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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 May 29, 2021
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)
 _________________________________
Minnesota41-0919654
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
4400 West 78th Street, Suite 520MinneapolisMinnesota55435
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (952835-1874
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 classTrading Symbol(s)Name of each exchange on which registered
Common stock, par value $0.33 1/3 per shareAPOGThe Nasdaq Stock Market LLC
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
o
  Accelerated filer
x
Non-accelerated filero  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 June 28, 2021, 25,526,814 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
 
  
 Page
PART I
Item 1.
Item 2.
Item 3.
Item 4.
PART II
Item 1.
Item 1A.
Item 2.
Item 6.
3

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements

CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except stock data)May 29, 2021February 27, 2021
Assets
Current assets
Cash and cash equivalents$36,469 $47,277 
Receivables, net172,433 175,917 
Inventories70,867 72,823 
Costs and earnings on contracts in excess of billings28,390 29,497 
Other current assets23,973 25,160 
Total current assets332,132 350,674 
Property, plant and equipment, net292,296 298,443 
Operating lease right-of-use assets56,277 58,864 
Goodwill131,461 130,098 
Intangible assets131,980 130,053 
Other non-current assets46,557 46,967 
Total assets$990,703 $1,015,099 
Liabilities and Shareholders’ Equity
Current liabilities
Accounts payable$74,312 $76,204 
Accrued payroll and related benefits37,041 50,125 
Billings on contracts in excess of costs and earnings16,873 22,789 
Operating lease liabilities12,438 13,251 
Current portion of debt3,000 2,000 
Other current liabilities44,541 53,183 
Total current liabilities188,205 217,552 
Long-term debt162,000 163,000 
Non-current operating lease liabilities47,184 48,439 
Non-current self-insurance reserves25,784 24,880 
Other non-current liabilities69,979 68,483 
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 25,605,924 and 25,713,688 respectively
8,535 8,571 
Additional paid-in capital158,341 154,958 
Retained earnings352,130 357,243 
Accumulated other comprehensive loss(21,455)(28,027)
Total shareholders’ equity497,551 492,745 
Total liabilities and shareholders’ equity$990,703 $1,015,099 
See accompanying notes to consolidated financial statements.

4

Table of Contents
CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)
Three Months Ended
(In thousands, except per share data)May 29, 2021May 30, 2020
Net sales$326,006 $289,095 
Cost of sales258,296 228,844 
Gross profit67,710 60,251 
Selling, general and administrative expenses51,668 53,782 
Operating income16,042 6,469 
Interest expense, net1,238 1,414 
Other expense, net315 1,049 
Earnings before income taxes14,489 4,006 
Income tax expense3,672 1,130 
Net earnings$10,817 $2,876 
Earnings per share - basic $0.43 $0.11 
Earnings per share - diluted$0.42 $0.11 
Weighted average basic shares outstanding25,402 26,168 
Weighted average diluted shares outstanding25,822 26,418 
See accompanying notes to consolidated financial statements.

5

Table of Contents
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)
Three Months Ended
(In thousands)May 29, 2021May 30, 2020
Net earnings$10,817 $2,876 
Other comprehensive earnings (loss):
Unrealized gain on marketable securities, net of $ and $26 of tax expense, respectively
 97 
Unrealized gain (loss) on derivative instruments, net of $211 and $(189) of tax expense (benefit), respectively
692 (617)
Foreign currency translation adjustments5,880 (6,151)
Other comprehensive earnings (loss)6,572 (6,671)
Total comprehensive earnings (loss)$17,389 $(3,795)

See accompanying notes to consolidated financial statements.

6

Table of Contents
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
(In thousands)May 29, 2021May 30, 2020
Operating Activities
Net earnings$10,817 $2,876 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization12,980 12,540 
Share-based compensation1,674 1,406 
Deferred income taxes941 (738)
Noncash lease expense3,098 2,945 
Other, net58 1,039 
Changes in operating assets and liabilities:
Receivables4,455 39,650 
Inventories2,252 (4,700)
Costs and earnings on contracts in excess of billings1,205 7,558 
Accounts payable and accrued expenses(22,449)(22,334)
Billings on contracts in excess of costs and earnings(6,434)(17,181)
Refundable and accrued income taxes1,410 2,847 
Operating lease liability(3,113)(2,781)
Other(11)849 
Net cash provided by operating activities6,883 23,976 
Investing Activities
Capital expenditures(4,705)(8,606)
Other557 (1,082)
Net cash used by investing activities(4,148)(9,688)
Financing Activities
Borrowings on line of credit 139,500 
Payments on line of credit (146,500)
Proceeds from exercise of stock options4,115  
Repurchase and retirement of common stock(12,625)(4,731)
Dividends paid(5,035)(4,872)
Other (712)(731)
Net cash used by financing activities(14,257)(17,334)
Decrease in cash and cash equivalents(11,522)(3,046)
Effect of exchange rates on cash714 (270)
Cash, cash equivalents and restricted cash at beginning of year47,277 14,952 
Cash, cash equivalents and restricted cash at end of period$36,469 $11,636 
Noncash Activity
Capital expenditures in accounts payable$1,058 $1,458 
See accompanying notes to consolidated financial statements.

