UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________

FORM 10-Q

_________________________________



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

For the quarterly period ended November ~~30, 2019~~

28, 2020



☐			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.)

~~Minnesota~~

~~41-0919654~~

~~(State or other jurisdiction of incorporation or organization)~~

~~(I.R.S. Employer Identification No.)~~

4400 West 78th Street, Suite 520

Minneapolis

Minnesota

55435

(Address of principal executive offices)

(Zip Code)

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

Not Applicable

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

_________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.33 1/3 per share

APOG

NASDAQ Global Select Market

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 every Interactive Data File required to be submitted 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 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 growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

~~Large accelerated filer~~

~~Accelerated filer~~

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

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

As of January ~~7, 2020, 26,507,935~~5, 2021, 26,007,703 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~~

Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS

(unaudited)


(In thousands, except stock data)	November 28, 2020		February 29, 2020
Assets
Current assets
Cash and cash equivalents	$	55,413	$	14,952

Receivables, net	172,877		196,806
Inventories	73,815		71,089
Costs and earnings on contracts in excess of billings	29,141		73,582
Other current assets	14,389		25,481
Total current assets	345,635		381,910
Property, plant and equipment, net	302,082		324,386
Operating lease right-of-use assets	62,950		52,892
Goodwill	192,883		185,516
Intangible assets	136,843		140,191
Other non-current assets	45,589		44,096
Total assets	$	1,085,982	$	1,128,991
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	69,719	$	69,056
Accrued payroll and related benefits	40,170		40,119

Billings on contracts in excess of costs and earnings	25,945		32,696
Operating lease liabilities	12,098		11,272
Current portion of debt	2,000		5,400
Other current liabilities	61,768		118,314
Total current liabilities	211,700		276,857
Long-term debt	166,463		212,500
Non-current operating lease liabilities	53,122		43,163
Non-current self-insurance reserves	26,085		22,831
Other non-current liabilities	81,269		56,862
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 25,962,041 and 26,443,166 respectively	8,654		8,814
Additional paid-in capital	155,974		154,016
Retained earnings	414,749		388,010
Common stock held in trust	(183)		(685)
Deferred compensation obligations	183		685
Accumulated other comprehensive loss	(32,034)		(34,062)
Total shareholders’ equity	547,343		516,778
Total liabilities and shareholders’ equity	$	1,085,982	$	1,128,991

In thousands, except stock data November 30, 2019 March 2, 2019
Assets
Current assets
Cash and cash equivalents $ 10,129
$ 17,087
Restricted cash 401
12,154
Receivables, net of allowance for doubtful accounts 197,976
192,767
Inventories 75,791
78,344
Costs and earnings on contracts in excess of billings 72,284
55,095
Other current assets 40,335
16,451
Total current assets 396,916
371,898
Property, plant and equipment, net 326,418
315,823
Operating lease right-of-use assets 56,315
—
Goodwill 185,776
185,832
Intangible assets 142,779
148,235
Other non-current assets 41,587
46,380
Total assets $ 1,149,791
$ 1,068,168
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable $ 66,557
$ 72,219
Accrued payroll and related benefits 33,339
41,119
Billings on contracts in excess of costs and earnings 26,366
21,478
Operating lease liabilities 9,399
—
Current portion of debt 155,400
—
Other current liabilities 108,481
92,696
Total current liabilities 399,542
227,512
Long-term debt 95,856
245,724
Non-current operating lease liabilities 48,509
—
Non-current self-insurance reserves 25,260
21,433
Other non-current liabilities 65,645
77,182
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 26,552,935 and 27,015,127 respectively 8,851
9,005
Additional paid-in capital 153,188
151,842
Retained earnings 385,032
367,597
Common stock held in trust (675 ) (755 )
Deferred compensation obligations 675
755
Accumulated other comprehensive loss (32,092 ) (32,127 )
Total shareholders’ equity 514,979
496,317
Total liabilities and shareholders’ equity $ 1,149,791
$ 1,068,168

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

(unaudited)


	Three Months Ended				Nine Months Ended
(In thousands, except per share data)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Net sales	$	313,583	$	337,916	$	922,162	$	1,050,340
Cost of sales	243,998		263,606		716,139		808,856
Gross profit	69,585		74,310		206,023		241,484
Selling, general and administrative expenses	19,835		52,716		126,590		169,274
Operating income	49,750		21,594		79,433		72,210

Interest expense, net	1,502		1,995		4,240		7,176
Other income, net	472		231		684		599
Earnings before income taxes	48,720		19,830		75,877		65,633
Income tax expense	11,447		4,596		18,070		15,677
Net earnings	$	37,273	$	15,234	$	57,807	$	49,956
Earnings per share - basic	$	1.44	$	0.58	$	2.22	$	1.89
Earnings per share - diluted	$	1.42	$	0.57	$	2.19	$	1.87
Weighted average basic shares outstanding	25,883		26,432		26,068		26,481
Weighted average diluted shares outstanding	26,225		26,750		26,350		26,776

Three Months Ended Nine Months Ended
In thousands, except per share data November 30,
2019 December 1, 2018 November 30,
2019 December 1,
2018
Net sales $ 337,916
$ 357,718
$ 1,050,340
$ 1,056,382
Cost of sales 263,606
273,628
808,856
807,096
Gross profit 74,310
84,090
241,484
249,286
Selling, general and administrative expenses 52,716
52,682
169,274
167,224
Operating income 21,594
31,408
72,210
82,062
Interest and other expense, net 1,764
2,787
6,577
6,254
Earnings before income taxes 19,830
28,621
65,633
75,808
Income tax expense 4,596
6,730
15,677
18,030
Net earnings $ 15,234
$ 21,891
$ 49,956
$ 57,778
Earnings per share - basic $ 0.58
$ 0.79
$ 1.89
$ 2.06
Earnings per share - diluted $ 0.57
$ 0.78
$ 1.87
$ 2.04
Weighted average basic shares outstanding 26,432
27,836
26,481
28,030
Weighted average diluted shares outstanding 26,750
28,156
26,776
28,304

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(unaudited)


	Three Months Ended				Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Net earnings	$	37,273	$	15,234	$	57,807	$	49,956
Other comprehensive earnings (loss):
Unrealized (loss) gain on marketable securities, net of $0, $(11), $39 and $38 of tax (benefit) expense, respectively	(2)		(44)		145		145
Unrealized gain on derivative instruments, net of $90, $119, $305 and $146 of tax expense, respectively	294		387		997		476
Foreign currency translation adjustments	899		(491)		887		(586)
Other comprehensive earnings (loss)	1,191		(148)		2,029		35
Total comprehensive earnings	$	38,464	$	15,086	$	59,836	$	49,991

Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 November 30,
2019 December 1,
2018
Net earnings $ 15,234
$ 21,891
$ 49,956
$ 57,778
Other comprehensive (loss) earnings:
Unrealized (loss) gain on marketable securities, net of ($11), ($16), $38 and ($25) of tax (benefit) expense, respectively (44 ) (58 ) 145
(90 )
Unrealized gain (loss) on derivative instruments, net of $119, $10, $146 and ($99) of tax expense (benefit), respectively 387
32
476
(327 )
Foreign currency translation adjustments (491 ) (3,621 ) (586 ) (7,518 )
Other comprehensive (loss) earnings (148 ) (3,647 ) 35
(7,935 )
Total comprehensive earnings $ 15,086
$ 18,244
$ 49,991
$ 49,843

See accompanying notes to consolidated financial statements.

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019
Operating Activities
Net earnings	$	57,807	$	49,956
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	38,000		34,681
Share-based compensation	6,163		4,617
Deferred income taxes	5,012		10,088
Gain on disposal of assets	(19,346)		(623)

Noncash lease expense	9,531		8,993
Other, net	(69)		(2,007)
Changes in operating assets and liabilities:
Receivables	24,153		(5,288)
Inventories	(2,722)		2,474
Costs and earnings on contracts in excess of billings	44,501		(17,156)
Accounts payable and accrued expenses	(43,915)		(22,457)
Billings on contracts in excess of costs and earnings	(6,981)		4,901
Refundable and accrued income taxes	12,424		(6,159)
Operating lease liability	(9,168)		(7,468)
Other	5,122		(951)
Net cash provided by operating activities	120,512		53,601
Investing Activities
Capital expenditures	(17,116)		(41,176)
Proceeds from sales of property, plant and equipment	23,724		591


Other	(1,090)		(857)
Net cash provided (used) by investing activities	5,518		(41,442)
Financing Activities
Borrowings on line of credit	193,332		108,000
(Repayment) borrowings on debt	(5,400)		150,000
Payments on line of credit	(237,500)		(252,500)
Repurchase and retirement of common stock	(20,731)		(20,010)
Dividends paid	(14,546)		(13,808)
Other	(853)		(2,584)
Net cash used by financing activities	(85,698)		(30,902)
Increase (decrease) in cash and cash equivalents	40,332		(18,743)
Effect of exchange rates on cash	129		32
Cash, cash equivalents and restricted cash at beginning of year	14,952		29,241
Cash, cash equivalents and restricted cash at end of period	$	55,413	$	10,530
Noncash Activity
Capital expenditures in accounts payable	$	684	$	1,205

Nine Months Ended
In thousands November 30, 2019 December 1, 2018
Operating Activities
Net earnings $ 49,956
$ 57,778
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization 34,681
38,378
Share-based compensation 4,617
4,724
Deferred income taxes 10,088
10,600
Gain on disposal of assets (623 ) (2,499 )
Proceeds from New Markets Tax Credit transaction, net of deferred costs —
8,850
Noncash lease expense 1,525
—
Other, net (2,007 ) (799 )
Changes in operating assets and liabilities:
Receivables (5,288 ) 9,291
Inventories 2,474
4,398
Costs and earnings on contracts in excess of billings (17,156 ) (54,569 )
Accounts payable and accrued expenses (22,457 ) (20,072 )
Billings on contracts in excess of costs and earnings 4,901
14,558
Refundable and accrued income taxes (6,159 ) 1,831
Other (951 ) (1,825 )
Net cash provided by operating activities 53,601
70,644
Investing Activities
Capital expenditures (41,176 ) (33,867 )
Proceeds from sales of property, plant and equipment 591
12,332
Purchases of marketable securities (4,201 ) (9,006 )
Sales/maturities of marketable securities 4,867
5,813
Other (1,523 ) (2,209 )
Net cash used by investing activities (41,442 ) (26,937 )
Financing Activities
Borrowings on line of credit 108,000
294,500
Proceeds from issuance of term debt 150,000
—
Payments on line of credit (252,500 ) (278,000 )
Repurchase and retirement of common stock (20,010 ) (23,313 )
Dividends paid (13,808 ) (13,180 )
Other (2,584 ) (1,178 )
Net cash used by financing activities (30,902 ) (21,171 )
(Decrease) increase in cash and cash equivalents (18,743 ) 22,536
Effect of exchange rates on cash 32
(498 )
Cash, cash equivalents and restricted cash at beginning of year 29,241
19,359
Cash, cash equivalents and restricted cash at end of period $ 10,530
$ 41,397
Noncash Activity
Capital expenditures in accounts payable $ 1,205
$ 5,771

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		Total Shareholders' Equity
Balance at February 29, 2020	26,443	$	8,814	$	154,016	$	388,010	$	(685)	$	685	$	(34,062)	$	516,778
Net earnings	—	—		—		2,876		—		—		—		2,876
Unrealized gain on marketable securities, net of $26 tax expense	—	—		—		—		—		—		97		97
Unrealized loss on foreign currency hedge, net of $189 tax benefit	—	—		—		—		—		—		(617)		(617)
Foreign currency translation adjustments	—	—		—		—		—		—		(6,151)		(6,151)
Issuance of stock, net of cancellations	183	62		(39)		—		(11)		11		—		23
Share-based compensation	—	—		1,406		—		—		—		—		1,406

Share repurchases	(231)	(77)		(1,370)		(3,284)		—		—		—		(4,731)
Other share retirements	(26)	(9)		(151)		(505)		—		—		—		(665)
Cash dividends	—	—		—		(4,872)		—		—		—		(4,872)
Balance at May 30, 2020	26,369	$	8,790	$	153,862	$	382,225	$	(696)	$	696	$	(40,733)	$	504,144
Net earnings	—	—		—		17,658		—		—		—		17,658
Unrealized gain on marketable securities, net of $13 tax expense	—	—		—		—		—		—		50		50
Unrealized gain on foreign currency hedge, net of $404 tax expense	—	—		—		—		—		—		1,319		1,319
Foreign currency translation adjustments	—	—		—		—		—		—		6,139		6,139
Issuance of stock, net of cancellations	121	41		(23)		—		(11)		11		—		18
Share-based compensation	—	—		2,256		—		—		—		—		2,256


