UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________ 
FORM 10-Q
 _________________________________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended May 30, 2015 

o	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from             to             
Commission File Number: 0-6365
_________________________________ 
APOGEE ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
 _________________________________

Minnesota	 	41-0919654	
(State or other jurisdiction of
incorporation or organization)	 	(I.R.S. Employer
Identification No.)	
 	 	 	
4400 West 78th Street – Suite 520,
Minneapolis, MN	 	55435	
(Address of principal executive offices)	 	(Zip Code)	
Registrant’s telephone number, including area code: (952) 835-1874
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     x   Yes     o   No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      x   Yes     o   No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	 	x	  	Accelerated filer	 	o	
 	 	 	 	 	 	 	
Non-accelerated filer	 	o  (Do not check if a smaller reporting company)	  	Smaller reporting company	 	o	
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     o   Yes     x   No
As of July 8, 2015, 29,234,140 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	Financial Information	 	
 	 	 	
Item 1.	Financial Statements (Unaudited):	 	
 	 	 	
 	Consolidated Balance Sheets	3	
 	 	 	
 	Consolidated Results of Operations	4	
 	 	 	
 	Consolidated Statements of Comprehensive Earnings	5	
 	 	 	
 	Consolidated Statements of Cash Flows	6	
 	 	 	
 	Consolidated Statements of Shareholders' Equity	7	
 	 	 	
 	Notes to Consolidated Financial Statements	8	
 	 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15	
 	 	 	
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20	
 	 	 	
Item 4.	Controls and Procedures	20	
 	 	 	
PART II	Other Information	 	
 	 	 	
Item 1.	Legal Proceedings	21	
 	 	 	
Item 1A.	Risk Factors	21	
 	 	 	
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21	
 	 	 	
Item 6.	Exhibits	22	
 	 	 	
Signatures	 	23	

2

Table of Contents

PART I. FINANCIAL INFORMATION
 	 	
Item 1.	Financial Statements	

CONSOLIDATED BALANCE SHEETS
(unaudited)

(In thousands, except per share data)	 	May 30,
2015	 	February 28,
2015	
Assets	 	 	 	 	
Current assets	 	 	 	 	
Cash and cash equivalents	 	$	28,204	
 	 	$	52,185	
 	
Short-term available for sale securities	 	35,279	
 	 	327	
 	
Receivables, net of allowance for doubtful accounts	 	160,304	
 	 	171,623	
 	
Inventories	 	62,490	
 	 	61,408	
 	
Refundable income taxes	 	3,390	
 	 	5,115	
 	
Deferred tax assets	 	370	
 	 	1,359	
 	
Other current assets	 	7,707	
 	 	6,958	
 	
Total current assets	 	297,744	
 	 	298,975	
 	
Property, plant and equipment, net	 	192,374	
 	 	193,540	
 	
Available for sale securities	 	9,703	
 	 	10,655	
 	
Goodwill	 	75,563	
 	 	75,857	
 	
Intangible assets	 	22,419	
 	 	23,280	
 	
Other non-current assets	 	10,080	
 	 	9,750	
 	
Total assets	 	$	607,883	
 	 	$	612,057	
 	
Liabilities and Shareholders’ Equity	 	 	 	 	
Current liabilities	 	 	 	 	
Accounts payable	 	$	52,792	
 	 	$	56,516	
 	
Accrued payroll and related benefits	 	24,323	
 	 	36,620	
 	
Accrued self-insurance reserves	 	6,202	
 	 	8,058	
 	
Other current liabilities	 	23,201	
 	 	25,557	
 	
Billings in excess of costs and earnings on uncompleted contracts	 	29,424	
 	 	22,233	
 	
Current portion long-term debt	 	37	
 	 	44	
 	
Total current liabilities	 	135,979	
 	 	149,028	
 	
Long-term debt	 	21,727	
 	 	20,587	
 	
Unrecognized tax benefits	 	4,499	
 	 	4,477	
 	
Long-term self-insurance reserves	 	7,346	
 	 	6,185	
 	
Deferred tax liabilities	 	10,073	
 	 	10,652	
 	
Other non-current liabilities	 	37,355	
 	 	38,652	
 	
Commitments and contingent liabilities (Note 12)	 	

Shareholders’ equity	 	 	 	 	
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 29,227,904 and 29,049,531, respectively	 	9,743	
 	 	9,683	
 	
Additional paid-in capital	 	144,229	
 	 	138,575	
 	
Retained earnings	 	262,327	
 	 	256,538	
 	
Common stock held in trust	 	(810	)	 	(801	)	
Deferred compensation obligations	 	810	
 	 	801	
 	
Accumulated other comprehensive loss	 	(25,395	)	 	(22,320	)	
Total shareholders’ equity	 	390,904	
 	 	382,476	
 	
Total liabilities and shareholders’ equity	 	$	607,883	
 	 	$	612,057	

See accompanying notes to consolidated financial statements.

3

Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)

 	 	Three Months Ended	
(In thousands, except per share data)	 	May 30,
2015	 	May 31,
2014	
Net sales	 	$	239,962	
 	 	$	210,883	
 	
Cost of sales	 	184,374	
 	 	169,445	
 	
Gross profit	 	55,588	
 	 	41,438	
 	
Selling, general and administrative expenses	 	37,364	
 	 	33,621	
 	
Operating income	 	18,224	
 	 	7,817	
 	
Interest income	 	237	
 	 	249	
 	
Interest expense	 	167	
 	 	193	
 	
Other income, net	 	48	
 	 	1,283	
 	
Earnings before income taxes	 	18,342	
 	 	9,156	
 	
Income tax expense	 	6,216	
 	 	3,054	
 	
Net earnings	 	$	12,126	
 	 	$	6,102	

Earnings per share - basic	 	$	0.42	
 	 	$	0.21	
 	
Earnings per share - diluted	 	$	0.41	
 	 	$	0.21	
 	
Weighted average basic shares outstanding	 	29,044	
 	 	28,777	
 	
Weighted average diluted shares outstanding	 	29,479	
 	 	29,385	

See accompanying notes to consolidated financial statements.

4

Table of Contents

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)

 	 	Three Months Ended	
(In thousands)	 	May 30,
2015	 	May 31,
2014	
Net earnings	 	$	12,126	
 	 	$	6,102	
 	
Other comprehensive earnings (loss):	 	 	 	 	
Unrealized (loss) gain on marketable securities, net of $(33) and $45 of tax (benefit)expense, respectively	 	(64	)	 	82	
 	
Unrealized loss on foreign currency hedge, net of $0 and $36 of tax benefit, respectively	 	—	
 	 	(62	)	
Foreign currency translation adjustments	 	(3,011	)	 	2,150	
 	
Other comprehensive loss	 	(3,075	)	 	2,170	
 	
Total comprehensive earnings	 	$	9,051	
 	 	$	8,272	

See accompanying notes to consolidated financial statements.

