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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Minnesota
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41-0919654
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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4400 West 78
th
Street – Suite 520,
Minneapolis, MN
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55435
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common stock, par value $0.33 1/3 per share
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APOG
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NASDAQ Global Select Market
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Page
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PART I
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 1.
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Item 1A.
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Item 2.
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Item 5.
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Item 6.
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Item 1.
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Financial Statements
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In thousands, except stock data
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June 1, 2019
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March 2, 2019
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||||
Assets
|
|
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|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
20,619
|
|
|
$
|
17,087
|
|
Restricted cash
|
|
8,337
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12,154
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||
Receivables, net of allowance for doubtful accounts
|
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209,338
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192,767
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||
Inventories
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77,345
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78,344
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||
Costs and earnings on contracts in excess of billings
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61,069
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55,095
|
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||
Other current assets
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16,081
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16,451
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||
Total current assets
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392,789
|
|
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371,898
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||
Property, plant and equipment, net
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317,522
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|
315,823
|
|
||
Operating lease right-of-use assets
|
|
46,780
|
|
|
—
|
|
||
Goodwill
|
|
185,237
|
|
|
185,832
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||
Intangible assets
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144,908
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|
148,235
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||
Other non-current assets
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45,003
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|
46,380
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||
Total assets
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$
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1,132,239
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$
|
1,068,168
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Liabilities and Shareholders’ Equity
|
|
|
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|
||||
Current liabilities
|
|
|
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|
||||
Accounts payable
|
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$
|
73,017
|
|
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$
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72,219
|
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Accrued payroll and related benefits
|
|
25,864
|
|
|
41,119
|
|
||
Billings on contracts in excess of costs and earnings
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20,230
|
|
|
21,478
|
|
||
Operating lease liabilities
|
|
10,704
|
|
|
—
|
|
||
Other current liabilities
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85,090
|
|
|
92,696
|
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||
Total current liabilities
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214,905
|
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227,512
|
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||
Long-term debt
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293,309
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245,724
|
|
||
Non-current operating lease liabilities
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|
37,220
|
|
|
—
|
|
||
Non-current self-insurance reserves
|
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23,117
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|
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21,433
|
|
||
Other non-current liabilities
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78,712
|
|
|
77,182
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|
||
Commitments and contingent liabilities (Note 8)
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|
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|
||||
Shareholders’ equity
|
|
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|
||||
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 26,530,369 and 27,015,127 respectively
|
|
8,843
|
|
|
9,005
|
|
||
Additional paid-in capital
|
|
150,240
|
|
|
151,842
|
|
||
Retained earnings
|
|
360,394
|
|
|
367,597
|
|
||
Common stock held in trust
|
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(767
|
)
|
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(755
|
)
|
||
Deferred compensation obligations
|
|
767
|
|
|
755
|
|
||
Accumulated other comprehensive loss
|
|
(34,501
|
)
|
|
(32,127
|
)
|
||
Total shareholders’ equity
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484,976
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|
496,317
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|
||
Total liabilities and shareholders’ equity
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$
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1,132,239