Other share retirements	(23)	(8)		(139)		(390)		—		—		—		(537)
Cash dividends	—	—		—		(4,879)		—		—		—		(4,879)
Balance at August 29, 2020	26,467	$	8,823	$	155,956	$	394,614	$	(707)	$	707	$	(33,225)	$	526,168
Net earnings	—	—		—		37,273		—		—		—		37,273
Unrealized loss on marketable securities, net of $0 tax benefit	—	—		—		—		—		—		(2)		(2)
Unrealized gain on foreign currency hedge, net of $90 tax expense	—	—		—		—		—		—		294		294
Foreign currency translation adjustments	—	—		—		—		—		—		899		899
Issuance of stock, net of cancellations	10	3		15		—		524		(524)		—		18
Share-based compensation	—	—		2,501		—		—		—		—		2,501
Exercise of stock options	127	42		1,414		—		—		—		—		1,456
Share repurchases	(620)	(207)		(3,781)		(12,012)		—		—		—		(16,000)
Other share retirements	(22)	(7)		(131)		(331)		—		—		—		(469)
Cash dividends	—	—		—		(4,795)		—		—		—		(4,795)
Balance at November 28, 2020	25,962	$	8,654	$	155,974	$	414,749	$	(183)	$	183	$	(32,034)	$	547,343

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 2, 2019 27,015
$ 9,005
$ 151,842
$ 367,597
$ (755 ) $ 755
$ (32,127 )
Net earnings —
—
—
15,443
—
—
—
Unrealized gain on marketable securities, net of $47 tax expense —
—
—
—
—
—
181
Unrealized gain on foreign currency hedge, net of $2 tax expense —
—
—
—
—
—
5
Foreign currency translation adjustments —
—
—
—
—
—
(2,560 )
Issuance of stock, net of cancellations 79
26
14
—
(12 ) 12
—
Share-based compensation —
—
1,618
—
—
—
—
Share repurchases (532 ) (177 ) (3,051 ) (16,782 ) —
—
—
Other share retirements (32 ) (11 ) (183 ) (1,266 ) —
—
—
Cash dividends —
—
—
(4,598 ) —
—
—
Balance at June 1, 2019 26,530
$ 8,843
$ 150,240
$ 360,394
$ (767 ) $ 767
$ (34,501 )
Net earnings —
—
—
19,279
—
—
—
Unrealized gain on marketable securities, net of $2 tax expense —
—
—
—
—
—
8
Unrealized gain on foreign currency hedge, net of $25 tax expense —
—
—
—
—
—
84
Foreign currency translation adjustments —
—
—
—
—
—
2,465
Issuance of stock, net of cancellations 44
15
27
—
(11 ) 11
—
Share-based compensation —
—
1,582
—
—
—
—
Other share retirements (20 ) (7 ) (114 ) (629 ) —
—
—
Cash dividends —
—
—
(4,605 ) —
—
—
Balance at August 31, 2019 26,554
$ 8,851
$ 151,735
$ 374,439
$ (778 ) $ 778
$ (31,944 )
Net earnings —
—
—
15,234
—
—
—
Unrealized loss on marketable securities, net of $11 tax benefit —
—
—
—
—
—
(44 )
Unrealized gain on foreign currency hedge, net of $119 tax expense —
—
—
—
—
—
387
Foreign currency translation adjustments —
—
—
—
—
—
(491 )
Issuance of stock, net of cancellations (1 ) 1
43
—
103
(103 ) —
Share-based compensation —
—
1,417
—
—
—
—
Other share retirements —
(1 ) (7 ) (36 ) —
—
—
Cash dividends —
—
—
(4,605 ) —
—
—
Balance at November 30, 2019 26,553
$ 8,851
$ 153,188
$ 385,032
$ (675 ) $ 675
$ (32,092 )

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		Total Shareholders' Equity
Balance at March 2, 2019	27,015	$	9,005	$	151,842	$	367,597	$	(755)	$	755	$	(32,127)	$	496,317


Net earnings	—	—		—		15,443		—		—		—		15,443
Unrealized gain on marketable securities, net of $47 tax expense	—	—		—		—		—		—		181		181
Unrealized gain on foreign currency hedge, net of $2 tax expense	—	—		—		—		—		—		5		5
Foreign currency translation adjustments	—	—		—		—		—		—		(2,560)		(2,560)
Issuance of stock, net of cancellations	79	26		14		—		(12)		12		—		40
Share-based compensation	—	—		1,618		—		—		—		—		1,618

Share repurchases	(532)	(177)		(3,051)		(16,782)		—		—		—		(20,010)
Other share retirements	(32)	(11)		(183)		(1,266)		—		—		—		(1,460)
Cash dividends	—	—		—		(4,598)		—		—		—		(4,598)
Balance at June 1, 2019	26,530	$	8,843	$	150,240	$	360,394	$	(767)	$	767	$	(34,501)	$	484,976


Net earnings	—	—		—		19,279		—		—		—		19,279
Unrealized gain on marketable securities, net of $2 tax expense	—	—		—		—		—		—		8		8
Unrealized gain on foreign currency hedge, net of $25 tax expense	—	—		—		—		—		—		84		84
Foreign currency translation adjustments	—	—		—		—		—		—		2,465		2,465
Issuance of stock, net of cancellations	44	15		27		—		(11)		11		—		42
Share-based compensation	—	—		1,582		—		—		—		—		1,582


Other share retirements	(20)	(7)		(114)		(629)		—		—		—		(750)
Cash dividends	—	—		—		(4,605)		—		—		—		(4,605)
Balance at August 31, 2019	26,554	$	8,851	$	151,735	$	374,439	$	(778)	$	778	$	(31,944)	$	503,081


Net earnings	—	—		—		15,234		—		—		—		15,234
Unrealized loss on marketable securities, net of $11 tax benefit	—	—		—		—		—		—		(44)		(44)
Unrealized gain on foreign currency hedge, net of $119 tax expense	—	—		—		—		—		—		387		387
Foreign currency translation adjustments	—	—		—		—		—		—		(491)		(491)
Issuance of stock, net of cancellations	(1)	1		43		—		103		(103)		—		44
Share-based compensation	—	—		1,417		—		—		—		—		1,417


Other share retirements	0	(1)		(7)		(36)		—		—		—		(44)
Cash dividends	—	—		—		(4,605)		—		—		—		(4,605)
Balance at November 30, 2019	26,553	$	8,851	$	153,188	$	385,032	$	(675)	$	675	$	(32,092)	$	514,979

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 —
—
—
2,999
—
—
—
Reclassification of tax effects —
—
—
737
—
—
(737 )
Net earnings —
—
—
15,373
—
—
—
Unrealized gain on marketable securities, net of $2 tax expense —
—
—
—
—
—
10
Unrealized loss on foreign currency hedge, net of $92 tax benefit —
—
—
—
—
—
(304 )
Foreign currency translation adjustments —
—
—
—
—
—
(517 )
Issuance of stock, net of cancellations 90
30
35
—
91
(91 ) —
Share-based compensation —
—
1,514
—
—
—
—
Exercise of stock options 19
6
177
—
—
—
—
Other share retirements (41 ) (13 ) (228 ) (1,440 ) —
—
—
Cash dividends —
—
—
(4,410 ) —
—
—
Balance at June 2, 2018 28,226
$ 9,409
$ 154,261
$ 386,518
$ (831 ) $ 831
$ (25,601 )
Net earnings —
—
—
20,514
—
—
—
Unrealized loss on marketable securities, net of $11 tax benefit —
—
—
—
—
—
(42 )
Unrealized loss on foreign currency hedge, net of $17 tax benefit —
—
—
—
—
—
(55 )
Foreign currency translation adjustments —
—
—
—
—
—
(3,383 )
Issuance of stock, net of cancellations 35
12
37
—
(11 ) 11
—
Share-based compensation —
—
1,605
—
—
—
—
Other share retirements (1 ) (1 ) (5 ) —
—
—
—
Cash dividends —
—
—
(4,413 ) —
—
—
Balance at September 1, 2018 28,260
$ 9,420
$ 155,898
$ 402,619
$ (842 ) $ 842
$ (29,081 )
Net earnings —
—
—
21,891
—
—
—
Unrealized loss on marketable securities, net of $16 tax benefit —
—
—
—
—
—
(58 )
Unrealized gain on foreign currency hedge, net of $10 tax expense —
—
—
—
—
—
32
Foreign currency translation adjustments —
—
—
—
—
—
(3,622 )
Issuance of stock, net of cancellations —
—
54
—
97
(97 ) —
Share-based compensation —
—
1,605
—
—
—
—
Share repurchases (600 ) (200 ) (3,436 ) (19,677 ) —
—
—
Other share retirements (4 ) (1 ) (26 ) (187 ) —
—
—
Cash dividends —
—
—
(4,357 ) —
—
—
Balance at December 1, 2018 27,656
$ 9,219
$ 154,095
$ 400,289
$ (745 ) $ 745
$ (32,729 )

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


1.	~~Summary of Significant Accounting Policies~~

1.Summary of 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 2, 2019~~.February 29, 2020. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature. The results of operations for the ~~nine-month period~~three- and nine-month periods ended November ~~30, 2019~~28, 2020 are not necessarily indicative of the results to be expected for the full year.

COVID-19 considerations

The ongoing COVID-19 pandemic continues to cause volatility and uncertainty in global markets impacting worldwide economic activity. We have experienced some delays in commercial construction projects and orders as a result of COVID-19. In our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions. Within our Large-Scale Optical (LSO) segment, most customers reopened and the segment's two manufacturing locations resumed normal operations during the latter part of the second quarter, after being shutdown for most of the first and second quarters due to governmental orders. We have also been impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at some of our facilities. The extent to which COVID-19 will continue to impact our business will depend on future developments and public health advancements, which have been buoyed recently by the commencement of vaccine production and distribution.

In response to COVID-19, we have implemented a variety of countermeasures to promote the health and safety of our employees during this pandemic, including health screening, physical distancing practices, enhanced cleaning, use of personal protective equipment, business travel restrictions, and remote work capabilities, in addition to quarantine-related paid leave and other employee assistance programs.

Adoption of new accounting standards

At the beginning of fiscal ~~2020,~~2021, we adopted the guidance in ~~ASC 842,~~ ~~Leases~~, following a modified retrospective approach and elected not to restate prior periods. Adoption of the new standard resulted in recording operating lease assets and liabilities of approximately $50 million as of March 3, 2019 and did not materially impact our consolidated net earnings and cash flows. Refer to additional information in Note 7.

~~Accounting standards not yet adopted~~

~~In June 2016, the FASB issued~~ ASU 2016-13, Measurement of Credit Losses on Financial ~~Instruments~~Instruments.~~, which revises~~ The guidance provides for ~~the accounting for credit losses~~a new impairment model on financial instruments ~~within its scope. The new standard introduces an approach~~which is based on expected ~~losses, to estimate~~ credit losses, ~~on certain types of financial instruments and modifies~~which was applied following a modified retrospective approach. Additionally, the new guidance makes targeted improvements to the impairment model for certain available-for-sale debt ~~securities. This ASU is effective for our fiscal year 2021. Entities are required to apply~~securities, including eliminating the ~~standard's provisions as a cumulative-effect adjustment to retained earnings as~~concept of "other than temporary" from that model. The portion of the ~~beginning of the first reporting period in which the~~ guidance ~~is adopted. We do not expect the~~related to available-for-sale debt securities was adopted following a prospective approach. The adoption of this ASU todid not have a significant impact on ~~our consolidated~~earnings or financial ~~statements.~~condition. Refer to additional disclosures in Notes 2 and 4.

Subsequent events

We have evaluated subsequent events for potential recognition and disclosure through the date of this ~~filing~~filing. Subsequent to the end of the quarter, we announced the election of our new Chief Executive Officer, Ty R. Silberhorn, and ~~determined that there were no subsequent events that required recognition or disclosure~~entered into an employment agreement with him, effective January 4, 2021. Mr. Silberhorn replaces, Joseph F. Puishys, who announced his retirement, as an employee of the Company, in ~~the consolidated financial statements.~~September 2020, effective January 4, 2021.