5

Table of Contents

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

 	 	Three Months Ended	
(In thousands)	 	May 30,
2015	 	May 31,
2014	
Operating Activities	 	 	 	 	
Net earnings	 	$	12,126	
 	 	$	6,102	
 	
Adjustments to reconcile net earnings to net cash provided by operating activities:	 	 	 	 	
Depreciation and amortization	 	7,741	
 	 	6,766	
 	
Stock-based compensation	 	1,040	
 	 	1,250	
 	
Deferred income taxes	 	358	
 	 	(501	)	
Excess tax benefits from stock-based compensation	 	(3,619	)	 	(1,589	)	
Gain on disposal of assets	 	(102	)	 	(453	)	
Other, net	 	39	
 	 	12	
 	
Changes in operating assets and liabilities:	 	 	 	 	
Receivables	 	10,820	
 	 	586	
 	
Inventories	 	(1,240	)	 	(2,268	)	
Accounts payable and accrued expenses	 	(18,129	)	 	(11,677	)	
Billings in excess of costs and earnings on uncompleted contracts	 	7,191	
 	 	985	
 	
Refundable and accrued income taxes	 	5,361	
 	 	2,825	
 	
Other, net	 	(731	)	 	(842	)	
Net cash provided by operating activities	 	20,855	
 	 	1,196	
 	
Investing Activities	 	 	 	 	
Capital expenditures	 	(8,753	)	 	(8,738	)	
Proceeds from sales of property, plant and equipment	 	1	
 	 	201	
 	
Sales of restricted investments	 	—	
 	 	798	
 	
Purchases of marketable securities	 	(35,787	)	 	(484	)	
Sales/maturities of marketable securities	 	1,696	
 	 	868	
 	
Investments in corporate-owned life insurance policies	 	(823	)	 	—	
 	
Net cash used in investing activities	 	(43,666	)	 	(7,355	)	
Financing Activities	 	 	 	 	
Proceeds from issuance of debt	 	1,199	
 	 	—	
 	
Payments on debt	 	(10	)	 	(12	)	
Shares withheld for taxes, net of stock issued to employees	 	(2,028	)	 	(3,164	)	
Excess tax benefits from stock-based compensation	 	3,619	
 	 	1,589	
 	
Repurchase and retirement of common stock	 	—	
 	 	(863	)	
Dividends paid	 	(3,215	)	 	(3,078	)	
Net cash used in financing activities	 	(435	)	 	(5,528	)	
Decrease in cash and cash equivalents	 	(23,246	)	 	(11,687	)	
Effect of exchange rates on cash	 	(735	)	 	315	
 	
Cash and cash equivalents at beginning of year	 	52,185	
 	 	28,465	
 	
Cash and cash equivalents at end of period	 	$	28,204	
 	 	$	17,093	
 	
Noncash Activity	 	 	 	 	
Capital expenditures in accounts payable	 	$	1,363	
 	 	$	921	

See accompanying notes to consolidated financial statements.

6

Table of Contents

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)

(In thousands, except per share data)	 	Common Shares Outstanding	 	Common Stock	 	Additional Paid-In Capital	 	Retained Earnings	 	Common Stock Held in Trust	 	Deferred Compensation Obligation	 	Accumulated Other Comprehensive (Loss) Income	
Bal. at Feb 28, 2015	 	29,050	
 	 	$	9,683	
 	 	$	138,575	
 	 	$	256,538	
 	 	$	(801	)	 	$	801	
 	 	$	(22,320	)	
Net earnings	 	—	
 	 	—	
 	 	—	
 	 	12,126	
 	 	—	
 	 	—	
 	 	—	
 	
Unrealized loss on marketable securities, net of $33 tax benefit	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(64	)	
Foreign currency translation adjustments	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(3,011	)	
Issuance of stock, net of cancellations	 	83	
 	 	28	
 	 	(13	)	 	—	
 	 	(9	)	 	9	
 	 	—	
 	
Stock-based compensation	 	—	
 	 	—	
 	 	1,040	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Tax benefit associated with stock plans	 	—	
 	 	—	
 	 	3,658	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Exercise of stock options	 	160	
 	 	53	
 	 	1,285	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Other share retirements	 	(65	)	 	(21	)	 	(316	)	 	(3,122	)	 	—	
 	 	—	
 	 	—	
 	
Cash dividends	 	—	
 	 	—	
 	 	—	
 	 	(3,215	)	 	—	
 	 	—	
 	 	—	
 	
Bal. at May 30, 2015	 	29,228	
 	 	$	9,743	
 	 	$	144,229	
 	 	$	262,327	
 	 	$	(810	)	 	$	810	
 	 	$	(25,395	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bal. at Mar 1, 2014	 	28,958	
 	 	$	9,653	
 	 	$	130,570	
 	 	$	228,841	
 	 	$	(791	)	 	$	791	
 	 	$	(12,960	)	
Net earnings	 	—	
 	 	—	
 	 	—	
 	 	6,102	
 	 	—	
 	 	—	
 	 	—	
 	
Unrealized gain on marketable securities, net of $45 tax expense	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	82	
 	
Unrealized loss on foreign currency hedge, net of $36 tax benefit	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	(62	)	
Foreign currency translation adjustments	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	 	2,150	
 	
Issuance of stock, net of cancellations	 	262	
 	 	87	
 	 	(67	)	 	—	
 	 	3	
 	 	(3	)	 	—	
 	
Stock-based compensation	 	—	
 	 	—	
 	 	1,250	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Tax benefit associated with stock plans	 	—	
 	 	—	
 	 	1,604	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Exercise of stock options	 	17	
 	 	5	
 	 	159	
 	 	—	
 	 	—	
 	 	—	
 	 	—	
 	
Share repurchases	 	(28	)	 	(9	)	 	(128	)	 	(726	)	 	—	
 	 	—	
 	 	—	
 	
Other share retirements	 	(106	)	 	(35	)	 	(29	)	 	(3,284	)	 	—	
 	 	—	
 	 	—	
 	
Cash dividends	 	—	
 	 	—	
 	 	—	
 	 	(3,078	)	 	—	
 	 	—	
 	 	—	
 	
Bal. at May 31, 2014	 	29,103	
 	 	$	9,701	
 	 	$	133,359	
 	 	$	227,855	
 	 	$	(788	)	 	$	788	
 	 	$	(10,790	)	

See accompanying notes to consolidated financial statements.

7

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 	 	
1.	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 28, 2015. We use the same accounting policies in preparing quarterly and annual financial statements. All adjustments necessary for a fair presentation of quarterly operating results are reflected herein and are of a normal, recurring nature. The results of operations for the three-month period ended May 30, 2015 are not necessarily indicative of the results to be expected for the full year.