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$
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1,068,168
|
|
|
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Three Months Ended
|
||||||
In thousands, except per share data
|
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June 1, 2019
|
|
June 2, 2018
|
||||
Net sales
|
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$
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355,365
|
|
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$
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336,531
|
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Cost of sales
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274,398
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255,801
|
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||
Gross profit
|
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80,967
|
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80,730
|
|
||
Selling, general and administrative expenses
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57,926
|
|
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58,735
|
|
||
Operating income
|
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23,041
|
|
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21,995
|
|
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Interest and other expense, net
|
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2,611
|
|
|
1,741
|
|
||
Earnings before income taxes
|
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20,430
|
|
|
20,254
|
|
||
Income tax expense
|
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4,987
|
|
|
4,881
|
|
||
Net earnings
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$
|
15,443
|
|
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$
|
15,373
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Earnings per share - basic
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$
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0.58
|
|
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$
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0.55
|
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Earnings per share - diluted
|
|
$
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0.58
|
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$
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0.54
|
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Weighted average basic shares outstanding
|
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26,597
|
|
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28,189
|
|
||
Weighted average diluted shares outstanding
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26,843
|
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28,437
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Three Months Ended
|
||||||
In thousands
|
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June 1, 2019
|
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June 2, 2018
|
||||
Net earnings
|
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$
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15,443
|
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$
|
15,373
|
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Other comprehensive (loss) earnings:
|
|
|
|
|
||||
Unrealized gain on marketable securities, net of $47 and $2 of tax expense, respectively
|
|
181
|
|
|
10
|
|
||
Unrealized gain (loss) on foreign currency hedge, net of $2 and ($92) of tax expense (benefit), respectively
|
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5
|
|
|
(304
|
)
|
||
Foreign currency translation adjustments
|
|
(2,560
|
)
|
|
(517
|
)
|
||
Other comprehensive loss
|
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(2,374
|
)
|
|
(811
|
)
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||
Total comprehensive earnings
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$
|
13,069
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$
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14,562
|
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Three Months Ended
|
||||||
In thousands
|
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June 1, 2019
|
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June 2, 2018
|
||||
Operating Activities
|
|
|
|
|
||||
Net earnings
|
|
$
|
15,443
|
|
|
$
|
15,373
|
|
Adjustments to reconcile net earnings to net cash (used) provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
11,102
|
|
|
14,050
|
|
||
Share-based compensation
|
|
1,618
|
|
|
1,514
|
|
||
Deferred income taxes
|
|
6,438
|
|
|
4,094
|
|
||
Noncash lease expense
|
|
2,902
|
|
|
—
|
|
||
Other, net
|
|
(1,762
|
)
|
|
(440
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
||||
Receivables
|
|
(16,982
|
)
|
|
26,183
|
|
||
Inventories
|
|
835
|
|
|
6,578
|
|
||
Costs and earnings on contracts in excess of billings
|
|
(6,007
|
)
|
|
(35,258
|
)
|
||
Accounts payable and accrued expenses
|
|
(16,834
|
)
|
|
(19,715
|
)
|
||
Billings on contracts in excess of costs and earnings
|
|
(1,198
|
)
|
|
11,933
|
|
||
Refundable and accrued income taxes
|
|
(4,369
|
)
|
|
301
|
|
||
Other
|
|
(928
|
)
|
|
730
|
|
||
Net cash (used) provided by operating activities
|
|
(9,742
|
)
|
|
25,343
|
|
||
Investing Activities
|
|
|
|
|
||||
Capital expenditures
|
|
(11,198
|
)
|
|
(9,327
|
)
|
||
Purchases of marketable securities
|
|
(880
|
)
|
|
(8,619
|
)
|
||
Sales/maturities of marketable securities
|
|
1,112
|
|
|
2,495
|
|
||
Other
|
|
(1,056
|
)
|
|
(779
|
)
|
||
Net cash used in investing activities
|
|
(12,022
|
)
|
|
(16,230
|
)
|
||
Financing Activities
|
|
|
|
|
||||
Borrowings on line of credit
|
|
103,000
|
|
|
90,000
|
|
||
Payments on line of credit
|
|
(55,500
|
)
|
|
(92,000
|
)
|
||
Repurchase and retirement of common stock
|
|
(20,010
|
)
|
|
—
|
|
||
Dividends paid
|
|
(4,598
|
)
|
|
(4,410
|
)
|
||
Other
|
|
(1,270
|
)
|
|
(721
|
)
|
||
Net cash provided (used) by financing activities
|
|
21,622
|
|
|
(7,131
|
)
|
||
(Decrease) increase in cash and cash equivalents
|
|
(142
|
)
|
|
1,982
|
|
||
Effect of exchange rates on cash
|
|
(143
|
)
|
|
279
|
|
||
Cash, cash equivalents and restricted cash at beginning of year
|
|
29,241
|
|
|
19,359
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
|
$
|
28,956
|
|
|
$
|
21,620
|
|
Noncash Activity
|
|
|
|
|
||||
Capital expenditures in accounts payable
|
|
$
|
1,667
|
|
|
$
|
2,162
|
|
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
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
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
|
)
|
1.