2.	~~Revenue, Receivables and Contract Assets and Liabilities~~

2.Revenue, Receivables and Contract Assets and Liabilities

Revenue

The following table disaggregates total revenue by timing of recognition (see Note 1312 for disclosure of revenue by segment):


	Three Months Ended				Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Recognized at shipment	$	129,132	$	153,093	$	379,292	$	472,695
Recognized over time	184,451		184,823		542,870		577,645
Total	$	313,583	$	337,916	$	922,162	$	1,050,340

Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 November 30, 2019 December 1, 2018
Recognized at shipment $ 153,093
$ 158,164
$ 472,695
$ 481,565
Recognized over time 184,823
199,554
577,645
574,817
Total $ 337,916
$ 357,718
$ 1,050,340
$ 1,056,382

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Receivables

~~Trade and construction accounts receivable consist of amounts billed and due from customers. The amounts due are stated at their estimated~~Receivables reflected in the financial statements represent the net ~~realizable value. We maintain an~~amount expected to be collected. An allowance for ~~doubtful~~credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, ~~to provide for~~considering aging, financial condition of the ~~estimated amount~~debtor, recent payment history, current and forecast economic conditions and other relevant factors. Upon billing, aging of receivables is monitored until collection. An account is considered current when it is within agreed upon payment terms. An account is written off when it is determined that ~~will not be collected. This allowance~~the asset is ~~based on an assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables.~~no longer collectible. Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.


(In thousands)	November 28, 2020		February 29, 2020
Trade accounts	$	122,959	$	141,126
Construction contracts	9,727		20,808
Contract retainage	42,053		37,341
Total receivables	174,739		199,275
Less: allowance for credit losses	(1,862)		(2,469)
Net receivables	$	172,877	$	196,806

In thousands November 30, 2019 March 2, 2019
Trade accounts $ 141,448
$ 145,693
Construction contracts 23,096
19,050
Contract retainage 35,287
32,396
Total receivables 199,831
197,139
Less: allowance for doubtful accounts (1,855 ) (4,372 )
Net receivables $ 197,976
$ 192,767

The following table summarizes the activity in the allowance for credit losses:


(In thousands)	November 28, 2020
Beginning balance	$	2,469
Additions charged to costs and expenses	325
Deductions from allowance, net of recoveries	(884)
Other changes (1)	(48)
Ending balance	$	1,862
(1) Result of foreign currency effects

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)	November 28, 2020		February 29, 2020
Contract assets	$	71,194	$	110,923
Contract liabilities	27,965		35,954

In thousands November 30, 2019 March 2, 2019
Contract assets $ 107,571
$ 87,491
Contract liabilities 28,863
24,083

The ~~increase~~decrease in contract assets was mainly due to ~~timing of~~a reduction in costs ~~incurred~~and earnings in ~~advance~~excess of billings, ~~primarily on~~which is driven by the settlement of matters related to a legacy EFCO ~~project.~~project, as well as the timing of projects. The change in contract liabilities was due to timing of project activity within our businesses that operate under long-term contracts.


Other contract-related disclosures	Three Months Ended				Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Revenue recognized related to contract liabilities from prior year-end	$	2,044	$	4,589	$	16,239	$	22,044
Revenue recognized related to prior satisfaction of performance obligations	4,016		1,776		10,545		5,298

Other contract-related disclosures Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 November 30, 2019 December 1, 2018
Revenue recognized related to contract liabilities from prior year-end $ 4,589
$ —
$ 22,044
$ 10,398
Revenue recognized related to prior satisfaction of performance obligations 1,776
1,470
5,298
3,798

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 recognize revenue over time. As of November ~~30, 2019,~~28, 2020, the transaction price associated with unsatisfied performance obligations was approximately ~~$896.7~~ $901.6

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million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:

In thousands November 30, 2019
Within one year $ 480,803
Within two years 344,827
Beyond 71,044
Total $ 896,674


3.(In thousands)	~~Supplemental Balance Sheet Information~~	November 28, 2020
Within one year		$	498,623
Within two years		331,219
Beyond		71,786
Total		$	901,628

3.Supplemental Balance Sheet Information

Inventories


(In thousands)	November 28, 2020		February 29, 2020
Raw materials	$	43,292	$	36,611
Work-in-process	16,337		17,520
Finished goods	14,186		16,958
Total inventories	$	73,815	$	71,089

In thousands November 30, 2019 March 2, 2019
Raw materials $ 39,746
$ 43,890
Work-in-process 19,255
15,533
Finished goods 16,790
18,921
Total inventories $ 75,791
$ 78,344

~~Other current assets~~

In thousands November 30, 2019 March 2, 2019
Prepaid assets $ 11,662
$ 11,682
Insurance receivable 15,000
—
Refundable income taxes 4,278
—
Other 9,395
4,769
Total other current assets $ 40,335
$ 16,451

Other current liabilities


(In thousands)	November 28, 2020		February 29, 2020
Warranties	$	13,281	$	12,822
Accrued project losses	3,297		48,962
Property and other taxes	13,078		5,952
Accrued self-insurance reserves	9,912		8,307
Other	22,200		42,271
Total other current liabilities	$	61,768	$	118,314

In thousands November 30, 2019 March 2, 2019
Warranties $ 10,601
$ 12,475
Accrued project losses 47,562
37,085
Property and other taxes 7,156
8,026
Accrued self-insurance reserves 9,297
9,537
Other 33,865
25,573
Total other current liabilities $ 108,481
$ 92,696

Other non-current liabilities


(In thousands)	November 28, 2020		February 29, 2020
Deferred benefit from New Market Tax Credit transactions	$	15,717	$	15,717
Retirement plan obligations	8,138		8,294
Deferred compensation plan	8,437		8,452
Deferred tax liabilities	20,014		7,940
Other	28,963		16,459
Total other non-current liabilities	$	81,269	$	56,862

In thousands November 30, 2019 March 2, 2019
Deferred benefit from New Market Tax Credit transactions $ 15,717
$ 26,458
Retirement plan obligations 7,633
7,633
Deferred compensation plan 11,743
10,408
Other 30,552
32,683
Total other non-current liabilities $ 65,645
$ 77,182

4.Financial Instruments


4.	~~Financial Instruments~~

Marketable securities

Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), 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
November 28, 2020	$	12,556	$	459	$	0	$	13,015
February 29, 2020	11,692		275		0		11,967

In thousands Amortized Cost Gross Unrealized Gains Gross Unrealized Losses
Estimated
Fair Value
November 30, 2019 $ 11,750
$ 152
$ 18
$ 11,884
March 2, 2019 12,481
59
108
12,432

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 for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

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The amortized cost and estimated fair values of these bonds at November ~~30, 2019~~,28, 2020, 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
Due within one year	$	771	$	779
Due after one year through five years	7,682		7,978
Due after five years through 10 years	3,303		3,428

Due beyond 15 years	800		830
Total	$	12,556	$	13,015

In thousands Amortized Cost Estimated Fair Value
Due within one year $ 835
$ 837
Due after one year through five years 8,581
8,710
Due after five years through 10 years 2,259
2,262
Due after 10 years through 15 years —
—
Due beyond 15 years 75
75
Total $ 11,750
$ 11,884

Derivative instruments

In August 2019, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility. As of November ~~30, 2019,~~28, 2020, the interest rate swap contract had a notional value of ~~$85~~$55 million.

We periodically enter into forward purchase foreign currency cash flow hedge contracts and forward purchase aluminum hedge contracts, generally with an original maturity date of less than one year, to hedge foreign currency exchange rate ~~risk.~~risk and future purchases of aluminum in certain of our architectural businesses. As of November ~~30, 2019,~~28, 2020, we held foreign exchange

forward contracts and aluminum forward contracts with a U.S. dollar notional ~~value~~values of ~~$24.7~~$18.7 million and $1.9 million, respectively, with the objective of reducing the exposure to fluctuations in the Canadian dollar, the Euro and the ~~Euro.~~price of aluminum.

These derivative instruments are recorded within our consolidated balance sheets within other current assets and liabilities. Gains or losses associated with these instruments are recorded as a component of accumulated other comprehensive income.

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.


(In thousands)	Quoted Prices in Active Markets (Level 1)		Other Observable Inputs (Level 2)		Total Fair Value
November 28, 2020
Assets:
Money market funds	$	27,000	$	0	$	27,000
Commercial paper	—		4,300		4,300
Municipal and corporate bonds	—		13,015		13,015
Cash surrender value of life insurance	—		17,704		17,704
Foreign currency and aluminum forward/option contracts	—		896		896

Liabilities:
Deferred compensation	—		14,027		14,027

Interest rate swap contract	—		676		676

February 29, 2020
Assets:
Money market funds	$	2,689	$	0	$	2,689
Commercial paper	0		1,500		1,500
Municipal and corporate bonds	0		11,967		11,967
Cash surrender value of life insurance	—		16,560		16,560
Liabilities:
Deferred compensation	—		14,042		14,042
Foreign currency forward/option contract	—		340		340
Interest rate swap contract	—		561		561

In thousands
Quoted Prices in
Active Markets
(Level 1)
Other Observable Inputs (Level 2) Total Fair Value
November 30, 2019
Assets:
Money market funds $ 2,680
$ —
$ 2,680
Commercial paper —
500
500
Municipal and corporate bonds —
12,384
12,384
Liabilities:
Foreign currency forward/option contract —
69
69
Interest rate swap contract —
16
16

March 2, 2019
Assets:
Money market funds $ 2,015
$ —
$ 2,015
Commercial paper —
300
300
Municipal and corporate bonds —
12,432
12,432
Liabilities:
Foreign currency forward/option contract —
470
470

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Money market funds and commercial paper

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. These assets are included within cash and cash equivalents on our consolidated balance sheets.

Municipal and corporate bonds

Municipal and corporate bonds were measured at fair value based on market prices from recent trades of similar securities and are classified within our consolidated balance sheets as other current or other non-current assets based on maturity date.

Cash surrender value of life insurance and deferred compensation

Contracts insuring the lives of certain employees who are eligible to participate in certain non-qualified pension and deferred compensation plans are held in trust. Cash surrender value of the contracts is based on performance measurement funds that shadow the deferral investment allocations made by participants in certain deferred compensation plans. Changes in cash surrender value are recorded in other expense. The deferred compensation liability balances are valued based on amounts allocated by participants to the underlying performance measurement funds.

Derivative instruments

The interest rate swap is measured at fair value using ~~unobservable~~other observable market inputs, based off of benchmark interest rates. Forward foreign exchange and forward purchase aluminum contracts are measured at fair value using ~~unobservable~~other observable market inputs, such as quotations on forward foreign exchange points, ~~and~~ foreign currency exchange ~~rates.~~rates, and forward purchase aluminum prices. Derivative positions are primarily valued using standard calculations and models that use as their basis readily observable market parameters. Industry standard data providers are our primary source for forward and spot rate information for both interest and currency ~~rates.~~rates and aluminum prices.


5.	~~Goodwill and Other Identifiable Intangible Assets~~

5.Goodwill and Other Identifiable Intangible Assets

Goodwill

Goodwill represents the excess of the cost over the net tangible and identified intangible assets of acquired businesses. We evaluate goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable. Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis.

In the third quarter of fiscal 2021, we changed the date of our annual goodwill impairment testing from our year-end to the first day in our fiscal fourth quarter. This change results in better alignment of the annual impairment testing with our strategic and annual planning processes. This change was determined to not be material and had no impact on our current or historical consolidated financial statements.

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units. Therefore, we performed an interim goodwill impairment evaluation as of May 30, 2020. Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. However, the estimated fair value did not exceed carrying value by a significant margin at two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units.

During the third quarter, we combined two reporting units into one reporting unit, following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment. Within this segment, as a result of integration efforts that are ongoing, leadership over our Tubelite and Alumicor reporting units have been combined and functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the combined business. The goodwill of these individual reporting units was aggregated to the combined reporting unit. We evaluated goodwill on a qualitative basis prior to and subsequent to this change

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and have concluded no adjustment to the carrying value of goodwill was necessary as a result of this change. In addition, for all reporting units, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

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 March 2, 2019	$	148,446	$	25,709	$	1,120	$	10,557	$	185,832


Foreign currency translation	(263)		(53)		0		0		(316)
Balance at February 29, 2020	148,183		25,656		1,120		10,557		185,516

Adjustment (1)	6,315		0		0		0		6,315
Foreign currency translation	1,475		(423)		0		0		1,052
Balance at November 28, 2020	$	155,973	$	25,233	$	1,120	$	10,557	$	192,883

(1) During the quarter ended May 30, 2020, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods. The error was not material to any previously reported annual or interim consolidated financial statements.