In connection with preparing the unaudited consolidated financial statements for the three months ended May 30, 2015, we have evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined there were no items to recognize or disclose.
 	 	
2.	New Accounting Standards	

In May 2014, the FASB issued a standard on revenue from contracts with customers. The standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual reporting periods beginning after December 15, 2016, our fiscal 2018. We are currently evaluating the impact that this standard will have on our financial statements.

We do not expect that any other recently issued accounting pronouncements will have a significant effect on our financial statements.
 	 	
3.	Share-Based Compensation	
Total share-based compensation expense included in the results of operations was $1.0 million and $1.3 million for the three-month periods ended May 30, 2015 and May 31, 2014, respectively.

Stock Options and SARs
There were no options or SARs issued in the first three months of either fiscal 2016 or 2015. The following table summarizes the award transactions for the three months ended May 30, 2015:  

 	Options/SARs Outstanding	
 	Number of
Shares	 	Weighted
Average
Exercise Price	 	Weighted
Average
Remaining
Contractual
Life	 	Aggregate
Intrinsic
Value	
Outstanding at February 28, 2015	624,095	
 	 	$	11.92	
 	 	 	 	 	
Awards exercised	(165,394	)	 	9.74	
 	 	 	 	 	
Awards canceled	—	
 	 	—	
 	 	 	 	 	
Outstanding and exercisable at May 30, 2015	458,701	
 	 	$	12.70	
 	 	4.8 Years	 	$	18,820,316	

Cash proceeds from the exercise of stock options were $1.3 million and $0.2 million for the three months ended May 30, 2015 and May 31, 2014, respectively. The aggregate intrinsic value of securities (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) exercised was $5.7 million during the three months ended May 30, 2015 and $0.4 million during the prior-year period.

8

Table of Contents

Nonvested Shares and Share Units

The following table summarizes the nonvested share award transactions, including nonvested share units, for the three months ended May 30, 2015:  

 	Nonvested Shares and Units	
 	Number of
Shares and
Units	 	Weighted
Average
Grant Date
Fair Value	
Nonvested at February 28, 2015	400,708	
 	 	$	23.49	
 	
Granted	89,178	
 	 	53.43	
 	
Vested	(167,765	)	 	22.67	
 	
Canceled	(1,950	)	 	28.98	
 	
Nonvested at May 30, 2015	320,171	
 	 	$	32.23	

At May 30, 2015, there was $8.8 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 24 months. The total fair value of shares vested during the three-months ended May 30, 2015 was $8.6 million.
 	 	
4.	Earnings per Share	

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

 	Three Months Ended	
(In thousands, except per share data)	May 30,
2015	 	May 31,
2014	
Basic earnings per share – weighted average common shares outstanding	29,044	
 	 	28,777	
 	
Weighted average effect of nonvested share grants and assumed exercise of stock options	435	
 	 	608	
 	
Diluted earnings per share – weighted average common shares and potential
     common shares outstanding	29,479	
 	 	29,385	
 	
Earnings per share – basic	$	0.42	
 	 	$	0.21	
 	
Earnings per share – diluted	0.41	
 	 	0.21	

There were no anti-dilutive stock options excluded from the calculation of earnings per share for any of the periods presented as the average market price exceeded the exercise price of options outstanding.
 	 	
5.	Inventories	

 	 	 	 	 	 	 	 	
(In thousands)	May 30,
2015	 	February 28,
2015	
Raw materials	$	21,582	
 	 	$	19,761	
 	
Work-in-process	13,576	
 	 	14,385	
 	
Finished goods	24,199	
 	 	23,076	
 	
Costs and earnings in excess of billings on uncompleted contracts	3,133	
 	 	4,186	
 	
Total inventories	$	62,490	
 	 	$	61,408	

9

Table of Contents
 	 	
6.	Marketable Securities	

Marketable securities available for sale at May 30, 2015 and February 28, 2015, were as follows: 

(In thousands)	Amortized Cost	 	Gross Unrealized Gains	 	Gross Unrealized Losses	 	Estimated
Fair Value	
May 30, 2015	 	 	 	 	 	 	 	
Mutual fund	$	30,011	
 	 	$	—	
 	 	$	(13	)	 	$	29,998	
 	
Municipal bonds	$	10,060	
 	 	$	71	
 	 	$	(147	)	 	$	9,984	
 	
Commercial paper	$	5,000	
 	 	$	—	
 	 	$	—	
 	 	$	5,000	
 	
Total available for sale securities	$	45,071	
 	 	$	71	
 	 	$	(160	)	 	$	44,982	

February 28, 2015	 	 	 	 	 	 	 	
Municipal bonds	$	10,973	
 	 	$	127	
 	 	$	(118	)	 	$	10,982	
 	
Total available for sale securities	$	10,973	
 	 	$	127	
 	 	$	(118	)	 	$	10,982	

As of May 30, 2015, available for sale securities with a fair value of $1.1 million have been in a continuous unrealized loss position for more than 12 months with unrealized losses of $0.1 million.

During the quarter, the Company invested in a mutual fund holding government short-term securities and commercial paper as a means of deploying excess cash generated from operations while preserving liquidity.

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

The Company tests for other-than-temporary losses on a quarterly basis and considers the unrealized losses indicated above to be temporary in nature. The Company intends to hold the investments until it can recover the full principal amount, and has the ability to do so based on other sources of liquidity. The Company expects such recoveries to occur prior to the contractual maturities.

The amortized cost and estimated fair values of investments at May 30, 2015, 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	$	5,277	
 	 	$	5,281	
 	
Due after one year through five years	2,816	
 	 	2,816	
 	
Due after five years through 10 years	5,717	
 	 	5,749	
 	
Due after 10 years through 15 years	1,250	
 	 	1,138	
 	
Total	$	15,060	
 	 	$	14,984	

Gross realized gains and losses were not significant during the first three-months of fiscal 2016 or fiscal 2015.
 	 	
7.	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). The Company does not have any Level 3 assets or liabilities.