|
Summary of Significant Accounting Policies
|
2.
|
Revenue, Receivables and Contract Assets and Liabilities
|
|
|
Three Months Ended
|
||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||||
Recognized at shipment
|
|
$
|
155,265
|
|
|
$
|
156,867
|
|
Recognized over time
|
|
200,100
|
|
|
179,664
|
|
||
Total
|
|
$
|
355,365
|
|
|
$
|
336,531
|
|
In thousands
|
|
June 1, 2019
|
|
March 2, 2019
|
||||
Trade accounts
|
|
$
|
160,135
|
|
|
$
|
145,693
|
|
Construction contracts
|
|
19,626
|
|
|
19,050
|
|
||
Contract retainage
|
|
34,287
|
|
|
32,396
|
|
||
Total receivables
|
|
214,048
|
|
|
197,139
|
|
||
Less: allowance for doubtful accounts
|
|
(4,710
|
)
|
|
(4,372
|
)
|
||
Net receivables
|
|
$
|
209,338
|
|
|
$
|
192,767
|
|
In thousands
|
|
June 1, 2019
|
|
March 2, 2019
|
||||
Contract assets
|
|
$
|
95,356
|
|
|
$
|
87,491
|
|
Contract liabilities
|
|
23,081
|
|
|
24,083
|
|
In thousands
|
|
June 1, 2019
|
||
Within one year
|
|
$
|
394,690
|
|
Within two years
|
|
267,140
|
|
|
Beyond
|
|
104,250
|
|
|
Total
|
|
$
|
766,080
|
|
3.
|
Supplemental Balance Sheet Information
|
In thousands
|
|
June 1, 2019
|
|
March 2, 2019
|
||||
Raw materials
|
|
$
|
43,921
|
|
|
$
|
43,890
|
|
Work-in-process
|
|
16,535
|
|
|
15,533
|
|
||
Finished goods
|
|
16,889
|
|
|
18,921
|
|
||
Total inventories
|
|
$
|
77,345
|
|
|
$
|
78,344
|
|
In thousands
|
|
June 1, 2019
|
|
March 2, 2019
|
||||
Warranties
|
|
$
|
11,411
|
|
|
$
|
12,475
|
|
Accrued project losses
|
|
32,263
|
|
|
37,085
|
|
||
Taxes
|
|
6,696
|
|
|
8,026
|
|
||
Accrued self-insurance reserves
|
|
6,658
|
|
|
9,537
|
|
||
Other
|
|
28,062
|
|
|
25,573
|
|
||
Total other current liabilities
|
|
$
|
85,090
|
|
|
$
|
92,696
|
|
In thousands
|
|
June 1, 2019
|
|
March 2, 2019
|
||||
Deferred benefit from New Market Tax Credit transactions
|
|
$
|
26,458
|
|
|
$
|
26,458
|
|
Retirement plan obligations
|
|
7,633
|
|
|
7,633
|
|
||
Deferred compensation plan
|
|
10,892
|
|
|
10,408
|
|
||
Other
|
|
33,729
|
|
|
32,683
|
|
||
Total other non-current liabilities
|
|
$
|
78,712
|
|
|
$
|
77,182
|
|
4.