In thousands Architectural Framing Systems Architectural Glass Architectural Services
Large-Scale
Optical
Total
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 (1,129 ) (262 ) —
—
(1,391 )
Balance at March 2, 2019 148,446
25,709
1,120
10,557
185,832
Foreign currency translation 47
(103 ) —
—
(56 )
Balance at November 30, 2019 $ 148,493
$ 25,606
$ 1,120
$ 10,557
$ 185,776

Indefinite-lived intangible assets

We hold intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. Similar to the change in goodwill measurement date discussed above, we historically evaluated the reasonableness of the useful life and tested indefinite-lived intangible assets for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. In the third quarter of fiscal 2021, we changed the date of our annual impairment testing from our year-end to the first day in our fiscal fourth quarter.

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic. Therefore, the Company performed a quantitative indefinite-lived intangible asset impairment evaluation as of May 30, 2020. If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. If an impairment loss is recognized, the adjusted carrying amount becomes the asset's new accounting basis.

Fair value is measured using the relief-from-royalty method. This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset. This method requires us to estimate the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital. The assessment of fair value involves significant judgment and projections about future performance. In determining the discounted future revenue in our fair value analysis, we used discount rates that are appropriate with the risks and uncertainties inherent in the respective businesses in the range of 10.9 percent to 11.5 percent, royalty rates of 1.5 to 2.0 percent, and a long-term growth rate of 3.0 percent. Based on our analysis, the fair value of each of our trade names exceeded its carrying amount and impairment was not indicated as of May 30, 2020. During the third quarter of fiscal 2021, no additional qualitative indicators of impairment were identified and therefore, no interim quantitative indefinite-lived intangible asset impairment evaluation was completed. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.

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

In thousands
Gross
Carrying
Amount

Accumulated
Amortization
Impairment
Foreign
Currency
Translation
Net
November 30, 2019
Definite-lived intangible assets:
Customer relationships $ 120,238
$ (31,566 ) $ —
$ (20 ) $ 88,652
Other intangibles 41,033
(32,274 ) —
(74 ) 8,685
Total definite-lived intangible assets 161,271
(63,840 ) —
(94 ) 97,337
Indefinite-lived intangible assets:
Trademarks 45,421
—
—
21
45,442
Total intangible assets $ 206,692
$ (63,840 ) $ —
$ (73 ) $ 142,779
March 2, 2019
Definite-lived intangible assets:
Customer relationships $ 122,816
$ (26,637 ) $ —
$ (2,578 ) $ 93,601
Other intangibles 41,697
(31,634 ) —
(850 ) 9,213
Total definite-lived intangible assets 164,513
(58,271 ) —
(3,428 ) 102,814
Indefinite-lived intangible assets:
Trademarks 49,078
—
(3,141 ) (516 ) 45,421
Total intangible assets $ 213,591
$ (58,271 ) $ (3,141 ) $ (3,944 ) $ 148,235


(In thousands)	Gross Carrying Amount		Accumulated Amortization		Foreign Currency Translation		Net
November 28, 2020
Definite-lived intangible assets:
Customer relationships	$	119,647	$	(38,333)	$	1,749	$	83,063
Other intangibles	41,293		(33,488)		174		7,979
Total definite-lived intangible assets	160,940		(71,821)		1,923		91,042
Indefinite-lived intangible assets:
Trademarks	45,300		—		501		45,801
Total intangible assets	$	206,240	$	(71,821)	$	2,424	$	136,843
February 29, 2020
Definite-lived intangible assets:
Customer relationships	$	120,239	$	(33,121)	$	(592)	$	86,526
Other intangibles	41,069		(32,516)		(189)		8,364
Total definite-lived intangible assets	161,308		(65,637)		(781)		94,890
Indefinite-lived intangible assets:
Trademarks	45,421		—		(120)		45,301
Total intangible assets	$	206,729	$	(65,637)	$	(901)	$	140,191

Amortization expense on definite-lived intangible assets was ~~$5.7~~$5.6 million and ~~$10.5~~$5.7 million for the ~~nine-month~~nine-month periods ended November 28, 2020 and November 30, 2019, ~~and~~ ~~December 1, 2018~~, respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At November ~~30, 2019~~,28, 2020, the estimated future amortization expense for definite-lived intangible assets was:


(In thousands)	Remainder of Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025
Estimated amortization expense	$	1,999	$	7,993	$	7,902	$	7,571	$	7,247

In thousands Remainder of Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024
Estimated amortization expense $ 1,982
$ 7,921
$ 7,915
$ 7,750
$ 7,563

6.Debt


6.	~~Debt~~

As of November ~~30, 2019, our total debt outstanding was $251.3 million, compared to $245.8 million as of March 2, 2019. During the second quarter of fiscal~~28, 2020, we ~~amended the borrowing capacity~~had a committed revolving credit facility with maximum borrowings of ~~our prior credit facility~~up to $235 million with a maturity of June 2024 and ~~we established~~ a $150 million term loan. The term loan ~~with a~~was amended during the third quarter of fiscal 2021 to extend the maturity date to June 2024. Total debt outstanding was $168.5 million, compared to $217.9 million as of ~~June~~February 29, 2020. ~~Outstanding~~There were 0 outstanding borrowings under the revolving credit facility ~~were $80.5 million,~~ as of November ~~30, 2019, and $225.0~~28, 2020, while there were $47.5 million in outstanding borrowings under the revolving credit facility as of ~~March 2, 2019.~~February 29, 2020.

Our revolving credit facility and term loan ~~contains~~contain 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 November ~~30, 2019,~~28, 2020, we were in compliance with both financial covenants. Additionally, at November ~~30, 2019,~~28, 2020, we had a total of ~~$24.7~~$18.7 million of ongoing letters of credit related to industrial revenue bonds,

construction contracts and insurance collateral that expire in fiscal ~~years 2021 to 2032~~year 2022 and reduce borrowing capacity under the revolving credit facility.

At November ~~30, 2019,~~28, 2020, debt included ~~$20.4~~$15.0 million of industrial revenue bonds that mature in fiscal years ~~2021~~2022 through ~~2043~~2043. In June 2020, a $5.4 million industrial revenue bond matured and ~~$0.4 million of long-term debt in Canada.~~was repaid. The fair value of the industrial revenue bonds approximated carrying value at November ~~30, 2019,~~28, 2020, 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 4.

We also maintain two Canadian ~~demand~~committed, revolving credit facilities totaling ~~$12.0~~$25.0 million ~~Canadian dollars.~~(USD). As of November ~~30, 2019 and March 2, 2019, 0 borrowings were~~28, 2020, $3.5 million was outstanding under the ~~facilities. Borrowings~~facilities, while at February 29, 2020, there were 0 borrowings under ~~these facilities are made available at~~ the ~~sole discretion of the lenders and are payable on demand.~~

facilities.

Interest payments were ~~$7.3~~$3.7 million and ~~$7.2~~$7.3 million for the nine months ended November 28, 2020 and November 30, 2019, respectively.

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~~and~~ ~~December 1, 2018, respectively.~~

7. Leases

We lease certain of the buildings and equipment used in our operations. We determine if an arrangement contains a lease at inception. Currently, all of our lease arrangements are classified as operating leases. We elected the package of practical expedients permitted under the transition guidance in adopting ASC 842, which among other things, allowed us to carry forward our historical lease classification.Operating lease assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term and lease expense is recognized on a straight-line basis over the lease term. Our leases have remaining lease terms of one to ten years, some of which include renewal options that can extend the lease for up to an additional ten years at our sole discretion. We have made an accounting policy election not to record leases with an original term of 12 months or less on our consolidated balance sheet and such leases are expensed on a straight-line basis over the lease term.

In determining lease asset value, we consider fixed or variable payment terms, prepayments, incentives, and options to extend, terminate or purchase. Renewal, termination or purchase options affect the lease term used for determining lease asset value only if the option is reasonably certain to be exercised. We use a discount rate for each lease based upon an estimated incremental borrowing rate over a similar term. We have elected the practical expedient to account for lease and ~~nonlease~~non lease components (e.g., common-area maintenance costs) as a single lease component. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. We are not a lessor in any transactions.

The components of lease expense were as follows:


	Three Months Ended				Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Operating lease cost	$	3,477	$	3,445	$	10,329	$	10,308
Short-term lease cost	472		427		1,384		1,606
Variable lease cost	678		843		2,071		2,223

Total lease cost	$	4,627	$	4,715	$	13,784	$	14,137

Three Months Ended Nine Months Ended
In thousands November 30, 2019 November 30, 2019
Operating lease cost $ 3,445
$ 10,308
Short-term lease cost 427
1,606
Variable lease cost 843
2,223
Total lease cost $ 4,715
$ 14,137

Other supplemental information related to leases was as follows:


	Nine Months Ended
(In thousands except weighted-average data)	November 28, 2020			November 30, 2019

Cash paid for amounts included in the measurement of operating lease liabilities	$	10,233		$	10,335
Lease assets obtained in exchange for new operating lease liabilities	$	19,623		$	15,948
Weighted-average remaining lease term - operating leases	5.8 years			5.9 years
Weighted-average discount rate - operating leases	3.18		%	3.57		%

Nine Months Ended
In thousands except weighted-average data November 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 10,335
Lease assets obtained in exchange for new operating lease liabilities $ 15,948
Weighted-average remaining lease term - operating leases 5.9 years
Weighted-average discount rate - operating leases 3.57 %

Future maturities of lease liabilities are as follows:

In thousands November 30, 2019
Remainder of Fiscal 2020 $ 3,366
Fiscal 2021 12,880
Fiscal 2022 11,256
Fiscal 2023 10,307
Fiscal 2024 8,147
Fiscal 2025 6,290
Thereafter 12,357
Total lease payments 64,603
Less: Amounts representing interest (6,695 )
Present value of lease liabilities $ 57,908

~~As of November 30, 2019, we have no additional future operating lease commitments for leases that have not yet commenced.~~

~~Aggregate annual future rental commitments under operating leases with noncancellable terms of more than one year at March 2, 2019 were reported under previous lease accounting standards as follows:~~

In thousands 2020 2021 2022 2023 2024 Thereafter Total
Total minimum payments $ 14,888
11,787
9,669
8,772
6,735
16,806
$ 68,657


8.(In thousands)	~~Commitments and Contingent Liabilities~~	November 28, 2020
Remainder of Fiscal 2021		$	3,381
Fiscal 2022		13,866
Fiscal 2023		12,662
Fiscal 2024		10,740
Fiscal 2025		8,994
Fiscal 2026		7,136
Thereafter		10,078
Total lease payments		66,857
Less: Amounts representing interest		(1,637)
Present value of lease liabilities		$	65,220

In September 2020, we sold a building in McCook, IL used within our LSO segment for $25.1 million. The carrying value of the building was $4.3 million, and we recognized a gain on this sale of approximately $19.3 million, net of associated transaction costs, which is included as a reduction of selling, general and administrative expenses within our consolidated

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statements of operations. We also entered into a separate lease agreement for this facility, which was determined to be an operating lease, and we have approximately $8.2 million of future lease payments upon commencement of this lease in September 2020.

8.Commitments and Contingent Liabilities

Bond commitments

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 November ~~30, 2019, $833.9 million~~28, 2020, $1.1 billion of these types of bonds were outstanding, of which ~~$432.6~~$527.8 million is onin our backlog. These bonds do not have stated expiration dates. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

Warranty and project-related contingencies

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
(In thousands)	November 28, 2020		November 30, 2019
Balance at beginning of period	$	15,629	$	16,737
Additional accruals	4,175		5,996
Claims paid	(4,071)		(7,807)

Balance at end of period	$	15,733	$	14,926

Nine Months Ended
In thousands November 30, 2019 December 1, 2018
Balance at beginning of period $ 16,737
$ 22,517
Additional accruals 5,996
3,437
Claims paid (7,807 ) (8,398 )
Balance at end of period $ 14,926
$ 17,556

Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of our Architectural Framing Systems businesses. We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages. ~~We have recorded an estimated~~The liability for these types of project-related contingencies was $3.3 million and $49.0 million as of November 28, 2020 and February 29, 2020, respectively. In June 2020, we settled contract claims related to a majority of these project-related contingencies on a legacy EFCO project ~~of $47.6 million and $42.8 million as of November~~for an amount equal to the recorded contingency at May 30, ~~2019 and March 2, 2019, respectively. This includes approximately~~ ~~$14.7 million~~ recorded in the third quarter for estimated costs associated with project dispute resolution and other additional project costs. In the third quarter, upon confirmation of coverage by an insurer, we also recorded an insurance receivable of ~~$15.0 million, included within other current assets on the consolidated balance sheets and within cost of sales on the consolidated results of operations. We received this payment subsequent to quarter-end.~~2020.