10

Table of Contents

Financial assets measured at fair value on a recurring basis as of May 30, 2015 and February 28, 2015, are summarized below: 

(In thousands)	Quoted Prices in
Active Markets
(Level 1)	 	Other
Observable
Inputs
(Level 2)	 	Total Fair
Value	
May 30, 2015	 	 	 	 	 	
Cash equivalents	 	 	 	 	 	
Money market funds	$	18,363	
 	 	$	—	
 	 	$	18,363	
 	
Short-term securities	 	 	 	 	 	
Mutual funds	$	29,998	
 	 	$	—	
 	 	$	29,998	
 	
Commercial paper	$	—	
 	 	$	5,000	
 	 	$	5,000	
 	
Municipal bonds	$	—	
 	 	$	281	
 	 	$	281	
 	
Total short-term securities	29,998	
 	 	5,281	
 	 	35,279	
 	
Long-term securities	 	 	 	 	 	
Mutual funds	$	271	
 	 	$	—	
 	 	$	271	
 	
Municipal bonds	$	—	
 	 	$	9,703	
 	 	$	9,703	
 	
Total long-term securities	$	271	
 	 	$	9,703	
 	 	$	9,974	
 	
Total assets at fair value	$	48,632	
 	 	$	14,984	
 	 	$	63,616	

February 28, 2015	 	 	 	 	 	
Cash equivalents	 	 	 	 	 	
Money market funds	$	34,386	
 	 	$	—	
 	 	$	34,386	
 	
Short-term securities	 	 	 	 	 	
Municipal bonds	$	—	
 	 	$	327	
 	 	$	327	
 	
Long-term securities	 	 	 	 	 	
Mutual funds	$	305	
 	 	 	 	$	305	
 	
Municipal bonds	$	—	
 	 	$	10,655	
 	 	$	10,655	
 	
Total assets at fair value	$	34,691	
 	 	$	10,982	
 	 	$	45,673	

The following methods were used to estimate the fair value of each class of financial instrument:

Cash equivalents
Cash equivalents consisted of highly liquid investments with an original maturity of three months or less. Money market funds were measured at fair value based on quoted prices in active markets.

Short- and long-term securities
Mutual funds were measured at fair value based on quoted prices in active markets. A portion of our mutual funds are considered a long-term funding source for the deferred compensation plan and are included in other non-current assets in the consolidated balance sheet.

Commercial paper was measured using inputs based upon quoted prices for similar instruments in active markets.

Municipal bonds were carried at fair value based on market prices from recent trades of similar securities and are classified as short-term or long-term based on maturity date.

11

Table of Contents
 	 	
8.	Goodwill and Other Identifiable Intangible Assets	

The carrying amount of goodwill attributable to each business segment is below:  

(In thousands)	Architectural Glass	 	Architectural Services	 	Architectural Framing Systems	 	Large-Scale
Optical	 	Total	
Balance at March 1, 2014	$	26,628	
 	 	$	1,120	
 	 	$	39,716	
 	 	$	10,557	
 	 	$	78,021	
 	
Foreign currency translation	(273	)	 	—	
 	 	(1,891	)	 	—	
 	 	(2,164	)	
Balance at February 28, 2015	26,355	
 	 	1,120	
 	 	37,825	
 	 	10,557	
 	 	75,857	
 	
Foreign currency translation	(358	)	 	—	
 	 	64	
 	 	—	
 	 	(294	)	
Balance at May 30, 2015	$	25,997	
 	 	$	1,120	
 	 	$	37,889	
 	 	$	10,557	
 	 	$	75,563	

The following tables provide the gross carrying amount of other intangible assets and related accumulated amortization:

 	May 30, 2015	
(In thousands)	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Foreign
Currency
Translation	 	Net	
Definite-lived intangible assets:	 	 	 	 	 	 	 	
Debt issue costs	$	3,677	
 	 	$	(2,610	)	 	$	—	
 	 	$	1,067	
 	
Non-compete agreements	6,633	
 	 	(6,342	)	 	(11	)	 	280	
 	
Customer relationships	24,174	
 	 	(12,003	)	 	(224	)	 	11,947	
 	
Trademarks and other intangibles	8,063	
 	 	(2,975	)	 	(220	)	 	4,868	
 	
Total definite-lived intangible assets	$	42,547	
 	 	$	(23,930	)	 	$	(455	)	 	$	18,162	
 	
Indefinite-lived intangible assets:	 	 	 	 	 	 	 	
Trademarks	4,239	
 	 	—	
 	 	18	
 	 	4,257	
 	
Total intangible assets	$	46,786	
 	 	$	(23,930	)	 	$	(437	)	 	$	22,419	

 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	February 28, 2015	
(In thousands)	Gross
Carrying
Amount	 	Accumulated
Amortization	 	Foreign
Currency
Translation	 	Net	
Definite-lived intangible assets:	 	 	 	 	 	 	 	
Debt issue costs	$	3,668	
 	 	$	(2,560	)	 	$	—	
 	 	$	1,108	
 	
Non-compete agreements	6,690	
 	 	(6,364	)	 	(10	)	 	316	
 	
Customer relationships	25,677	
 	 	(11,932	)	 	(1,315	)	 	12,430	
 	
Trademarks and other intangibles	8,275	
 	 	(2,920	)	 	(168	)	 	5,187	
 	
Total definite-lived intangible assets	$	44,310	
 	 	$	(23,776	)	 	$	(1,493	)	 	$	19,041	
 	
Indefinite-lived intangible assets:	 	 	 	 	 	 	 	
Trademarks	4,768	
 	 	—	
 	 	(529	)	 	4,239	
 	
Total intangible assets	$	49,078	
 	 	$	(23,776	)	 	$	(2,022	)	 	$	23,280	

Amortization expense on the definite-lived intangible assets was $0.4 million and $0.5 million for the three-month periods ended May 30, 2015 and May 31, 2014, respectively. The amortization expense associated with the debt issue costs is included in interest expense while the remainder is in selling, general and administrative expenses in the consolidated results of operations. At May 30, 2015, the estimated future amortization expense for definite-lived intangible assets is as follows:

(In thousands)	Remainder
of Fiscal
2015	 	Fiscal
2016	 	Fiscal
2017	 	Fiscal
2018	 	Fiscal
2019	
Estimated amortization expense	$	1,306	
 	 	$	1,594	
 	 	$	1,563	
 	 	$	1,513	
 	 	$	1,439	

12

Table of Contents
 	 	
9.	Debt	

Debt at May 30, 2015 consists of $20.4 million of industrial revenue bonds, $1.2 million on the Canadian revolving credit facility and $0.2 million of other debt. The industrial revenue bonds mature in fiscal years 2021 through 2043, borrowings under our U.S. revolving facility mature in fiscal 2020 and the other debt matures in fiscal years 2016 through 2021. The fair value of the industrial revenue bonds and revolving credit facility borrowings approximates carrying value at May 30, 2015, due to the variable interest rates on these instruments. The bonds are classified as Level 2 within the fair value hierarchy described in Note 7.

The Company maintains a $125.0 million committed revolving credit facility that expires in December 2019. No borrowings were outstanding under the facility as of May 30, 2015 or February 28, 2015.

This credit facility requires the Company to maintain a debt-to-EBITDA ratio of not more than 3.00. This ratio is computed quarterly, with EBITDA computed on a rolling four-quarter basis. The Company’s ratio was 0.21 at May 30, 2015. The credit facility also requires the Company to maintain a minimum level of net worth, as defined in the credit facility, based on certain quarterly financial calculations. The minimum required net worth computed in accordance with the credit facility at May 30, 2015 was $329.1 million, whereas the Company’s net worth as defined in the credit facility was $390.9 million. If the Company is not in compliance with either of these covenants, the lenders may terminate the commitment and/or declare any loan then outstanding to be immediately due and payable. At May 30, 2015, the Company was in compliance with the financial covenants of the credit facility.