7

Table of Contents
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
(In thousands)Common Shares OutstandingCommon StockAdditional Paid-In CapitalRetained EarningsCommon Stock Held in TrustDeferred Compensation ObligationAccumulated Other Comprehensive (Loss) IncomeTotal Shareholders' Equity
Balance at February 27, 202125,714 $8,571 $154,958 $357,243 $(186)$186 $(28,027)$492,745 
Net earnings— — — 10,817 — — — 10,817 
Unrealized gain on marketable securities, net of $ tax expense
— — — — — — — — 
Unrealized loss on foreign currency hedge, net of $211 tax expense
— — — — — — 692 692 
Foreign currency translation adjustments— — — — — — 5,880 5,880 
Issuance of stock, net of cancellations90 30 (7)— (3)3 — 23 
Share-based compensation— — 1,674 — — — — 1,674 
Exercise of stock options179 60 4,055 — — — — 4,115 
Share repurchases(357)(119)(2,218)(10,288)— — — (12,625)
Other share retirements(20)(7)(121)(607)— — — (735)
Cash dividends— — — (5,035)— — — (5,035)
Balance at May 29, 202125,606 $8,535 $158,341 $352,130 $(189)$189 $(21,455)$497,551 


(In thousands)Common Shares OutstandingCommon StockAdditional Paid-In CapitalRetained EarningsCommon Stock Held in TrustDeferred Compensation ObligationAccumulated Other Comprehensive (Loss) IncomeTotal Shareholders' Equity
Balance at February 29, 202026,443 $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 cancellations183 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, 202026,369 $8,790 $153,862 $382,225 $(696)$696 $(40,733)$504,144 



See accompanying notes to consolidated financial statements.

8

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

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 February 27, 2021. 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 three-month period ended May 29, 2021 are not necessarily indicative of the results to be expected for the full year.

COVID-19 update
During fiscal 2021, as a result of the global COVID-19 pandemic, we experienced some delays in commercial construction projects and orders and other disruptions to our business, including various physical distancing and health-related precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment for a portion of fiscal 2021 due to governmental orders. We were also impacted by quarantine-related absenteeism among our production workforce, resulting in labor constraints at some of our facilities. In the first quarter of fiscal 2022, the negative impacts on our business due to the COVID-19 pandemic have moderated. The extent to which COVID-19 will continue to impact our business in the future will depend in part on the effectiveness of ongoing public health initiatives, which have been boosted by vaccine production and distribution.

Adoption of new accounting standards
In the current quarter, we adopted the guidance in ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU removed exceptions on intra-period tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes. The adoption of this ASU did not have a significant impact on the consolidated financial statements.

In the current quarter, we adopted the guidance in ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The adoption of this ASU did not have a significant impact on the consolidated financial statements.

Subsequent events
We have evaluated subsequent events for potential recognition and disclosure through the date of this filing. Subsequent to the end of the quarter, we purchased 86,933 shares of stock under our authorized share repurchase program, at a total cost of $3.4 million.

2.Revenue, Receivables and Contract Assets and Liabilities

Revenue
The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):
Three Months Ended
(In thousands)May 29, 2021May 30, 2020
Recognized at shipment$140,283 $116,163 
Recognized over time185,723 172,932 
Total$326,006 $289,095 

Receivables
Receivables reflected in the financial statements represent the net amount expected to be collected. An allowance for credit losses is established based on expected losses. Expected losses are estimated by reviewing individual accounts, considering aging, financial condition of the 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 the asset is 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.
9

Table of Contents
(In thousands)May 29, 2021February 27, 2021
Trade accounts$123,501 $120,534 
Construction contracts2,181 12,163 
Contract retainage49,006 45,167 
Total receivables174,688 177,864 
Less: allowance for credit losses2,255 1,947 
Net receivables$172,433 $175,917 