|
Financial Instruments
|
In thousands
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Estimated
Fair Value
|
||||||||
June 1, 2019
|
|
$
|
12,121
|
|
|
$
|
181
|
|
|
$
|
(2
|
)
|
|
$
|
12,300
|
|
March 2, 2019
|
|
12,481
|
|
|
59
|
|
|
(108
|
)
|
|
12,432
|
|
In thousands
|
|
Amortized Cost
|
|
Estimated Fair Value
|
||||
Due within one year
|
|
$
|
600
|
|
|
$
|
601
|
|
Due after one year through five years
|
|
9,293
|
|
|
9,429
|
|
||
Due after five years through 10 years
|
|
1,822
|
|
|
1,863
|
|
||
Due after 10 years through 15 years
|
|
—
|
|
|
—
|
|
||
Due beyond 15 years
|
|
406
|
|
|
407
|
|
||
Total
|
|
$
|
12,121
|
|
|
$
|
12,300
|
|
In thousands
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
Other Observable Inputs (Level 2)
|
|
Total Fair Value
|
||||||
June 1, 2019
|
|
|
|
|
|
|
||||||
Cash equivalents
|
|
|
|
|
|
|
||||||
Money market funds
|
|
$
|
2,611
|
|
|
$
|
—
|
|
|
$
|
2,611
|
|
Commercial paper
|
|
—
|
|
|
4,500
|
|
|
4,500
|
|
|||
Total cash equivalents
|
|
2,611
|
|
|
4,500
|
|
|
7,111
|
|
|||
Short-term securities
|
|
|
|
|
|
|
||||||
Municipal and corporate bonds
|
|
—
|
|
|
601
|
|
|
601
|
|
|||
Long-term securities
|
|
|
|
|
|
|
||||||
Municipal and corporate bonds
|
|
—
|
|
|
11,699
|
|
|
11,699
|
|
|||
Total assets at fair value
|
|
$
|
2,611
|
|
|
$
|
16,800
|
|
|
$
|
19,411
|
|
March 2, 2019
|
|
|
|
|
|
|
||||||
Cash equivalents
|
|
|
|
|
|
|
||||||
Money market funds
|
|
$
|
2,015
|
|
|
$
|
—
|
|
|
$
|
2,015
|
|
Commercial paper
|
|
—
|
|
|
300
|
|
|
300
|
|
|||
Total cash equivalents
|
|
2,015
|
|
|
300
|
|
|
2,315
|
|
|||
Short-term securities
|
|
|
|
|
|
|
||||||
Municipal and corporate bonds
|
|
—
|
|
|
402
|
|
|
402
|
|
|||
Long-term securities
|
|
|
|
|
|
|
||||||
Municipal and corporate bonds
|
|
—
|
|
|
12,030
|
|
|
12,030
|
|
|||
Total assets at fair value
|
|
$
|
2,015
|
|
|
$
|
12,732
|
|
|
$
|
14,747
|
|
5.
|
Goodwill and Other Identifiable Intangible Assets
|
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
|
|
(578
|
)
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(595
|
)
|
|||||
Balance at June 1, 2019
|
|
$
|
147,868
|
|
|
$
|
25,692
|
|
|
$
|
1,120
|
|
|
$
|
10,557
|
|
|
$
|
185,237
|
|
In thousands
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Impairment
|
|
Foreign
Currency
Translation
|
|
Net
|
||||||||||
June 1, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Definite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Customer relationships
|
|
$
|
120,238
|
|
|
$
|
(28,094
|
)
|
|
$
|
—
|
|
|
$
|
(1,190
|
)
|
|
$
|
90,954
|
|
Other intangibles
|
|
40,847
|
|
|
(31,727
|
)
|
|
—
|
|
|
(322
|
)
|
|
8,798
|
|
|||||
Total definite-lived intangible assets
|
|
161,085
|
|
|
(59,821
|
)
|
|
—
|
|
|
(1,512
|
)
|
|
99,752
|
|
|||||
Indefinite-lived intangible assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trademarks
|
|
45,421
|
|
|
—
|
|
|
—
|
|
|
(265
|
)
|
|
45,156
|
|
|||||
Total intangible assets
|
|
$
|
206,506
|
|
|
$
|
(59,821
|
)
|
|
$
|
—
|
|
|
$
|
(1,777
|
)
|
|
$
|
144,908
|
|
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
|
|
Remainder of Fiscal 2020
|
|
Fiscal 2021
|
|
Fiscal 2022
|
|
Fiscal 2023
|
|
Fiscal 2024
|
||||||||||
Estimated amortization expense
|
|
$
|
5,930
|
|
|
$
|
7,900
|
|
|
$
|
7,797
|
|
|
$
|
7,438
|
|
|
$
|
7,358
|
|
6.