Letters of credit

At November ~~30, 2019,~~28, 2020, we had ~~$24.7~~$18.7 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6. In connection with the settlement of contract claims related to a legacy EFCO project referenced above, the original project performance and payment bond related to the project was replaced, which required a $25.0 million letter of credit. The letter of credit for the replacement bond was issued outside of our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.

Purchase obligations

Purchase obligations for raw material commitments and capital expenditures totaled ~~$146.0~~$207.5 million as of November ~~30, 2019.~~28, 2020.

New Markets Tax Credit (NMTC) transactions

We have ~~entered into~~ four separate NMTC ~~programs~~transactions to support our operational ~~expansion, including two transactions completed in fiscal 2019.~~expansion. Proceeds received from investors on these transactions are included within other ~~current and~~ non-current liabilities on our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax recapture for a period of seven years from the date of each respective transaction. Therefore, upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits. The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other ~~current and~~ non-current assets on our consolidated balance sheets. These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement. During the construction phase, we are required to hold cash dedicated to fund each capital project which is then classified as restricted cash on our consolidated balance sheets. Variable-interest entities, which have been included within our consolidated financial statements, have been created as a result of the structure of these transactions, as investors in the programs do not have a material interest in their underlying economics. During the third quarter ended November 28, 2020, an NMTC transaction was settled as expected and as a result, $7.4 million of operating income was recognized as a reduction to selling, general and administrative expenses within the Architectural Glass segment.

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The table below provides a summary of our remaining outstanding NMTC transactions (in millions):


Inception date	Termination date	Proceeds received		Deferred costs		Net benefit

June 2016	June 2023	$	6.0	$	1.2	$	4.8
August 2018	August 2025	6.6		1.3		5.3
September 2018	September 2025	3.2		1.0		2.2
Total		$	15.8	$	3.5	$	12.3

Inception date Termination date Proceeds received Deferred costs Net benefit
November 2013 October 2020 $ 10.7
$ 3.0
$ 7.7
June 2016 May 2023 6.0
0.9
5.1
August 2018 July 2025 6.6
0.9
5.7
September 2018 August 2025 3.2
0.8
2.4
Total $ 26.5
$ 5.6
$ 20.9

Litigation

On November 5, 2018, a shareholder filed a purported securities class action against the Company and certain named executive officers. On April 26, 2019, the new lead plaintiff filed an amended complaint, alleging that, during the purported class period of May 1, 2017 to April 10, 2019, the Company and the named executive officers made materially false or misleading statements or omissions about the Company's acquisition of EFCO Corporation on June 12, 2017, and about the Company's Architectural Glass business segment, in violation of the federal securities laws. We intend to vigorously defend this matter.

On December 17, 2018, a different shareholder filed a derivative lawsuit, purportedly on behalf of the Company, against certain of our executive officers and directors claiming breaches of fiduciary duty, waste of corporate assets and unjust enrichment. This complaint alleges that the officers and directors allegedly made materially false or misleading statements or omissions about the Company's business, operations and prospects, particularly with respect to our Architectural Glass business segment, during the period between June 28, 2018 and September 17, 2018. This matter has been stayed, pending resolution of a motion to dismiss the foregoing matter. We intend to vigorously defend this matter.

~~In addition to the foregoing, the~~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 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 matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no 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.


9.	~~Share-Based Compensation~~

9.Share-Based Compensation

Total share-based compensation expense included in the results of operations was ~~$4.6 million for the~~ ~~nine-month period ended~~ ~~November 30, 2019~~ ~~and $4.7~~$6.2 million for the nine-month period ended ~~December 1, 2018~~.November 28, 2020 and $4.6 million for the nine-month period ended November 30, 2019.

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 February 29, 2020	100,341	$	8.34
Awards granted	660,600	23.04
Awards exercised	(127,241)	11.45

Outstanding at November 28, 2020	633,700	$	23.04	9.6 years	$	2,889,672
Vested or expected to vest at November 28, 2020	633,700	$	23.04	9.6 years	$	2,889,672

Stock options and SARs Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value
Outstanding at March 2, 2019 100,341
$ 8.34

Awards exercised —
—

Outstanding and exercisable at November 30, 2019 100,341
8.34
1.8 years $ 3,000,196

~~No awards were exercised for~~For the nine-months ended November ~~30, 2019. For the nine-months ended December 1, 2018,~~28, 2020, cash proceeds from the exercise of stock options were ~~$0.2~~$1.5 million and 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~~$1.8 million. NaN awards were issued or exercised during the nine-months ended November 30, 2019.

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 2, 2019 286,613
$ 47.00
Granted 125,571
39.53
Vested (128,333 ) 49.00
Canceled (3,000 ) 43.08
Nonvested at November 30, 2019 280,851
42.78


Nonvested shares and units	Number of Shares and Units	Weighted Average Grant Date Fair Value
Nonvested at February 29, 2020	309,259	$	40.58
Granted	342,196	20.46
Vested	(140,953)	39.76
Canceled	(2,059)	34.38
Nonvested at November 28, 2020	508,443	$	27.29

At November ~~30, 2019~~,28, 2020, there was ~~$6.9~~$8.6 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 2025 months. The total fair value of shares vested during the nine months ended November ~~30, 2019~~28, 2020 was ~~$5.1~~$3.2 million.


~~10.~~	~~Employee Benefit Plans~~

The Company sponsors 2 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 November 30, 2019 December 1, 2018 November 30,
2019 December 1,
2018
Interest cost $ 123
$ 127
$ 369
$ 381
Expected return on assets (46 ) (10 ) (138 ) (30 )
Amortization of unrecognized net loss 55
57
165
171
Net periodic benefit cost $ 132
$ 174
$ 396
$ 522

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~~11.~~	~~Income Taxes~~

10.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 2017, or state and local income tax examinations for years prior to fiscal 2013. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2016, and there is 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 $5.2~~$4.3 million and $4.1 million at November ~~30, 2019~~28, 2020 and ~~$5.1 million at March 2, 2019.~~February 29, 2020, 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 $0.4 million during the next 12 months due to lapsing of statutes.

11.Earnings per Share


~~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)	November 28, 2020	November 30, 2019	November 28, 2020	November 30, 2019
Basic earnings per share – weighted average common shares outstanding	25,883	26,432	26,068	26,481
Weighted average effect of nonvested share grants and assumed exercise of stock options	342	318	282	295
Diluted earnings per share – weighted average common shares and potential common shares outstanding	26,225	26,750	26,350	26,776
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)	159	152	238	152

Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 November 30,
2019 December 1,
2018
Basic earnings per share – weighted average common shares outstanding 26,432
27,836
26,481
28,030
Weighted average effect of nonvested share grants and assumed exercise of stock options 318
320
295
274
Diluted earnings per share – weighted average common shares and potential common shares outstanding 26,750
28,156
26,776
28,304
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)

152
170
152
92

12.Segment Information


~~13.~~	~~Segment Information~~

The Company has 4 reporting segments: Architectural Framing Systems, Architectural Glass, Architectural Services and ~~Large-Scale Optical (LSO).~~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 6 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
In thousands November 30, 2019 December 1, 2018 November 30, 2019 December 1, 2018
Net sales from operations
Architectural Framing Systems $ 165,517
$ 181,306
$ 533,432
$ 550,193
Architectural Glass 89,433
98,524
288,862
263,533
Architectural Services 69,043
72,828
195,787
220,051
Large-Scale Optical 24,405
23,377
66,449
64,522
Intersegment eliminations (10,482 ) (18,317 ) (34,190 ) (41,917 )
Net sales $ 337,916
$ 357,718
$ 1,050,340
$ 1,056,382
Operating income (loss) from operations
Architectural Framing Systems $ 6,345
$ 12,903
$ 34,141
$ 43,554
Architectural Glass 4,092
5,851
16,951
9,168
Architectural Services 6,533
8,659
15,082
21,435
Large-Scale Optical 6,754
6,628
15,561
15,845
Corporate and other (2,130 ) (2,633 ) (9,525 ) (7,940 )
Operating income $ 21,594
$ 31,408
$ 72,210
$ 82,062

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	Three Months Ended				Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Net sales
Architectural Framing Systems	$	136,688	$	165,517	$	439,779	$	533,432
Architectural Glass	84,779		89,433		248,274		288,862
Architectural Services	76,690		69,043		213,911		195,787
Large-Scale Optical	25,267		24,405		48,438		66,449
Intersegment eliminations	(9,841)		(10,482)		(28,240)		(34,190)
Net sales	$	313,583	$	337,916	$	922,162	$	1,050,340
Operating income (loss)
Architectural Framing Systems	$	7,218	$	6,345	$	26,211	$	34,141
Architectural Glass	10,825		4,092		15,306		16,951
Architectural Services	8,558		6,533		20,470		15,082
Large-Scale Optical(1)	26,114		6,754		25,131		15,561
Corporate and other	(2,965)		(2,130)		(7,685)		(9,525)
Operating income	$	49,750	$	21,594	$	79,433	$	72,210

(1) LSO operating income amounts for the three- and nine-month periods ended November 28, 2020 include a $19.3 million gain on the sale-lease back of a building.

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~~

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

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”~~“should,” "will," "continue" 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 2, 2019~~.beliefs. 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~~Information about factors ~~include, but are not limited to,~~that could materially affect our results can be found in the ~~risks and uncertainties set forth under Item 1A~~“Risk Factors” section of ~~the Company’s~~our Annual Report on Form 10-K for the ~~fiscal~~ year ended ~~March 2, 2019~~.February 29, 2020 and in subsequent filings with the U.S. Securities and Exchange Commission, including this Quarterly Report on Form 10-Q.

We also 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 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 ongoing COVID-19 pandemic continues to cause volatility and uncertainty in global and domestic markets impacting worldwide economic activity. We have experienced some delays in commercial construction projects and orders as a result of COVID-19. In our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as

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customers and end markets face some uncertainty and delays in timing of work. In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions. Within our Large-Scale Optical (LSO) segment, most customers reopened and the segment's two manufacturing locations resumed normal operations during our second fiscal quarter, after being shutdown for most of our first and second quarters due to governmental orders. We have also been impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at some of our facilities. The extent to which COVID-19 will continue to impact our business will depend on future developments and public health advancements, which have been buoyed recently by the commencement of vaccine production and distribution.

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended ~~March 2, 2019~~February 29, 2020 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Highlights of Third Quarter ~~and First Nine Months~~ of Fiscal ~~2020~~2021 Compared to Third Quarter ~~and First Nine Months~~ of Fiscal ~~2019~~2020

Net sales

Consolidated net sales decreased ~~5.5~~7.2 percent, or ~~$19.8~~$24.3 million, and decreased 12.2 percent, or $128.2 million, for the ~~third quarter~~three- and nine-month periods ended November ~~30, 2019, and decreased 0.6 percent, or $6.0 million, for the nine-month period,~~28, 2020, respectively, compared to the same periods in the prior ~~year. In the quarter, the decrease in sales was driven by three of our four segments,~~year, primarily ~~a result of lower volumes~~reflecting end market and COVID-19-related volume declines in the Architectural Framing Systems ~~segment, due to customer-driven schedule delays,~~ and ~~in the~~ Architectural Glass segment, resulting from increased foreign competition. The Architectural Services segment also contributed to the decline in sales, as a result of timing of project activity, as expected. For the nine-month period, the decrease in sales was driven by expected project timing-related declines within the Architectural Services segment and by lower volumes as a result of customer-driven schedule delays within the Architectural Framing Systems segment, partially offset by improved volume in the Architectural Glass segment.segments.