The following table summarizes the activity in the allowance for credit losses:
(In thousands)May 29, 2021February 27, 2021
Beginning balance$1,947 $2,469 
Additions charged to costs and expenses332 389 
Deductions from allowance, net of recoveries(69)(887)
Other changes (1)
45 (24)
Ending balance$2,255 $1,947 
      (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)May 29, 2021February 27, 2021
Contract assets$77,396 $74,664 
Contract liabilities18,955 25,000 

The change in contract assets and contract liabilities was mainly due to timing of project activity within our businesses that operate under long-term contracts.
Other contract-related disclosuresThree Months Ended
(In thousands)May 29, 2021May 30, 2020
Revenue recognized related to contract liabilities from prior year-end$14,100 $13,011 
Revenue recognized related to prior satisfaction of performance obligations2,164 2,877 

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 May 29, 2021, the transaction price associated with unsatisfied performance obligations was approximately $855.0 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
(In thousands)May 29, 2021
Within one year
$464,123 
Within two years
306,360 
Beyond84,478 
Total$854,961 


10

Table of Contents
3.Supplemental Balance Sheet Information

Inventories
(In thousands)May 29, 2021February 27, 2021
Raw materials$36,751 $36,681 
Work-in-process19,210 18,932 
Finished goods14,906 17,210 
Total inventories$70,867 $72,823 

Other current liabilities
(In thousands)May 29, 2021February 27, 2021
Warranties$12,023 $12,298 
Accrued project losses1,697 4,572 
Property and other taxes7,265 7,459 
Accrued self-insurance reserves2,620 6,482 
Other20,936 22,372 
Total other current liabilities$44,541 $53,183 

Other non-current liabilities
(In thousands)May 29, 2021February 27, 2021
Deferred benefit from New Market Tax Credit transactions$15,717 $15,717 
Retirement plan obligations7,706 7,730 
Deferred compensation plan13,429 13,507 
Deferred tax liabilities9,851 8,310 
Deferred payroll taxes6,789 6,789 
Other16,487 16,430 
Total other non-current liabilities$69,979 $68,483 

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 CostGross Unrealized GainsGross Unrealized LossesEstimated
Fair Value
May 29, 2021$12,372 $384 $7 $12,749 
February 27, 202112,517 386 10 12,893 

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.

The amortized cost and estimated fair values of these bonds at May 29, 2021, 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.
11

Table of Contents
(In thousands)Amortized CostEstimated Fair Value
Due within one year$713 $717 
Due after one year through five years8,507 8,812 
Due after five years through 10 years2,352 2,392 
Due beyond 15 years800 828 
Total$12,372 $12,749 

Derivative instruments
We use interest rate swaps, foreign exchange forward contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations. The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.

In fiscal 2020, 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 and term loan. As of May 29, 2021, the interest rate swap contract had a notional value of $40 million.

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign exchange rates (primarily related to the Canadian dollar). These contracts generally have an original maturity date of less than one year. As of May 29, 2021, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S. dollar notional values of $10.5 million and $5.8 million, respectively.

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
May 29, 2021
Assets:
Money market funds$13,991 $ $13,991 
Municipal and corporate bonds— 12,749 12,749 
Cash surrender value of life insurance— 18,474 18,474 
Foreign currency forward/option contracts— 577 577 
Aluminum hedge contracts— 872 872 
Liabilities:
Deferred compensation— 14,888 14,888 
Interest rate swap contract— 361 361 
February 27, 2021
Assets:
Money market funds$26,034 $ $26,034 
Municipal and corporate bonds— 12,893 12,893 
Cash surrender value of life insurance— 18,632 18,632 
Foreign currency forward/option contracts— 606 606 
Aluminum hedge contracts— 363 363 
Liabilities:
Deferred compensation— 13,507 13,507 
Interest rate swap contract— 504 504 


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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 other observable market inputs, based off of benchmark interest rates. Forward foreign exchange and fixed/floating aluminum contracts are measured at fair value using other observable market inputs, such as quotations on forward foreign exchange points, foreign currency exchange 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 and aluminum prices.

