)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (b)	Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (b)
September 2, 2018 to September 30, 2018	4,327	$	49.22	—	1,240,068
October 1, 2018 to October 28, 2018	—	—		500,000	2,740,068
October 29, 2018 to December 1, 2018	—	—		100,000	2,640,068
Total	4,327	$	49.22	600,000	2,640,068


(a)	The shares in this column represent the total number of shares that were ~~repurchased by us pursuant to our publicly announced repurchase program, plus the shares~~ surrendered to us by plan participants to satisfy stock-for-stock option exercises or withholding tax obligations related to share-based compensation.

(b)

In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company ~~stock, which was announced on April 10, 2003. Subsequently, the~~stock. The Board ~~of Directors~~ increased the authorization by 750,000 shares, ~~which was~~ announced on January 24, 2008; by 1,000,000 shares ~~which was~~on each of the announcement dates of October 8, 2008, January 13, 2016 and January 9, 2018; and by 2,000,000 shares, announced on October ~~8, 2008; and by 1,000,000 shares, which was announced on January 13, 2016.~~3, 2018. The repurchase program does not have an expiration date.


Item 6.	Exhibits



~~10.1~~	~~Third Amendment to the Apogee Enterprises, Inc. 2011 Deferred Compensation Plan, dated October 5, 2017.~~

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2	Certification of 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	The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December ~~2, 2017~~1, 2018 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December ~~2, 2017~~1, 2018 and March ~~4, 2017,~~3, 2018, (ii) the Consolidated Results of Operations for the ~~three~~three- and ~~nine months~~nine-months ended December 1, 2018 and December 2, 2017, ~~and November 26, 2016,~~ (iii) the Consolidated Statements of Comprehensive Earnings for the ~~three~~three- and ~~nine months~~nine-months ended December 1, 2018 and December 2, 2017, ~~and November 26, 2016,~~ (iv) the Consolidated Statements of Cash Flows for the nine months ended December 1, 2018 and December 2, 2017, ~~and November 26, 2016,~~ (v) the Consolidated Statements of Shareholders' Equity for the nine months ended December 1, 2018 and December 2, 2017, ~~and November 26, 2016,~~ and (vi) Notes to Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	APOGEE ENTERPRISES, INC.

Date: January ~~11, 2018~~10, 2019	By: /s/ Joseph F. Puishys
		Joseph F. Puishys President and Chief Executive Officer (Principal Executive Officer)



Date: January ~~11, 2018~~10, 2019	By: /s/ James S. Porter
		James S. Porter Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

~~Exhibit Index to Form 10-Q for the Period Ended~~ ~~December 2, 2017~~



~~10.1~~	~~Third Amendment to the Apogee Enterprises, Inc. 2011 Deferred Compensation Plan, dated October 5, 2017.~~

~~31.1~~	~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.~~

~~31.2~~	~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.~~

~~32.1~~	~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~	~~Certification of 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~~	The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended December 2, 2017 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 2, 2017 and March 4, 2017, (ii) the Consolidated Results of Operations for the three and nine months ended December 2, 2017 and November 26, 2016, (iii) the Consolidated Statements of Comprehensive Earnings for the three and nine months ended December 2, 2017 and November 26, 2016, (iv) the Consolidated Statements of Cash Flows for the nine months ended December 2, 2017 and November 26, 2016, (v) the Consolidated Statements of Shareholders' Equity for the nine months ended December 2, 2017 and November 26, 2016, and (vi) Notes to Consolidated Financial Statements.



		Page
PART I	Financial Information

Item 1.	Financial Statements (Unaudited):

	Consolidated Balance Sheets	4

	Consolidated Results of Operations	5

	Consolidated Statements of Comprehensive Earnings	6

	Consolidated Statements of Cash Flows	7

	Consolidated Statements of Shareholders' Equity	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1719

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2326

Item 4.	Controls and Procedures	2326

PART II	Other Information

Item 1.	Legal Proceedings	2326

Item 1A.	Risk Factors	2327

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2327

Item 6.	Exhibits	2427

Signatures		2528



(In thousands)
Net working capital	$	34,156
Property, plant and equipment	43,815
Goodwill	57,460
Other intangible assets	71,500
Less: Long-term liabilities acquired, net	14,605
Net assets acquired	$	192,326



(In thousands)	Estimated fair value		Estimated useful life (in years)
Customer relationships	$	34,800	16
Tradename	32,400		Indefinite
Backlog	4,300		1.5
	$	71,500