We also maintain a Canadian dollar 4.0 million revolving demand facility available to our Canadian operation. Borrowings under the facility are made available at the sole discretion of the lender and are payable on demand, with interest at rates specified in the credit agreement. The Company classifies any outstanding balances under this demand facility as long-term debt, as outstanding amounts can be refinanced through our committed revolving credit facility. As of May 30, 2015, $1.2 million was outstanding under this facility. No borrowings were outstanding under this facility as of February 28, 2015.

Interest payments were $0.1 million for each of the three months ended May 30, 2015 and May 31, 2014, and primarily relate to fees associated with our revolving credit facility.
 	 	
10.	Employee Benefit Plans	

Pension Plans
The Company sponsors an unfunded Officers’ Supplemental Executive Retirement Plan for the benefit of certain executives and a defined-benefit pension plan, the Tubelite, Inc. Hourly Employees’ Pension Plan. Components of net periodic benefit cost are as follows:

 	Three Months Ended	
(In thousands)	May 30,
2015	 	May 31,
2014	
Interest cost	$	142	
 	 	$	138	
 	
Expected return on assets	(34	)	 	(43	)	
Amortization of unrecognized net loss	62	
 	 	44	
 	
Net periodic benefit cost	$	170	
 	 	$	139	

 	 	
11.	Income Taxes	

The Company files income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions, Canada, Brazil and other international jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years prior to fiscal 2012, or U.S. state and local income tax examinations for years prior to fiscal 2009. The Company is not currently under U.S. federal examination for years subsequent to fiscal year 2011, and there is very limited audit activity of the Company’s income tax returns in U.S. state jurisdictions or international jurisdictions.

The total liability for unrecognized tax benefits was approximately $5.0 million at both May 30, 2015 and February 28, 2015. The Company records the impact of penalties and interest related to unrecognized tax benefits in income tax expense, which is consistent with past practices. The total liability for unrecognized tax benefits is expected to decrease by approximately $0.6 million during the next 12 months due to lapsing of statutes.

13

Table of Contents
 	 	
12.	Commitments and Contingent Liabilities	

Operating lease commitments. As of May 30, 2015, the Company was obligated under non-cancelable operating leases for buildings and equipment. Certain leases provide for increased rentals based upon increases in real estate taxes or operating costs. Future minimum rental payments under non-cancelable operating leases are:  

(In thousands)	Remainder
of Fiscal
2015	 	Fiscal
2016	 	Fiscal
2017	 	Fiscal
2018	 	Fiscal
2019	 	Thereafter	 	Total	
Total minimum payments	$	7,058	
 	 	$	7,588	
 	 	$	6,773	
 	 	$	6,007	
 	 	$	4,680	
 	 	$	3,671	
 	 	$	35,777	

Bond commitments. In the ordinary course of business, predominantly in the Company’s Architectural Services business, the Company is required to provide surety or performance bonds that commit payments to its customers for any non-performance by the Company. At May 30, 2015, $89.2 million of the Company’s backlog was bonded by performance bonds with a face value of $290.8 million. Performance bonds do not have stated expiration dates, as the Company is released from the bonds upon completion of the contract. The Company has never been required to make any payments related to these performance bonds with respect to any of its current portfolio of businesses.

Warranties. The Company accrues for warranty and claim costs as a percentage of sales based on historical trends and for specific sales credits as they become known and estimable. Actual warranty and 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, shifts in product mix and any significant changes in sales volume. The Company’s warranty and claim accruals are detailed below.  

 	Three Months Ended	
(In thousands)	May 30,
2015	 	May 31,
2014	
Balance at beginning of period	$	11,275	
 	 	$	11,978	
 	
Additional accruals	1,926	
 	 	1,060	
 	
Claims paid	(1,173	)	 	(891	)	
Balance at end of period	$	12,028	
 	 	$	12,147	

Letters of credit. At May 30, 2015, the Company had ongoing letters of credit related to its construction contracts and certain industrial revenue bonds. The total value of letters of credit under which the Company was obligated as of May 30, 2015 was approximately $23.5 million, all of which have been issued under the credit facility. The Company’s total availability under its $125.0 million credit facility is reduced by borrowings under the facility and also by letters of credit issued under the facility.

Purchase obligations. The Company has purchase obligations for raw material commitments and capital expenditures. As of May 30, 2015, these obligations totaled $131.4 million.

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’s construction supply and services businesses are 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 employment practices, workers compensation, general liability and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.
 	 	
13.	Segment Information	

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

14

Table of Contents

entrances of commercial, institutional and high-end multi-family residential buildings. The Company has aggregated four operating segments into the Architectural Framing Systems reporting segment based upon their similar products, customers, distribution methods, production processes and economic characteristics.
 	 	
•	The LSO segment manufactures value-added glass and acrylic products for the custom picture framing and fine art markets.	

 	 	 	 	 	 	 	 	
 	Three Months Ended	
(In thousands)	May 30,
2015	 	May 31,
2014	
Net Sales from operations	 	 	 	
Architectural Glass	$	101,175	
 	 	$	79,634	
 	
Architectural Services	55,652	
 	 	51,616	
 	
Architectural Framing Systems	71,900	
 	 	64,222	
 	
Large-Scale Optical	20,219	
 	 	20,061	
 	
Intersegment eliminations	(8,984	)	 	(4,650	)	
Net sales	$	239,962	
 	 	$	210,883	
 	
Operating Income (Loss) from operations	 	 	 	
Architectural Glass	$	8,283	
 	 	$	2,800	
 	
Architectural Services	942	
 	 	184	
 	
Architectural Framing Systems	5,261	
 	 	1,931	
 	
Large-Scale Optical	4,870	
 	 	3,964	
 	
Corporate and other	(1,132	)	 	(1,062	)	
Operating income	$	18,224	
 	 	$	7,817	

Due to the varying combinations and integration of individual window, storefront and curtainwall systems, the Company has determined that it is impractical to report product revenues generated by class of product, beyond the segment revenues currently reported.
 	 	
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	

Forward-Looking Statements
This discussion contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “forecast,” “project,” “should” and similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All forecasts and projections in this document are “forward-looking statements,” and are based on management’s current expectations or beliefs of the Company’s near-term results, based on current information available pertaining to the Company, including the risk factors noted under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2015. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results.

Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to, the risks and uncertainties set forth under Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2015.

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

15

Table of Contents

Overview
We are a leader in certain technologies and distinctive solutions for enclosing commercial buildings and framing art. The Company's four reportable segments are: Architectural Glass, Architectural Services, Architectural Framing Systems and Large-Scale Optical (LSO).
 	 	