|
Debt
|
|
|
Three Months Ended
|
||
In thousands
|
|
June 1, 2019
|
||
Operating lease cost
|
|
$
|
3,373
|
|
Short-term lease cost
|
|
682
|
|
|
Variable lease cost
|
|
713
|
|
|
Total lease cost
|
|
$
|
4,768
|
|
|
|
Three Months Ended
|
||
In thousands except weighted-average data
|
|
June 1, 2019
|
||
Cash paid for amounts included in the measurement of operating lease liabilities
|
|
$
|
3,300
|
|
Lease assets obtained in exchange for new operating lease liabilities
|
|
$
|
706
|
|
Weighted-average remaining lease term - operating leases
|
|
5.5 years
|
|
|
Weighted-average discount rate - operating leases
|
|
3.74
|
%
|
In thousands
|
|
June 1, 2019
|
||
Remainder of Fiscal 2020
|
|
$
|
9,782
|
|
Fiscal 2021
|
|
10,346
|
|
|
Fiscal 2022
|
|
8,716
|
|
|
Fiscal 2023
|
|
7,920
|
|
|
Fiscal 2024
|
|
6,007
|
|
|
Fiscal 2025
|
|
4,298
|
|
|
Thereafter
|
|
6,369
|
|
|
Total lease payments
|
|
53,438
|
|
|
Less: Amounts representing interest
|
|
(5,514
|
)
|
|
Present value of lease liabilities
|
|
$
|
47,924
|
|
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.
|
Commitments and Contingent Liabilities
|
|
|
Three Months Ended
|
||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||||
Balance at beginning of period
|
|
$
|
16,737
|
|
|
$
|
22,517
|
|
Additional accruals
|
|
1,787
|
|
|
1,062
|
|
||
Claims paid
|
|
(2,771
|
)
|
|
(1,193
|
)
|
||
Balance at end of period
|
|
$
|
15,753
|
|
|
$
|
22,386
|
|
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
|
|
9.
|
Share-Based Compensation
|
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 June 1, 2019
|
|
100,341
|
|
|
8.34
|
|
|
2.3 years
|
|
$
|
2,800,517
|
|
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
|
|
80,571
|
|
|
39.50
|
|
|
Vested
|
|
(73,771
|
)
|
|
45.09
|
|
|
Canceled
|
|
(1,500
|
)
|
|
47.35
|
|
|
Nonvested at June 1, 2019
|
|
291,913
|
|
|
45.41
|
|
10.
|
Employee Benefit Plans
|
|
|
Three Months Ended
|
||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||||
Interest cost
|
|
$
|
123
|
|
|
$
|
127
|
|
Expected return on assets
|
|
(46
|
)
|
|
(10
|
)
|
||
Amortization of unrecognized net loss
|
|
55
|
|
|
57
|
|
||
Net periodic benefit cost
|
|
$
|
132
|
|
|
$
|
174
|
|
11.
|
Income Taxes
|
12.
|
Earnings per Share
|
|
|
Three Months Ended
|
||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||
Basic earnings per share – weighted average common shares outstanding
|
|
26,597
|
|
|
28,189
|
|
Weighted average effect of nonvested share grants and assumed exercise of stock options
|
|
246
|
|
|
248
|
|
Diluted earnings per share – weighted average common shares and potential common shares outstanding
|
|
26,843
|
|
|
28,437
|
|
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)
|
|
104
|
|
|
147
|
|
13.
|
Segment Information
|
•
|
The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings. The Company has aggregated
six
operating segments into this reporting segment based on their similar products, customers, distribution methods, production processes and economic characteristics.
|
•
|
The Architectural Glass segment fabricates coated, high-performance glass used in customized window and wall systems comprising the outside skin of commercial, institutional and high-end multi-family residential buildings.
|
•
|
The Architectural Services segment designs, engineers, fabricates and installs the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.
|
•
|
The LSO segment manufactures value-added glass and acrylic products primarily for framing and display applications.