5.Goodwill and Other 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 as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

Based on the impairment analysis performed in the fourth quarter of fiscal 2021, estimated fair value was in excess of carrying value at six of our eight reporting units. However, estimated fair value did not exceed carrying value for two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall. As a result, as of February 27, 2021, we incurred goodwill impairment expense of $46.7 million and $17.1 million in our EFCO and Sotawall reporting units, respectively. The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, represents the total accumulated goodwill impairment expenses recorded.

The carrying amount of goodwill attributable to each reporting segment was:  
(In thousands)Architectural Framing SystemsArchitectural GlassArchitectural ServicesLarge-Scale
Optical
Total
Balance at February 29, 2020$148,183 $25,656 $1,120 $10,557 $185,516 
Adjustment (1)
6,315 — — — 6,315 
Impairment expense(63,769)— — — (63,769)
Foreign currency translation2,370 (334)  2,036 
Balance at February 27, 202193,099 25,322 1,120 10,557 130,098 
Foreign currency translation1,457 (94)  1,363 
Balance at May 29, 2021$94,556 $25,228 $1,120 $10,557 $131,461 
(1) During the first quarter of fiscal 2021, 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.

Other intangible assets
We have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives. We test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Based on our analysis, the fair value of each of our trade names and trademarks exceeded carrying amount,
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except for the EFCO tradename, within our Architectural Framing Systems segment. The fair value determined for the EFCO tradename was less than its carrying value by $6.3 million; this amount was recognized as impairment expense in the fourth quarter ended February 27, 2021, as reflected in the table below.

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

(In thousands)Gross
Carrying
Amount
Accumulated
Amortization
Impairment ExpenseForeign
Currency
Translation
Net
May 29, 2021
Definite-lived intangible assets:
Customer relationships$122,961 $(43,192)$— $3,973 $83,742 
Other intangibles41,936 (35,426)— 976 7,486 
Total definite-lived intangible assets164,897 (78,618)— 4,949 91,228 
Indefinite-lived intangible assets:
Trademarks39,832 — — 920 40,752 
Total intangible assets$204,729 $(78,618)$— $5,869 $131,980 
February 27, 2021
Definite-lived intangible assets:
Customer relationships$119,647 $(40,443)$— $3,315 $82,519 
Other intangibles41,293 (34,234)— 643 7,702 
Total definite-lived intangible assets160,940 (74,677)— 3,958 90,221 
Indefinite-lived intangible assets:
Trademarks45,300 — (6,300)832 39,832 
Total intangible assets$206,240 $(74,677)$(6,300)$4,790 $130,053 

Amortization expense on definite-lived intangible assets was $2.0 million and $1.8 million for the three-month periods ended May 29, 2021 and May 30, 2020, respectively. Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses. At May 29, 2021, the estimated future amortization expense for definite-lived intangible assets was:
(In thousands)Remainder of Fiscal 2022Fiscal 2023Fiscal 2024Fiscal 2025Fiscal 2026
Estimated amortization expense$6,257 $8,302 $8,041 $7,651 $7,635 

6.Debt

As of May 29, 2021, we had a committed revolving credit facility with maximum borrowings of up to $235 million with a maturity of June 2024. There were no outstanding borrowings under the revolving credit facility as of May 29, 2021 and February 27, 2021. At May 29, 2021 and February 27, 2021, we also had a $150 million term loan with a maturity date of June 2024.

Our revolving credit facility and term loan 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 May 29, 2021, we were in compliance with both financial covenants. Additionally, at May 29, 2021, we had a total of $18.7 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal years 2022 to 2023 and reduce borrowing capacity under the revolving credit facility.

At May 29, 2021, debt included $15.0 million of industrial revenue bonds that mature in fiscal years 2022 through 2043. The fair value of the industrial revenue bonds approximated carrying value at May 29, 2021, 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 committed, revolving credit facilities totaling $25.0 million (USD). As of May 29, 2021 and February 27, 2021, there were no borrowings outstanding under the facilities.

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Interest payments were $1.1 million and $1.4 million for the three months ended May 29, 2021 and May 30, 2020, 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 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
(In thousands)May 29, 2021May 30, 2020
Operating lease cost$3,381 $3,561 
Short-term lease cost225 470 
Variable lease cost723 747 
Total lease cost$4,329 $4,778 

Other supplemental information related to leases was as follows:
Three Months Ended
(In thousands except weighted-average data)May 29, 2021May 30, 2020
Cash paid for amounts included in the measurement of operating lease liabilities$3,602 $3,327 
Lease assets obtained in exchange for new operating lease liabilities$465 $158 
Weighted-average remaining lease term - operating leases5.8 years5.8 years
Weighted-average discount rate - operating leases2.96 %3.60 %