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


	Three Months Ended				Nine Months Ended
	November 28, 2020		November 30, 2019		November 28, 2020		November 30, 2019
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales	77.8		78.0		77.7		77.0
Gross profit	22.2		22.0		22.3		23.0
Selling, general and administrative expenses	6.3		15.6		13.7		16.1
Operating income	15.9		6.4		8.6		6.9
Interest expense, net	0.5		0.6		0.5		0.7
Other income, net	0.2		0.1		0.1		0.1
Earnings before income taxes	15.5		5.9		8.2		6.3
Income tax expense	3.7		1.4		2.0		1.5
Net earnings	11.9	%	4.5	%	6.2	%	4.8	%
Effective tax rate	23.5	%	23.2	%	23.8	%	23.9	%

Three Months Ended Nine Months Ended
November 30, 2019 December 1, 2018 November 30, 2019 December 1, 2018
Net sales 100.0 % 100.0 % 100.0 % 100.0 %
Cost of sales 78.0
76.5
77.0
76.4
Gross profit 22.0
23.5
23.0
23.6
Selling, general and administrative expenses 15.6
14.7
16.1
15.8
Operating income 6.4
8.8
6.9
7.8
Interest and other expense, net 0.5
0.8
0.6
0.6
Earnings before income taxes 5.9
8.0
6.3
7.2
Income tax expense 1.4
1.9
1.5
1.7
Net earnings 4.5 % 6.1 % 4.8 % 5.5 %
Effective tax rate 23.2 % 23.5 % 23.9 % 23.8 %

Gross profit

Gross profit as a percent of sales was 22.2 percent and 22.3 percent for the three- and nine-month periods ended November 28, 2020, compared to 22.0 percent and 23.0 percent for the three- and nine-month periods ended November 30, ~~2019, respectively,~~2019. The increase in the third quarter of fiscal 2021 compared to ~~23.5 percent and 23.6 percent for~~ the ~~three- and nine-month periods ended December 1, 2018, respectively. The decrease~~same period in ~~the current quarter~~fiscal 2020 was ~~largely~~ driven by higher manufacturing costs and operational difficulties that we are addressing in some of the businesses in the Architectural Framing Systems segment, as well as reduced operating leverage on lower volumesstrong project execution in the Architectural Services segment. InThe decrease in the nine-month period ~~gross profit improvements in Architectural Glass were offset~~of fiscal 2021 compared to fiscal 2020 was largely driven by the operational difficulties in the Architectural Framing Systems segment, as well as reduced operating leverage in the Architectural Services segment. Additionally, in the current fiscal year, start-up costs relatedlower volumes due to ~~the new manufacturing facility for the small projects initiative within the Architectural Glass segment negatively impacted margin by 40 basis points in the quarter~~market-related and ~~20 basis points in the year-to-date period.~~COVID-19 project delays.

Selling, general and administrative (SG&A) expenses

SG&A expenses as a percent of sales were ~~15.6~~6.3 percent and ~~16.1~~13.7 percent for the three- and nine-month periods ended November ~~30, 2019, respectively,~~28, 2020, compared to ~~14.7~~15.6 percent and ~~15.8~~16.1 percent infor the prior year three- and nine-month ~~periods, respectively. In both current year periods,~~periods. SG&A ~~increased~~decreased as a percent of sales compared to the same ~~period~~periods in the prior year primarily due to ~~costs for outside advisors~~a $19.3 million gain on the sale-leaseback of a building and ~~legal fees, some~~$7.4 million of income related to a New Markets Tax Credit transaction, both of which were ~~offset by net recoveries related~~recognized in the third quarter of fiscal 2021. In addition, we received a benefit of $4.2 million during the third quarter of fiscal 2021, and $5.5 million year-to-date in fiscal 2021, from a Canadian wage subsidy program offered to ~~acquired project matters. These matters are included within~~support Canadian businesses due to the ~~Corporate~~widespread impacts of the COVID-19 pandemic. In total, these items had a favorable impact on SG&A as a percentage of sales

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of 9.9 percentage points and ~~other category within Note 13, Segment Information.~~3.5 percentage points for the three- and nine-month periods ended November 28, 2020, respectively.

Income tax expense

The effective tax rate in the third quarter of fiscal ~~2020~~2021 was ~~23.2~~23.5 percent, compared to ~~23.5~~23.2 percent in the same period last year, and ~~23.9~~23.8 percent for the first nine months of fiscal ~~2020,~~2021, compared to ~~23.8~~23.9 percent in the ~~prior-year~~prior year period. ~~The small changes in tax rate were driven by the mix of foreign income~~

Segment Analysis

Architectural Framing Systems


	Three Months Ended								Nine Months Ended
(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change
Net sales	$	136,688		$	165,517		(17.4)	%	$	439,779		$	533,432		(17.6)	%
Operating income	7,218			6,345			13.8	%	26,211			34,141			(23.2)	%
Operating margin	5.3		%	3.8		%			6.0		%	6.4		%

Architectural Framing Systems net sales declined $28.8 million, or 17.4 percent, and ~~the impact of state taxes~~$93.7 million, or 17.6 percent, for ~~both~~ the three- and nine-month periods ended November 28, 2020, compared to the prior-year periods, primarily reflecting market-related and COVID-19 project delays and lower order volume for short lead-time products.

Operating margin increased 150 basis points for the three-month period of the current year and decreased 40 basis points for the nine-month period of the current year, compared to the same periods ofin the prior year.

~~Segment Analysis~~

~~Architectural Framing Systems~~

Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 % Change November 30, 2019 December 1, 2018
%
Change
Net sales $ 165,517
$ 181,306
(8.7 )% $ 533,432
$ 550,193
(3.0 )%
Operating income 6,345
12,903
(50.8 )% 34,141
43,554
(21.6 )%
Operating margin 3.8 % 7.1 % 6.4 % 7.9 %

~~Architectural Framing Systems net sales declined $15.8 million, or 8.7 percent, and $16.8 million, or 3.0 percent, for~~ The increase in the ~~three- and nine-month periods ended November 30, 2019, respectively,~~third quarter of fiscal 2021 compared to the ~~prior-year periods. In both periods, the declines are~~third quarter of fiscal 2020 was due to cost actions and improved productivity that served to offset the impact of volume declines from end market softness and COVID-19. The decrease in the nine-month period in the current year compared to the same period in the prior year reflects leverage on the lower ~~volumes~~revenue, partially offset by cost reduction actions and improved productivity. In addition, this segment benefited from a Canadian wage subsidy of $4.2 million in the third quarter of fiscal 2021 and $5.5 million for the nine-month period of fiscal 2021, as a result of ~~customer-driven schedule delays and operational difficulties.~~

~~Operating margin decreased 330 and 150 basis points for~~a Canadian program offered to support Canadian businesses due to the ~~three- and nine-month periods~~widespread impacts of the current year, respectively, compared to the same periods in the prior year, reflecting the lower volumes due to customer-driven schedule delays, as well as higher manufacturing costs and operational difficulties in two of the segment's businesses, which have been identified and are being addressed. Last year's third quarter and year-to-date periods also included $0.7 million and $4.7 million, respectively, of expense for the amortization of short-lived acquired intangible assets.COVID-19 pandemic.

As of November ~~30, 2019,~~28, 2020, segment backlog was approximately ~~$375~~$408 million, compared to approximately ~~$385~~$404 million ~~last quarter.~~

at the end of the prior quarter, and $375 million at the end of the third quarter of the prior year. Backlog represents the dollar amount of signed contracts or firm orders, generally as a result of a competitive bidding process, which ismay be expected to be recognized as ~~revenue.~~revenue in the future. Backlog is not a term defined under U.S. GAAP and is not a measure of contract profitability. ~~Backlog should not be used~~We view backlog as ~~the sole~~one indicator of future ~~segment revenue because~~revenues, particularly in our longer-lead time businesses. In addition to backlog, we have a substantial amount of projects with short lead times that book-and-bill within the same reporting period and are not included in backlog. We have strong visibility beyond backlog, as projects awarded, verbal commitments and bidding activities are ~~monitored separately and~~ not included in backlog. ~~We use backlog as one of the metrics to evaluate sales trends in our long lead-time segments.~~

Architectural Glass


																		Three Months Ended								Nine Months Ended
	Three Months Ended								Nine Months Ended
In thousands	November 30, 2019			December 1, 2018			% Change		November 30, 2019			December 1, 2018			% Change
(In thousands)																	(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change
Net sales	$	89,433		$	98,524		(9.2	)%	$	288,862		$	263,533		9.6	%	Net sales	$	84,779		$	89,433		(5.2)	%	$	248,274		$	288,862		(14.1)	%
Operating income	4,092			5,851			(30.1	)%	16,951			9,168			84.9	%	Operating income	10,825			4,092			164.5	%	15,306			16,951			(9.7)	%
Operating margin	4.6		%	5.9		%			5.9		%	3.5		%			Operating margin	12.8		%	4.6		%			6.2		%	5.9		%

Net sales decreased ~~$9.1~~$4.7 million, or ~~9.2~~5.2 percent, and ~~increased $25.3~~$40.6 million, or ~~9.6~~14.1 percent, for the three- and nine-month periods ended November ~~30, 2019, respectively,~~28, 2020, compared to the same periods in the prior year. The ~~decrease in the third quarter of fiscal 2020 compared to the third quarter of fiscal 2019 is~~decreases reflect lower volumes primarily due to lower volumes as a result of increased foreign competition leveraging the strength of the U.S. dollar. For the nine-month period, the increase in sales compared to the same period last year is due to improved volumemarket-related and ~~mix on strong customer demand in the first half of our current fiscal year.~~COVID-19 project delays.

Operating margin ~~decreased 130 basis points for the three-month period of the current year~~increased 820 and increased 240 basis points for the nine-month period of the current year, respectively, compared to the same periods in the prior year. The decrease in the current quarter was due to start-up costs related to the new small projects initiative, as well as decreased volumes, somewhat offset by improved factory productivity. The margin increase in the nine-month of the current year period relates to operating leverage on higher volume and improved price and mix. Start-up costs related to the small projects initiative had a negative impact on margin of approximately 160 basis points and 10030 basis points for the three- and nine-month periods of the current year, ~~respectively.~~compared to the same periods in the prior year. Fiscal 2021 third quarter results included $7.4 million of operating income related to a New Markets Tax Credit transaction. In addition, operating margins in both periods of the current year were impacted by volume declines due to end market softness and COVID-19.

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Architectural Services


	Three Months Ended								Nine Months Ended
(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change
Net sales	$	76,690		$	69,043		11.1	%	$	213,911		$	195,787		9.3	%
Operating income	8,558			6,533			31.0	%	20,470			15,082			35.7	%
Operating margin	11.2		%	9.5		%			9.6		%	7.7		%

Three Months Ended Nine Months Ended
In thousands November 30, 2019 December 1, 2018 % Change November 30,
2019 December 1,
2018
%
Change
Net sales $ 69,043
$ 72,828
(5.2 )% $ 195,787
$ 220,051
(11.0 )%
Operating income 6,533
8,659
(24.6 )% 15,082
21,435
(29.6 )%
Operating margin 9.5 % 11.9 % 7.7 % 9.7 %

~~As expected,~~ Architectural Services net sales ~~declined $3.8~~increased $7.6 million, or ~~5.2~~11.1 percent, and ~~$24.3~~$18.1 million, or ~~11.0~~9.3 percent, for the three- and nine-month periods ended November ~~30, 2019, over~~28, 2020, compared to the same periods in the prior year, ~~on lower~~driven by increased volume ~~due to timing of project activity.~~from executing projects in backlog.

Operating margin ~~decreased 240~~increased 170 and ~~200~~190 basis points for the three- and nine-month periods of the current year, compared to the same periods in the prior year, ~~due to reduced leverage on the lower~~primarily driven by strong project ~~volume.~~execution.

As of November ~~30, 2019,~~28, 2020, segment backlog was approximately ~~$607~~$597 million, compared to approximately ~~$502~~$665 million ~~last quarter.~~as of the end of the prior quarter, and $607 million at the end of the third quarter of the prior year. Backlog is ~~defined~~described within the Architectural Framing Systems discussion above.