|
|
|
Three Months Ended
|
||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||||
Net sales from operations
|
|
|
|
|
||||
Architectural Framing Systems
|
|
$
|
180,522
|
|
|
$
|
179,037
|
|
Architectural Glass
|
|
100,291
|
|
|
76,925
|
|
||
Architectural Services
|
|
65,147
|
|
|
70,727
|
|
||
Large-Scale Optical
|
|
21,259
|
|
|
20,761
|
|
||
Intersegment eliminations
|
|
(11,854
|
)
|
|
(10,919
|
)
|
||
Net sales
|
|
$
|
355,365
|
|
|
$
|
336,531
|
|
Operating income (loss) from operations
|
|
|
|
|
||||
Architectural Framing Systems
|
|
$
|
12,273
|
|
|
$
|
12,339
|
|
Architectural Glass
|
|
6,399
|
|
|
1,579
|
|
||
Architectural Services
|
|
4,573
|
|
|
5,155
|
|
||
Large-Scale Optical
|
|
4,177
|
|
|
4,981
|
|
||
Corporate and other
|
|
(4,381
|
)
|
|
(2,059
|
)
|
||
Operating income
|
|
$
|
23,041
|
|
|
$
|
21,995
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
||||
|
June 1, 2019
|
|
June 2, 2018
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
77.2
|
|
|
76.0
|
|
Gross profit
|
22.8
|
|
|
24.0
|
|
Selling, general and administrative expenses
|
16.3
|
|
|
17.5
|
|
Operating income
|
6.5
|
|
|
6.5
|
|
Interest and other expense, net
|
(0.7
|
)
|
|
(0.5
|
)
|
Earnings before income taxes
|
5.7
|
|
|
6.0
|
|
Income tax expense
|
1.4
|
|
|
1.5
|
|
Net earnings
|
4.3
|
%
|
|
4.5
|
%
|
Effective tax rate
|
24.4
|
%
|
|
24.1
|
%
|
|
|
Three Months Ended
|
|||||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
|
% Change
|
|||||
Net sales
|
|
$
|
180,522
|
|
|
$
|
179,037
|
|
|
0.8
|
%
|
Operating income
|
|
12,273
|
|
|
12,339
|
|
|
(0.5
|
)%
|
||
Operating margin
|
|
6.8
|
%
|
|
6.9
|
%
|
|
|
|
|
Three Months Ended
|
|||||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
|
% Change
|
|||||
Net sales
|
|
$
|
100,291
|
|
|
$
|
76,925
|
|
|
30.4
|
%
|
Operating income
|
|
6,399
|
|
|
1,579
|
|
|
305.3
|
%
|
||
Operating margin
|
|
6.4
|
%
|
|
2.1
|
%
|
|
|
|
|
Three Months Ended
|
|||||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
|
% Change
|
|||||
Net sales
|
|
$
|
65,147
|
|
|
$
|
70,727
|
|
|
(7.9
|
)%
|
Operating income
|
|
4,573
|
|
|
5,155
|
|
|
(11.3
|
)%
|
||
Operating margin
|
|
7.0
|
%
|
|
7.3
|
%
|
|
|
|
|
Three Months Ended
|
|||||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
|
% Change
|
|||||
Net sales
|
|
$
|
21,259
|
|
|
$
|
20,761
|
|
|
2.4
|
%
|
Operating income
|
|
4,177
|
|
|
4,981
|
|
|
(16.1
|
)%
|
||
Operating margin
|
|
19.6
|
%
|
|
24.0
|
%
|
|
|
Selected cash flow data
|
|
Three Months Ended
|
||||||
In thousands
|
|
June 1, 2019
|
|
June 2, 2018
|
||||
Operating Activities
|
|
|
|
|
||||
Net cash (used) provided by operating activities
|
|
$
|
(9,742
|
)
|
|
$
|
25,343
|
|
Investing Activities
|
|
|
|
|
||||
Capital expenditures
|
|
(11,198
|
)
|
|
(9,327
|
)
|
||
Net purchases (sales) of marketable securities
|
|
232
|
|
|
(6,124
|
)
|
||
Financing Activities
|
|
|
|
|
||||
Net borrowings (payments) on line of credit
|
|
47,500
|
|
|
(2,000
|
)
|
||
Repurchase and retirement of common stock
|
|
(20,010
|
)
|
|
—
|
|
||
Dividends paid
|
|
(4,598
|
)
|
|
(4,410
|
)
|
|
|
Payments Due by Fiscal Period
|
||||||||||||||||||||||||||
In thousands
|
|
Remainder of Fiscal 2020
|
|
Fiscal 2021
|
|
Fiscal 2022
|