•	Our Architectural Glass segment consists of Viracon, a fabricator of 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 consists of Harmon, one of the largest U.S. full-service building glass installation companies, which 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 Architectural Framing Systems segment companies design, engineer, fabricate and finish 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. This segment includes Wausau Window and Wall Systems, a manufacturer of standard and custom aluminum window systems and curtainwall for the North American commercial construction and historical renovation markets; Tubelite, a fabricator of aluminum storefront, entrance and curtainwall products for the U.S. commercial construction industry; Alumicor, a fabricator of aluminum storefront, entrance, curtainwall and window products for the Canadian commercial construction industry; and Linetec, a paint and anodize finisher of architectural aluminum and PVC shutters for U.S. markets.	
 	 	
•	Our LSO segment consists of Tru Vue, a manufacturer of value-added glass and acrylic products for the custom picture framing and fine art markets.	

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended February 28, 2015 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Highlights of First Quarter Fiscal 2016 Compared to First Quarter Fiscal 2015

Net sales
Consolidated net sales increased 13.8 percent, or $29.1 million, for the first quarter ended May 30, 2015 compared to the prior year period, with growth occurring in all operating segments. Sales growth in the Architectural Glass segment contributed approximately 8 percentage points of the increase due to increased volume and improved pricing and mix; growth in the Architectural Framing Systems segment accounted for approximately 4 percentage points of the increase driven mainly by increased volume in the U.S. businesses; and the remaining increase came from increased volume in the Architectural Services segment.

The relationship between various components of operations, stated as a percent of net sales, is illustrated below for the three-month periods of the current and prior fiscal years:  

 	Three Months Ended	
(Percent of net sales)	May 30,
2015	May 31,
2014	
Net sales	100.0	%	100.0	%	
Cost of sales	76.8	
 	80.4	
 	
Gross profit	23.2	
 	19.6	
 	
Selling, general and administrative expenses	15.6	
 	15.9	
 	
Operating income	7.6	
 	3.7	
 	
Interest income	0.1	
 	0.1	
 	
Interest expense	0.1	
 	0.1	
 	
Other income, net	—	
 	0.6	
 	
Earnings before income taxes	7.6	
 	4.3	
 	
Income tax expense	2.7	
 	1.4	
 	
Net earnings	4.9	%	2.9	%	
Effective tax rate	33.9	%	33.4	%	

Gross profit
Gross profit as a percent of sales increased to 23.2 percent for the quarter ended May 30, 2015 from 19.6 percent in the prior year mainly due to the impact of leveraging volume growth and improved pricing across all three Architectural segments, improved product mix and productivity, and reduced healthcare costs.

16

Table of Contents

Selling, general and administrative (SG&A) expenses
SG&A expenses for the first quarter increased $3.7 million to $37.4 million, but decreased as a percentage of net sales to 15.6 percent compared to 15.9 percent in the prior year. The increase in SG&A expense is due to increases in incentive compensation on improved results, sales commissions from higher sales volumes and business development expenses.
Other income, net
Other income was insignificant in the first quarter of fiscal 2016 compared to income of $1.3 million in the prior-year period. The prior year income was due to the receipt of the final distribution for a European business that was discontinued over 15 years ago.
Income tax expense
Our effective tax rate in the first quarter of fiscal 2016 was 33.9 percent, compared to 33.4 percent in the same period last year as a result of timing of resolution of uncertain tax positions.

Segment Analysis

Architectural Glass

 	Three Months Ended	
(In thousands)	May 30, 2015	 	May 31, 2014	 	%
Change	
Net sales	$	101,175	
 	 	$	79,634	
 	 	27.1	%	
Operating income	8,283	
 	 	2,800	
 	 	195.8	%	
Operating margin	8.2	%	 	3.5	%	 	 	
First quarter Architectural Glass net sales of $101.2 million increased 27.1 percent over prior year net sales due to improving U.S. market conditions driving increased volume and improved pricing and mix.
Operating income grew to $8.3 million in the first quarter, with an operating margin of 8.2 percent. The improvement in profitability over the prior year was driven by operating leverage from increased volume and improved pricing and productivity in the U.S., partially offset by weaker performance in our glass fabrication business in Brazil due to the challenging local economic conditions.

Architectural Services

 	Three Months Ended	
(In thousands)	May 30, 2015	 	May 31, 2014	 	%
Change	
Net sales	$	55,652	
 	 	$	51,616	
 	 	7.8	%	
Operating income	942	
 	 	184	
 	 	412.0	%	
Operating margin	1.7	%	 	0.4	%	 	 	
Architectural Services net sales of $55.7 million for the first quarter were up 7.8 percent over the prior year, with an operating margin of 1.7 percent in the current period compared to 0.4% in the same period last year. Both sales and operating margin growth were attributable to increased volume of project activity and improving project margins as we focus on project selection.

Architectural Framing Systems

 	Three Months Ended	
(In thousands)	May 30, 2015	 	May 31, 2014	 	%
Change	
Net sales	$	71,900	
 	 	$	64,222	
 	 	12.0	%	
Operating income	5,261	
 	 	1,931	
 	 	172.4	%	
Operating margin	7.3	%	 	3.0	%	 	 	
First quarter Architectural Framing Systems net sales of $71.9 million increased 12.0 percent over prior year net sales due to volume growth across all U.S. businesses and improved pricing.
Operating income grew to $5.3 million in the first quarter, with an operating margin of 7.3 percent. The improvement in operating results was due to operating leverage on volume growth and improved pricing.

17

Table of Contents

Large-Scale Optical (LSO)

 	Three Months Ended	
(In thousands)	May 30, 2015	 	May 31, 2014	 	%
Change	
Net sales	$	20,219	
 	 	$	20,061	
 	 	0.8	%	
Operating income	4,870	
 	 	3,964	
 	 	22.9	%	
Operating margin	24.1	%	 	19.8	%	 	 	
LSO net sales of $20.2 million for the first quarter were up slightly from the prior year, while operating margin grew to 24.1 percent. The increase in operating margin was driven by an improved mix of higher value-added products and improved productivity.

Backlog
Backlog represents the dollar amount of revenues we expect to recognize in the future from firm contracts or orders received. Backlog is not a term defined under generally accepted accounting principles and is not a measure of contract profitability. We view backlog as an important metric in evaluating the level of sales activity and short-term sales trends in our business. However, as backlog is only one indicator, and not an effective indicator of our ultimate profitability, we do not believe backlog should be used as the sole indicator of our future earnings.