Large-Scale Optical (LSO)


																		Three Months Ended								Nine Months Ended
	Three Months Ended								Nine Months Ended
In thousands	November 30, 2019			December 1, 2018			% Change		November 30, 2019			December 1, 2018			% Change
(In thousands)																	(In thousands)	November 28, 2020			November 30, 2019			% Change		November 28, 2020			November 30, 2019			% Change
Net sales	$	24,405		$	23,377		4.4	%	$	66,449		$	64,522		3.0	%	Net sales	$	25,267		$	24,405		3.5	%	$	48,438		$	66,449		(27.1)	%
Operating income	6,754			6,628			1.9	%	15,561			15,845			(1.8	)%	Operating income	26,114			6,754			286.6	%	25,131			15,561			61.5	%
Operating margin	27.7		%	28.4		%			23.4		%	24.6		%			Operating margin	103.4		%	27.7		%			51.9		%	23.4		%

LSO net sales increased ~~4.4~~$0.9 million or 3.5 percent, and ~~3.0~~decreased $18.0 million, or 27.1 percent, for the three- and nine-month periods ended November ~~30, 2019, over~~28, 2020, compared to the same periods in the prior year. In the third quarter, customer demand increased significantly following the segment's COVID-related shutdown earlier in the year. The decrease in sales for the current year ~~due~~nine-month period compared to ~~improved sales mix. Operating~~the same period in the prior year reflects the required COVID-related closure of most of the segment’s customers and the segment’s manufacturing locations for most of the first and second quarters of fiscal 2021.

The segment had operating income of $26.1 million and $25.1 million and operating margin ~~decreased 70~~of 103.4 percent and ~~120 basis points~~51.9 percent for the three- and nine-month periods ended November ~~30, 2019,~~28, 2020, respectively, compared to operating income of $6.8 million and $15.6 million and operating margin of 27.7 percent and 23.4 percent in the same periods in the prior year. The increases for the fiscal 2021 periods are primarily related to a $19.3 million gain on the sale-leaseback of a segment building during the current year ~~driven by reduced~~third quarter. Additionally, operating ~~leverage.~~margin in the nine-month period reflects the impact of the segment's temporary shutdown and the related impact from lower volume.

Liquidity and Capital Resources


Selected cash flow data	Nine Months Ended
(In thousands)	November 28, 2020		November 30, 2019
Operating Activities
Net cash provided by operating activities	$	120,512	$	53,601
Investing Activities
Capital expenditures	(17,116)		(41,176)

Proceeds from sale of property, plant and equipment	23,724		591

Financing Activities
Borrowings on line of credit	193,332		108,000
(Repayment) borrowings on debt	(5,400)		150,000
Payments on line of credit	(237,500)		(252,500)
Repurchase and retirement of common stock	(20,731)		(20,010)
Dividends paid	(14,546)		(13,808)

Selected cash flow data Nine Months Ended
In thousands November 30, 2019 December 1, 2018
Operating Activities
Net cash provided by operating activities $ 53,601
$ 70,644
Investing Activities
Capital expenditures (41,176 ) (33,867 )
Financing Activities
Borrowings on line of credit 108,000
294,500
Proceeds from issuance of term debt 150,000
—
Payments on line of credit (252,500 ) (278,000 )
Repurchase and retirement of common stock (20,010 ) (23,313 )
Dividends paid (13,808 ) (13,180 )

Operating Activities. Cash provided by operating activities was ~~$53.6 million for the first~~ ~~nine~~ months of fiscal 2020, a decrease of $17.0 million compared to the prior-year period, primarily due to reduced net earnings and increased working capital requirements related to a legacy EFCO project, as well as timing of other working capital needs.

~~Investing Activities.~~ ~~Net cash used in investing activities was $41.4~~$120.5 million for the first nine months of fiscal ~~2020, primarily due~~2021, an increase of $66.9 million compared to the prior-year period, reflecting strong working capital management.

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Investing Activities. Net cash provided by investing activities was $5.5 million for the first nine months of fiscal 2021, driven by proceeds of $23.7 million on the sale-leaseback of a building, offset by capital expenditures of ~~$41.2 million, while in~~$17.1 million. In the first nine months of the prior year, net cash used by investing activities was ~~$26.9~~$41.4 million, ~~primarily due to~~driven by capital expenditures of ~~$33.9 million and net purchases of marketable securities of $3.2 million, offset by $12.3 million of proceeds from sales of property, plant and equipment. We estimate~~$41.2 million. Given the uncertain economic environment in fiscal ~~2020 capital expenditures to be approximately $55 million, as~~2021, we will continue to ~~make~~limit our capital spending to all health and safety related investments ~~to drive~~as well as the most critical high return projects that support our long-term strategic plan and profitable growth ~~and productivity improvements.~~targets.

Financing Activities. Net cash used inby financing activities was ~~$30.9~~$85.7 million for the first nine months of fiscal ~~2020,~~2021, compared to ~~$21.2~~$30.9 million ~~for~~in the prior-year period, primarily due to ~~reduced~~$47.5 million of net ~~borrowings~~payments in the current ~~year.~~year, compared to net borrowings of $5.5 million in the prior-year period. At November ~~30, 2019,~~28, 2020, we were in compliance with the financial covenants inunder our revolving credit ~~facility.~~facility and term loan.

We paid dividends totaling ~~$13.8~~$14.5 million ($~~0.525~~0.5625 per share) in the first nine months of fiscal ~~2020~~2021, compared to ~~$13.2~~$13.8 million ($~~0.4725~~0.5250 per share) in the comparable prior-year period. During the first nine months of fiscal 2021, we repurchased 852,029 shares under our authorized share repurchase program, for a total cost of $20.7 million. In the first nine months of fiscal 2020, we repurchased 531,997 shares under ~~our authorized share repurchase program, all during~~ the ~~first quarter, for a total cost of $20.0 million. In the first nine months of fiscal 2019, we repurchased 600,000 shares under our authorized~~ share repurchase program, for a total cost of ~~$23.3 million, all during~~$20.0 million. Since the ~~third quarter. We~~inception of the share repurchase program in 2004, we have purchased a total of ~~5,799,912~~6,806,941 shares, at a total cost of ~~$169.3 million, since the fiscal 2004 inception of this program.~~$195.1 million. We currently have remaining authority to repurchase an additional ~~1,450,088~~1,443,059 shares under this program. We will continue to evaluate making future share repurchases, considering our cash flow, debt levels and market conditions, including the continuing effects of the COVID-19 pandemic, in the context of all our capital allocation options ensuring that we maximize the long-term value for our shareholders.

Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of November ~~30, 2019~~:28, 2020:


	Payments Due by Fiscal Period
(In thousands)	Remainder of Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024		Fiscal 2025		Thereafter		Total
Debt obligations	$	—	$	2,000	$	1,000	$	—	$	153,463	$	12,000	$	168,463
Operating leases (undiscounted)	3,381		13,866		12,662		10,740		8,994		17,214		66,857
Purchase obligations	47,263		142,186		14,073		939		770		2,310		207,541
Total cash obligations	$	50,644	$	158,052	$	27,735	$	11,679	$	163,227	$	31,524	$	442,861

Payments Due by Fiscal Period
In thousands Remainder of Fiscal 2020 Fiscal 2021 Fiscal 2022 Fiscal 2023 Fiscal 2024 Thereafter Total
Debt obligations $ —
$ 155,400
$ 82,770
$ 1,085
$ —
$ 12,000
$ 251,255
Operating leases (undiscounted) 3,366
12,880
11,256
10,307
8,147
18,647
64,603
Purchase obligations 59,463
84,960
1,306
127
127
—
145,983
Total cash obligations $ 62,829
$ 253,240
$ 95,332
$ 11,519
$ 8,274
$ 30,647
$ 461,841

We acquire the use of certain assets through operating leases, such as property, manufacturing equipment, vehicles and other equipment. Purchase obligations in the table above relate to raw material commitments and capital expenditures.

We expect to make contributions of $0.7 million to our defined-benefit pension plans in fiscal ~~2020,~~2021, which will equal or exceed our minimum funding requirements.

As of November ~~30, 2019,~~28, 2020, we had reserves of ~~$5.2 million and $0.9~~$4.3 million for unrecognized tax ~~benefits and environmental liabilities, respectively.~~benefits. We ~~currently~~ expect approximately $0.4 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 required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance. At November ~~30, 2019, $833.9 million~~28, 2020, $1.1 billion of these types of bonds were outstanding, of which ~~$432.6~~$527.8 million is onin our backlog. These bonds do not have stated expiration dates. We have never been required to make payments under surety or performance bonds with respect to our existing businesses.

We are taking advantage of the option to defer remittance of the employer portion of Social Security tax as provided in the Coronavirus, Aid, Relief and Economic Security Act ("CARES Act"), and estimate that this deferral will allow us to retain approximately $13 million in cash during calendar year 2020 that would have otherwise been remitted to the federal government. At the end of the third quarter of fiscal 2021, we had deferred tax payments of $11.8 million, which are included within other non-current liabilities on our consolidated balance sheets. The deferred tax payments will be repaid equally in calendar years 2021 and 2022. The CARES Act, along with other foreign government initiatives, also provides for job retention programs, which have allowed some of our businesses to receive payroll tax credits or subsidies during calendar year 2020.

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Due to our ability to generate strong cash from operations and our 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.

~~Outlook~~

~~The following statements reflect~~COVID-19 Consideration. While we believe we have adequate sources of liquidity to continue to fund our ~~expectations~~business for ~~full-year fiscal 2020 results. These statements~~at least the next 12 months, the extent to which the ongoing COVID-19 pandemic may impact our results of operations or liquidity is uncertain. To date, we have experienced some delays in commercial construction projects and orders due to COVID-19. While the construction and construction-related industries are ~~forward-looking,~~considered an "essential business or service" in most jurisdictions in which we operate, the uncertain economic environment has resulted in order delays and ~~actual~~there have been instances of site closures and project delays.Increased social distancing and health-related precautions are required on many work sites, which have caused and may continue to cause additional project delays and additional costs to be incurred. Within the LSO segment, after being closed for most of the first and second quarters, we resumed normal operations at the segment's two manufacturing locations and most of our customer's retail locations continue to operate after being required to close earlier this year. We expect this global pandemic to continue to have an impact on our revenue and our results ~~may differ materially.~~

~~Revenue flat to down 1 percent over fiscal 2019.~~

~~Earnings per diluted share in~~of operations, the ~~range~~size and duration of ~~$2.15 to 2.30.~~

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

~~Additionally,~~which we are ~~implementing an integration~~currently unable to predict. At this time, we do not expect that the impact from the coronavirus pandemic will have a significant effect on our liquidity. As demonstrated so far this fiscal year, we have taken steps to increase available cash on hand including, but not limited to, active working capital management and ~~cost reduction plan~~targeted reductions in discretionary operating expenses and capital expenditures. Given the continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, liquidity or financial position. To the extent that our customers and suppliers are ~~identifying procurement cost savings across~~adversely impacted by the ~~Company,~~COVID-19 pandemic, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations, thereby negatively affecting our results of operations, and/or impact our liquidity.

Off-balance sheet arrangements. We have no off-balance sheet arrangements that have or are ~~expected~~reasonably likely to ~~generate savings largely~~have a current or future effect on our financial condition, changes in ~~fiscal 2021 and beyond.~~financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.

Related Party Transactions

~~In the third quarter of fiscal 2020, Sotawall's principal facility, that had been leased from a company owned by an officer of Sotawall, was sold to an unrelated third party.~~ No ~~other significant~~material changes have occurred in the disclosure with respect to our related party transactions as set forth in our Annual Report on Form 10-K for the fiscal year ended ~~March 2, 2019.~~February 29, 2020.

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 ~~other~~material changes have occurred toin the disclosure of our critical accounting policies set forth in our Annual Report on Form 10-K for the fiscal year ended ~~March 2, 2019.~~February 29, 2020, other than as described in our Current Report on Form 10-Q for the fiscal quarter ended May 30, 2020 and as noted below.

Goodwill and indefinite-lived intangible asset impairment

Goodwill

We have historically evaluated goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate the carrying value of the goodwill may not be recoverable. In the third quarter of fiscal 2021, we changed the date of our annual goodwill impairment testing from our year-end to the first day in our fiscal fourth quarter. This change results in better alignment of the annual impairment testing with our strategic and annual planning processes. This change was determined to not be material and had no impact on our current or historical consolidated financial statements.

Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020. However, the estimated fair value did not exceed carrying value by a significant margin at two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020. We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall. We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units. If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill. Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability. If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units.

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During the third quarter, we combined two reporting units into one reporting unit, following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment. Within this segment, as a result of integration efforts that are ongoing, leadership over our Tubelite and Alumicor reporting units has been combined and functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the combined business. The goodwill of these individual reporting units was aggregated to the combined reporting unit. We evaluated goodwill on a qualitative basis prior to and subsequent to this change and have concluded that no adjustment to the carrying value of goodwill was necessary as a result of this change. In addition, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

Indefinite-lived intangible assets

During the third quarter of fiscal 2021, no additional qualitative indicators of impairment were identified and therefore, no interim quantitative indefinite-lived intangible asset impairment evaluation was completed. We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate. If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.