|
Fiscal 2023
|
|
Fiscal 2024
|
|
Thereafter
|
|
Total
|
||||||||||||||
Debt obligations
|
|
$
|
110
|
|
|
$
|
5,521
|
|
|
$
|
274,620
|
|
|
$
|
1,058
|
|
|
$
|
—
|
|
|
$
|
12,000
|
|
|
$
|
293,309
|
|
Operating leases (undiscounted)
|
|
9,782
|
|
|
10,346
|
|
|
8,716
|
|
|
7,920
|
|
|
6,007
|
|
|
10,667
|
|
|
53,438
|
|
|||||||
Purchase obligations
|
|
95,864
|
|
|
27,514
|
|
|
9,321
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
132,699
|
|
|||||||
Total cash obligations
|
|
$
|
105,756
|
|
|
$
|
43,381
|
|
|
$
|
292,657
|
|
|
$
|
8,978
|
|
|
$
|
6,007
|
|
|
$
|
22,667
|
|
|
$
|
479,446
|
|
•
|
Revenue growth of 1 to 3 percent over fiscal 2019.
|
•
|
Operating margin of 8.2 to 8.6 percent.
|
•
|
Earnings per diluted share in the range of $3.00 to $3.20.
|
•
|
Capital expenditures of $60 to $65 million.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
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
June 1, 2019
, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
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)
|
|||||
March 3, 2019 to March 30, 2019
|
|
216,000
|
|
|
$
|
35.72
|
|
|
216,000
|
|
|
1,766,085
|
|
March 31, 2019 to April 27, 2019
|
|
221,671
|
|
|
38.31
|
|
|
221,671
|
|
|
1,544,414
|
|
|
April 28, 2019 to June 1, 2019
|
|
126,158
|
|
|
40.05
|
|
|
94,326
|
|
|
1,450,088
|
|
|
Total
|
|
563,829
|
|
|
$
|
37.83
|
|
|
531,997
|
|
|
1,450,088
|
|
(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 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
|
101
|
The following materials from Apogee Enterprises, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 1, 2019 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of June 1, 2019 and March 2, 2019, (ii) the Consolidated Results of Operations for the three-months ended June 1, 2019 and June 2, 2018, (iii) the Consolidated Statements of Comprehensive Earnings for the three-months ended June 1, 2019 and June 2, 2018, (iv) the Consolidated Statements of Cash Flows for the three-months ended June 2, 2019 and June 2, 2018, (v) the Consolidated Statements of Shareholders' Equity for the three-months ended June 1, 2019 and June 2, 2018, and (vi) Notes to Consolidated Financial Statements.
|
|
|
APOGEE ENTERPRISES, INC.
|
|
|
|
|
|
Date: July 11, 2019
|
|
By: /s/ Joseph F. Puishys
|
|
|
|
|
Joseph F. Puishys
President and Chief
Executive Officer
(Principal Executive Officer)
|
Date: July 11, 2019
|
|
By: /s/ James S. Porter
|
|
|
|
|
James S. Porter
Executive Vice President and
Chief Financial Officer (Principal Financial and
Accounting Officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Apogee Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Joseph F. Puishys
|
|
Joseph F. Puishys
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Apogee Enterprises, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ James S. Porter
|
|
James S. Porter
Executive Vice President and
Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Joseph F. Puishys
|
|
Joseph F. Puishys
President and Chief Executive Officer
|
|
July 11, 2019
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ James S. Porter
|
|
James S. Porter
Executive Vice President and
Chief Financial Officer
|
|
July 11, 2019
|
|