Future maturities of lease liabilities are as follows:
(In thousands)May 29, 2021
Remainder of Fiscal 2022$10,459 
Fiscal 202312,689 
Fiscal 202410,736 
Fiscal 20259,458 
Fiscal 20267,583 
Fiscal 20276,097 
Thereafter6,590 
Total lease payments63,612 
Less: Amounts representing interest(3,990)
Present value of lease liabilities$59,622 


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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 May 29, 2021, $1.2 billion of these types of bonds were outstanding, of which $527.3 million is in 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:  
 Three Months Ended
(In thousands)May 29, 2021May 30, 2020
Balance at beginning of period$14,999 $15,629 
Additional accruals2,478 511 
Claims paid(2,930)(939)
Balance at end of period$14,547 $15,201 

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. The liability for these types of project-related contingencies was $1.7 million and $4.6 million as of May 29, 2021 and February 27, 2021, respectively.

Letters of credit
At May 29, 2021, we had $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. We also have a $6.9 million letter of credit which has been issued outside 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 $235.9 million as of May 29, 2021.

New Markets Tax Credit (NMTC) transactions
We have three outstanding NMTC arrangements which help to support operational expansion. Proceeds received from investors on these transactions are included within other non-current liabilities on our consolidated balance sheets. The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction. 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 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 for each project, we are required to hold cash dedicated to fund each capital project which is 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.

The table below provides a summary of our outstanding NMTC transactions (in millions):
Inception dateTermination dateProceeds receivedDeferred costsNet benefit
June 2016June 2023$6.0 $1.2 $4.8 
August 2018August 20256.6 1.3 5.3 
September 2018September 20253.2 1.0 2.2 
Total$15.8 $3.5 $12.3 


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Litigation
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. We have in the past and are currently subject to product liability and warranty claims, including certain legal claims related to a commercial sealant product formerly incorporated into our products. 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

Total share-based compensation expense included in the results of operations was $1.7 million for the three-month period ended May 29, 2021 and $1.4 million for the three-month period ended May 30, 2020.

Stock options and SARs
Stock option and SAR activity for the current three-month period is summarized as follows:
Stock options and SARsNumber of SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual LifeAggregate Intrinsic Value
Outstanding at February 27, 2021633,700 $23.04 
Awards exercised(178,564)23.04 
Awards canceled(37,036)23.04 
Outstanding at May 29, 2021418,100 $23.04 9.1 years$6,258,957 
Vested or expected to vest at May 29, 2021418,100 $23.04 9.1 years$6,258,957 

For the three-months ended May 29, 2021, cash proceeds from the exercise of stock options were $4.1 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 $2.7 million. No awards were issued or exercised during the three-months ended May 30, 2020.

Executive Compensation Program
In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees. In the first quarter of fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date. The number of share units issued at grant is equal to the target number of performance shares and allows for the right to receive an additional number of shares dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Nonvested share awards and units
Nonvested share activity, including performance share units, for the current three-month period is summarized as follows:
Nonvested shares and unitsNumber of Shares and UnitsWeighted Average Grant Date Fair Value
Nonvested at February 27, 2021475,227 $27.52 
Granted(1)
141,956 34.71 
Vested(52,892)24.82 
Nonvested at May 29, 2021(1)
564,291 $29.58 
(1) Includes a total of 52,023 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.

At May 29, 2021, there was $11.3 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 31 months. The total fair value of shares vested during the three months ended May 29, 2021 was $1.9 million.

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 2018, or
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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 2017, 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 $3.8 million at May 29, 2021 and February 27, 2021, respectively. Penalties and interest related to unrecognized tax benefits are recorded in income tax expense.

11.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
(In thousands)May 29, 2021May 30, 2020
Basic earnings per share – weighted average common shares outstanding
25,402 26,168 
Weighted average effect of nonvested share grants and assumed exercise of stock options
420 250 
Diluted earnings per share – weighted average common shares and potential common shares outstanding
25,822 26,418 
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)
8 150 

12.Business Segment Data

We have four reporting segments:
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 Architectural Glass segment fabricates coated, high-performance glass used globally in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.
The Architectural Services segment provides full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.
The Large-Scale Optical (LSO) segment manufactures value-added glass and acrylic products primarily for framing and display applications.
Three Months Ended
(In thousands)May 29, 2021May 30, 2020
Net sales
Architectural Framing Systems$