We include a project within our backlog at the time a signed contract or a firm purchase order is received, generally as a result of a competitive bidding process. Backlog by reporting segment at May 30, 2015, February 28, 2015 and May 31, 2014 was as follows:

(In thousands)	May 30, 2015	 	February 28, 2015	 	May 31, 2014	
Architectural Glass	$	94,152	
 	 	137,432	
 	 	$	98,204	
 	
Architectural Services	302,049	
 	 	287,473	
 	 	209,155	
 	
Architectural Framing Systems	80,844	
 	 	77,666	
 	 	85,646	
 	
Large-Scale Optical	4,833	
 	 	2,107	
 	 	1,073	
 	
Intersegment eliminations	(11,044	)	 	(13,886	)	 	(8,966	)	
Total Backlog	$	470,834	
 	 	$	490,792	
 	 	$	385,112	

In our Architectural Glass segment, additional capacity and improved productivity have driven shorter lead times for customers, resulting in lower backlog. We expect approximately $311 million, or 66 percent, of our May 30, 2015 total backlog to be recognized during the remainder of fiscal 2016 and approximately $160 million, or 34 percent, to be recognized in fiscal 2017 and beyond.

Liquidity and Capital Resources

 	Three Months Ended	
(Cash effect, in thousands)	May 30,
2015	 	May 31,
2014	
Operating Activities	 	 	 	
Net cash provided by operating activities	$	20,855	
 	 	$	1,196	
 	
Investing Activities	 	 	 	
Capital expenditures	(8,753	)	 	(8,738	)	
Change in restricted investments, net	—	
 	 	798	
 	
Net sales (purchases) of marketable securities	(34,091	)	 	384	
 	
Financing Activities	 	 	 	
Proceeds from issuance of debt	1,199	
 	 	—	
 	
Repurchase and retirement of common stock	—	
 	 	(863	)	
Dividends paid	(3,215	)	 	(3,078	)	

18

Table of Contents

Operating activities. Cash provided by operating activities was $20.9 million for the first three months of fiscal 2016, increasing $19.7 million over the prior year due to reduced incremental investment in working capital combined with improved operating results.

Non-cash working capital (current assets, excluding cash and short-term available for sale securities and short-term restricted investments, less current liabilities, excluding current portion of long-term debt) was $98.3 million at May 30, 2015. This compares to $97.5 million at February 28, 2015 and $91.6 million at May 31, 2014. The increase over year-end and the prior year is due to our investment in working capital to support sales growth.

Investing Activities. In the first three months of fiscal 2016, net cash used by investing activities was $43.7 million, compared to $7.4 million in the same period last year. Current year spending included capital investments of $8.8 million and net purchases of short-term marketable securities of $34.1 million.

We expect fiscal 2016 capital expenditures to be approximately $45 to $50 million to increase capacity, manufacturing productivity and product development capabilities, as well as for maintenance.

We continue to review our portfolio of businesses and their assets in comparison to our internal strategic and performance objectives. As part of this review, we may acquire other businesses, pursue geographic expansion, take actions to manage capacity, further invest in, fully divest and/or sell parts of our current businesses.

Financing Activities. We paid dividends totaling $3.2 million ($0.11 per share) for the three-months ended May 30, 2015. We maintain a $125.0 million committed revolving credit facility as described in Note 9. No borrowings were outstanding under this facility as of May 30, 2015 and May 31, 2014.

During fiscal 2004, the Board of Directors authorized a share repurchase program of 1,500,000 shares of common stock. The Board of Directors increased this authorization by 750,000 shares in January 2008 and by 1,000,000 shares in October 2008. We did not purchase any shares under the program during the first three months of fiscal 2016. We repurchased 27,665 shares under the program during the first three months of fiscal 2015 for a total cost of $0.9 million. We have purchased a total of 2,482,632 shares, at a total cost of $36.5 million, since the inception of this program. We have remaining authority to repurchase 767,368 shares under this program, which has no expiration date.

Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of May 30, 2015:

 	Future Cash Payments Due by Fiscal Period	
(In thousands)	2016
Remaining	 	2017	 	2018	 	2019	 	2020	 	Thereafter	 	Total	
Continuing operations	 	 	 	 	 	 	 	 	 	 	 	 	 	
Industrial revenue bonds	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	20,400	
 	 	$	20,400	
 	
Other debt obligations	37	
 	 	36	
 	 	36	
 	 	36	
 	 	36	
 	 	1	
 	 	182	
 	
Operating leases (undiscounted)	7,058	
 	 	7,588	
 	 	6,773	
 	 	6,007	
 	 	4,680	
 	 	3,671	
 	 	35,777	
 	
Purchase obligations	113,384	
 	 	16,574	
 	 	1,487	
 	 	—	
 	 	—	
 	 	—	
 	 	131,445	
 	
Total cash obligations	$	120,479	
 	 	$	24,198	
 	 	$	8,296	
 	 	$	6,043	
 	 	$	4,716	
 	 	$	24,072	
 	 	$	187,804	

From time to time, we acquire the use of certain assets, such as warehouses, automobiles, forklifts, vehicles, office equipment, hardware, software and some manufacturing equipment through operating leases. Many of these operating leases have termination penalties. However, because the assets are used in the conduct of our business operations, it is unlikely that any significant portion of these operating leases would be terminated prior to the normal expiration of their lease terms. Therefore, we consider the risk related to termination penalties to be minimal.

We have purchase obligations for raw material commitments and capital expenditures. As of May 30, 2015, these obligations totaled $131.4 million.

We expect to make contributions of $1.0 million to our defined-benefit pension plans in fiscal 2016, which will equal or exceed our minimum funding requirements.

19

Table of Contents

As of May 30, 2015, we had $5.0 million and $1.8 million of unrecognized tax benefits and environmental liabilities, respectively. We expect approximately $0.6 million of the unrecognized tax benefits to lapse during the next 12 months. We are unable to reasonably estimate in which future periods the remaining unrecognized tax benefits and environmental liabilities will ultimately be settled.

At May 30, 2015, we had ongoing letters of credit related to industrial revenue bonds and construction contracts that that reduce availability of funds under our credit facility. The letters of credit by expiration period were as follows at May 30, 2015:

 	Amount of Commitment Expiration Per Fiscal Period	
(In thousands)	2016
Remaining	 	2017	 	2018	 	2019	 	2020	 	Thereafter	 	Total	
Standby letters of credit	$	—	
 	 	$	20,982	
 	 	$	—	
 	 	$	—	
 	 	$	—	
 	 	$	2,500	
 	 	$	23,482	

In addition to the above letters of credit, we are required, in the ordinary course of business, to provide surety or performance bonds that commit payments to our customers for any non-performance by us. At May 30, 2015, $89.2 million of our backlog was bonded by performance bonds with a face value of $290.8 million. Performance bonds do not have stated expiration dates, as we are released from the bonds upon completion of the contract. We have never been required to make any payments related to these performance bonds with respect to any of our current portfolio of businesses.