~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~

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 2, 2019.~~February 29, 2020.


~~Item 4.~~	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~~ ~~November 30, 2019, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.~~

a)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 November 28, 2020, 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~~

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 securities 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. On February 26, 2019, the Court appointed as lead plaintiffs the City of Cape Coral Municipal Firefighters’ Retirement Plan and the City of Cape Coral Municipal Police Officers’ Retirement Plan. On April 26, 2019, the lead plaintiffs filed an amended complaint. The amended complaint alleges that, during the purported class period of May 1, 2017From time to April 10, 2019, the Company and the named executive officers made materially false and/or misleading statements or omissions about the Company's acquisition of EFCO Corporation on June 12, 2017, and about the Company's Architectural Glass business segment in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The amended complaint seeks an unspecified amount of damages, attorney's fees and costs. We intend to vigorously defend 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, due to the named executive officers and board members allegedly making materially false and/or misleading statements or omissions about the Company's business, operations, and prospects, particularly with respect to our Architectural Glass business segment, during the period between June 28, 2018 and September 17, 2018. The complaint seeks an unspecified amount 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. This matter has been stayed pending resolution of a Motion to Dismiss in the Mayer action described above. We intend to vigorously defend this matter.

~~Other Matters~~

~~In addition to the foregoing,~~time, 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 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 matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no 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.


~~Item 1A.~~	~~Risk Factors~~

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 February 29, 2020, except as noted below.

~~March 2, 2019~~.

The novel coronavirus (COVID-19) pandemic, efforts to mitigate the pandemic, and the related weakening economic conditions, have impacted our business and could have a significant negative impact on our operations, liquidity, financial condition and financial results

In the last quarter of our fiscal 2020, a novel strain of coronavirus, COVID-19, started to impact the global economic environment causing extreme volatility and uncertainty in global markets. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic and we started to see certain impacts to our business. This contagious disease outbreak, which continues to spread, and the related adverse public health developments, and government orders to "stay in place" have adversely affected work forces, economies and financial markets globally. Quarantines and "stay in place" orders, the timing and length of containment and eradication solutions, travel restrictions, absenteeism by infected workers, labor shortages or other disruptions to our supply chain or our customers, have adversely impacted our sales and operating results and have resulted in some project delays. In addition, the pandemic has contributed to an economic downturn that could affect the ability of our customers to obtain financing for projects and therefore impact demand for our products and services. Order lead times have been and could continue to be extended or delayed and our pricing or pricing of suppliers for needed materials could increase. Some materials, products or services critical to our operations may become unavailable if the regional or global spread were significant enough to prevent alternative sourcing.

To date, we have experienced some delays in commercial construction projects and orders due to COVID-19. While the construction and construction-related industries are considered an "essential business or service" in most jurisdictions in which we operate, site closures or project delays have occurred and increased social distancing and health-related precautions are required on many work sites, which may cause additional project delays and additional costs to be incurred. Within the LSO segment, we also experienced the temporary closure of many of our customer's retail locations and we temporarily shut down our factories in this segment to comply with government "stay in place" orders. We may see additional temporary closures, which may lead to a future temporary shutdown of our LSO segment factories. We reopened our factories in the LSO segment during the second half of our second quarter.

This global pandemic has had, and we expect it to continue to have, an impact on our revenue and our results of operations, the size and duration of which we are currently unable to predict. The global outbreak of COVID-19 continues to evolve. The extent to which COVID-19 will impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate severity and spread of the disease, the duration or future outbreak surges, travel restrictions and social distancing requirements in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

Given the continuously evolving developments with respect to this pandemic, we cannot reasonably estimate the magnitude of the impact to our results of operations, liquidity or financial position. To the extent that our customers and suppliers are adversely impacted by the coronavirus outbreak, this could reduce the availability, or result in delays, of materials or supplies, or delays in customer payments, which in turn could materially interrupt our business operations, thereby negatively affecting our results of operations, and/or impact our liquidity.

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

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 ~~2020:~~2021:


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)
August 30, 2020 to September 26, 2020	14,113	$	20.93	—	2,063,596
September 27, 2020 to October 24, 2020	419,388	25.62		412,214	1,651,382
October 25, 2020 to November 28, 2020	208,649	25.74		208,323	1,443,059
Total	642,150	$	25.16	620,537	1,443,059

(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 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. The Board increased the authorization by 750,000 shares, announced on January 24, 2008; by 1,000,000 shares on each of the announcement dates of October 8, 2008, January 13, 2016, January 9, 2018, and January 14, 2020; and by 2,000,000 shares, announced on October 3, 2018. The repurchase program does not have an expiration date.

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 1, 2019 to September 28, 2019 —
$ —
—
1,450,088
September 29, 2019 to October 26, 2019 1,162
37.65
—
1,450,088
October 27, 2019 to November 30, 2019 —
—
—
1,450,088
Total 1,162
$ 37.65
—
1,450,088


~~(a)~~	The shares in this column represent the total number of shares that were surrendered to us by plan participants to satisfy stock-for-stock option exercises or withholding tax obligations related to share-based compensation. We did not purchase any shares pursuant to our publicly announced repurchase program during the fiscal quarter.

~~(b)~~

In fiscal 2004, announced on April 10, 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock. The Board increased the authorization by 750,000 shares, announced on January 24, 2008; by 1,000,000 shares 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 3, 2018. The repurchase program does not have an expiration date.

Item 6.Exhibits


~~Item 6.~~	~~Exhibits~~



~~10.1~~3.1			~~Cooperation Agreement, dated November 10, 2019, by and among Apogee Enterprises, Inc. and Engaged Group. Incorporated~~Restated Articles of Incorporation. (Incorporated by reference to Exhibit ~~10.1~~3.1 to Registrant's Annual Report on Form 10-K for the year-ended February 28, 2004.)
3.2			Articles of Amendment to Restated Articles of Incorporation. (Incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K filed on ~~November 12, 2019.~~January 16, 2020.)
~~10.2~~3.3			~~Engaged Capital Waiver, effective October 31, 2019, by~~Amended and ~~among~~Restated Bylaws of Apogee Enterprises, Inc. ~~and Engaged Group. Incorporated~~(Incorporated by reference to Exhibit ~~10.1~~3.1 to Registrant's Current Report on Form 8-K filed on ~~October 31, 2019.~~July 3, 2018.)
~~10.3~~10.1			Transition Agreement between Apogee Enterprises, Inc. and Joseph F. Puishys, dated September 15,2020. (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 17,2020)
~~Engaged Capital Waiver, effective October 10, 2019,~~10.2			Amendment No. 2 to Third Amended and Restated Credit Agreement dated as of November 6, 2020, by and among Apogee Enterprises, Inc., as the Borrower, the Lenders referred to therein, Wells Fargo Bank, National Association, as Administrative Age nt, Swingline Lender and ~~Engaged Group.~~ Issuing Lender, and U.S. Bank National Association, as Syndication Agent and Issuing Lender.(Incorporated by reference to Exhibit 10.1 to ~~Registrant's~~the Registrant’s Current Report on Form 8-K filed on ~~October 11, 2019.~~November 10, 2020)
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 November ~~30, 2019 are furnished herewith,~~28, 2020, formatted in ~~XBRL (Extensible~~iXBRL (Inline Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of November ~~30, 2019~~28, 2020 and ~~March 2, 2019,~~February 29, 2020, (ii) the Consolidated Results of Operations for the three- and nine-months ended November 28, 2020 and November 30, 2019, ~~and December 1, 2018,~~ (iii) the Consolidated Statements of Comprehensive Earnings for the three- and nine-months ended November 28, 2020 and November 30, 2019, ~~and December 1, 2018,~~ (iv) the Consolidated Statements of Cash Flows for the nine-months ended November 28, 2020 and November 30, 2019, ~~and December 1, 2018,~~ (v) the Consolidated Statements of Shareholders' Equity for the ~~three- and~~ nine-months ended November 28, 2020 and November 30, 2019, ~~and December 1, 2018,~~ and (vi) Notes to Consolidated Financial Statements.
104			Cover Page ~~formatted~~Interactive Data File (formatted as ~~Inline Extensible Business Reporting Language~~iXBRL and contained in Exhibit ~~101.~~101)

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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 7, 2021			~~APOGEE ENTERPRISES, INC.~~By: /s/ Ty R. Silberhorn

~~Date: January 9, 2020~~	~~By: /s/ Joseph F. Puishys~~
		~~Joseph F. Puishys~~ Ty R. Silberhorn President and Chief Executive Officer (Principal Executive Officer)



Date: January ~~9, 2020~~7, 2021	By: /s/ ~~James S. Porter~~Nisheet Gupta
		~~James S. Porter~~ Nisheet Gupta Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)



		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	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2021

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2427

Item 4.	Controls and Procedures	2427

PART II	Other Information

Item 1.	Legal Proceedings	2427

Item 1A.	Risk Factors	2427

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2528

Item 6.	Exhibits	2528

Signatures		2629



In thousands, except stock data	November 30, 2019			March 2, 2019
Assets
Current assets
Cash and cash equivalents	$	10,129		$	17,087
Restricted cash	401			12,154
Receivables, net of allowance for doubtful accounts	197,976			192,767
Inventories	75,791			78,344
Costs and earnings on contracts in excess of billings	72,284			55,095
Other current assets	40,335			16,451
Total current assets	396,916			371,898
Property, plant and equipment, net	326,418			315,823
Operating lease right-of-use assets	56,315			—
Goodwill	185,776			185,832
Intangible assets	142,779			148,235
Other non-current assets	41,587			46,380
Total assets	$	1,149,791		$	1,068,168
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable	$	66,557		$	72,219
Accrued payroll and related benefits	33,339			41,119
Billings on contracts in excess of costs and earnings	26,366			21,478
Operating lease liabilities	9,399			—
Current portion of debt	155,400			—
Other current liabilities	108,481			92,696
Total current liabilities	399,542			227,512
Long-term debt	95,856			245,724
Non-current operating lease liabilities	48,509			—
Non-current self-insurance reserves	25,260			21,433
Other non-current liabilities	65,645			77,182
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 26,552,935 and 27,015,127 respectively	8,851			9,005
Additional paid-in capital	153,188			151,842
Retained earnings	385,032			367,597
Common stock held in trust	(675		)	(755		)
Deferred compensation obligations	675			755
Accumulated other comprehensive loss	(32,092		)	(32,127		)
Total shareholders’ equity	514,979			496,317
Total liabilities and shareholders’ equity	$	1,149,791		$	1,068,168



	Three Months Ended				Nine Months Ended
In thousands, except per share data	November 30, 2019		December 1, 2018		November 30, 2019		December 1, 2018
Net sales	$	337,916	$	357,718	$	1,050,340	$	1,056,382
Cost of sales	263,606		273,628		808,856		807,096
Gross profit	74,310		84,090		241,484		249,286
Selling, general and administrative expenses	52,716		52,682		169,274		167,224
Operating income	21,594		31,408		72,210		82,062
Interest and other expense, net	1,764		2,787		6,577		6,254
Earnings before income taxes	19,830		28,621		65,633		75,808
Income tax expense	4,596		6,730		15,677		18,030
Net earnings	$	15,234	$	21,891	$	49,956	$	57,778
Earnings per share - basic	$	0.58	$	0.79	$	1.89	$	2.06
Earnings per share - diluted	$	0.57	$	0.78	$	1.87	$	2.04
Weighted average basic shares outstanding	26,432		27,836		26,481		28,030
Weighted average diluted shares outstanding	26,750		28,156		26,776		28,304



In thousands	Remainder of Fiscal 2020		Fiscal 2021		Fiscal 2022		Fiscal 2023		Fiscal 2024
Estimated amortization expense	$	1,982	$	7,921	$	7,915	$	7,750	$	7,563



	Nine Months Ended
In thousands except weighted-average data	November 30, 2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	10,335
Lease assets obtained in exchange for new operating lease liabilities	$	15,948
Weighted-average remaining lease term - operating leases	5.9 years
Weighted-average discount rate - operating leases	3.57		%



In thousands	2020		2021	2022	2023	2024	Thereafter	Total
Total minimum payments	$	14,888	11,787	9,669	8,772	6,735	16,806	$	68,657