We have total cash and short-term available for sale securities of $63.5 million, and $101.5 million available under our committed credit facility at May 30, 2015. We believe that our sources of liquidity will continue to be adequate to fund our working capital requirements, planned capital expenditures and dividend payments.

Outlook
The following statements are based on our current expectations for full-year fiscal 2016 results. These statements are forward-looking, and actual results may differ materially.
 	 	
•	We expect revenue growth of 10 to 15 percent over fiscal 2015.	
 	 	
•	We estimate gross margin to be approximately 24 percent.	
 	 	
•	We expect our effective tax rate to be approximately 34 percent.	
 	 	
•	We anticipate earnings per share of $2.10 to $2.25.	
 	 	
•	We expect capital expenditures in the range of $45 to $50 million.	

Related Party Transactions
No material changes have occurred in the disclosure with respect to our related party transactions set forth in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015.

Critical Accounting Policies
No material changes have occurred in the disclosure of our critical accounting policies set forth in our Annual Report on Form 10-K for the fiscal year ended February 28, 2015.
 	 	
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 February 28, 2015.
 	 	
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 May 30, 2015, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.	

20

Table of Contents

PART II. OTHER INFORMATION
 	 	
Item 1.	Legal Proceedings	

The Company has been a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company’s construction supply and services businesses are 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 employment practices, workers compensation, general liability and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims 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	

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 28, 2015.
 	 	
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 first quarter of fiscal 2016:

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	
March 1, 2015 through March 28, 2015	11,691	
 	 	$	43.90	
 	 	—	
 	 	767,368	
 	
March 29, 2015 through April 25, 2015	11,453	
 	 	49.32	
 	 	—	
 	 	767,368	
 	
April 26, 2015 through May 30, 2015	39,099	
 	 	53.69	
 	 	—	
 	 	767,368	
 	
Total	62,243	
 	 	$	50.30	
 	 	—	
 	 	767,368	

 	 	
(a)	The shares in this column represent shares that were surrendered to us by plan participants to satisfy stock-for-stock option exercises or withholding tax obligations related to stock-based compensation.	
 	 	
(b)	In April 2003, the Board of Directors authorized the repurchase of 1,500,000 shares of Company stock, which was announced on April 10, 2003. In January 2008, the Board of Directors increased the authorization by 750,000 shares, which was announced on January 24, 2008. In October 2008, the Board of Directors increased the authorization by 1,000,000 shares, which was announced on October 8, 2008. The Company’s repurchase program does not have an expiration date.	

21

Table of Contents
 	 	
Item 6.	Exhibits	

 	 	
10.1	Form of CEO Evaluation-Based Retention Incentive Agreement under the Apogee Enterprises, Inc. 2012 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on May 6, 2015.	
 	 	
10.2	Restricted Stock Deferred Program under the Apogee Enterprises, Inc. 2009 Non-Employee Director Stock Incentive Plan, as Amended and Restated (2014) (2015 Statement). Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 30, 2015.	
 	 	
10.3	Form of Deferred Restricted Stock Unit Agreement. Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 30, 2015.	
 	 	
24.1	Power of Attorney	
 	 	
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 May 30, 2015 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of May 30, 2015 and February 28, 2015, (ii) the Consolidated Results of Operations for the three months ended May 30, 2015 and May 31, 2014, (iii) the Consolidated Statements of Comprehensive Earnings for the three months ended May 30, 2015 and May 31, 2014, (iv) the Consolidated Statements of Cash Flows for the three months ended May 30, 2015 and May 31, 2014, (v) the Consolidated Statements of Shareholders' Equity for the three months ended May 30, 2015 and May 31, 2014, and (vi) Notes to Consolidated Financial Statements.	

22

Table of Contents

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: July 9, 2015	 	By: *	
 	 	 	Joseph F. Puishys
President and Chief
Executive Officer
(Principal Executive Officer)	

 	
 	 	 	 	
Date: July 9, 2015	 	By: /s/ James S. Porter	
 	 	 	James S. Porter
Chief Financial Officer
(Principal Financial and
Accounting Officer)	

* By: /s/ Patricia A. Beithon
Patricia A. Beithon
Attorney-in-Fact

23

Table of Contents

Exhibit Index to Form 10-Q for the Period Ended May 30, 2015

10.1	Form of CEO Evaluation-Based Retention Incentive Agreement under the Apogee Enterprises, Inc. 2012 Executive Management Incentive Plan. Incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed on May 6, 2015.	
 	 	
10.2	Restricted Stock Deferred Program under the Apogee Enterprises, Inc. 2009 Non-Employee Director Stock Incentive Plan, as Amended and Restated (2014) (2015 Statement). Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 30, 2015.	
 	 	
10.3	Form of Deferred Restricted Stock Unit Agreement. Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on June 30, 2015.	
 	 	
24.1	Power of Attorney	
 	 	
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 May 30, 2015 are furnished herewith, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of May 30, 2015 and February 28, 2015, (ii) the Consolidated Results of Operations for the three months ended May 30, 2015 and May 31, 2014, (iii) the Consolidated Statements of Comprehensive Earnings for the three months ended May 30, 2015 and May 31, 2014, (iv) the Consolidated Statements of Cash Flows for the three months ended May 30, 2015 and May 31, 2014, (v) the Consolidated Statements of Shareholders' Equity for the three months ended May 30, 2015 and May 31, 2014, and (vi) Notes to Consolidated Financial Statements.	

24

POWER OF ATTORNEY
Exhibit 24.1

KNOW ALL PERSONS BY THESE PRESENTS, that Joseph F. Puishys, President and Chief Executive Officer of Apogee Enterprises, Inc. (the “Company”), whose signature appears below hereby constitutes and appoints James S. Porter and Patricia A. Beithon, and each of them, the undersigned’s true and lawful attorneys-in-fact and agents, each acting alone, with the powers of substitution and revocation, for the undersigned and in the undersigned’s name, place and stead, in any and all capacities, to sign the Company’s 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 30, 2015, related Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, and related Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that such attorneys-in-fact and agents, or any of them, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this Power of Attorney has been signed as of the date set forth below:

Signature	 	Title	 	Date	

 	 	 	 	 	
/s/ Joseph F. Puishys    
Joseph F. Puishys	 	President and Chief Executive Officer and Director
(principal executive officer)	 	July 7, 2015	

Exhibit 31.1
CERTIFICATION
I, Joseph F. Puishys, certify that:
 	 	
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.	

Date: July 9, 2015 

 	 	
 	 *	
 	Joseph F. Puishys
President and Chief Executive Officer	

* By: /s/ Patricia A. Beithon
Patricia A. Beithon
Attorney-in-Fact

Exhibit 31.2
CERTIFICATION
I, James S. Porter, certify that:
 	 	
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.	

Date: July 9, 2015 

 	 	
 	/s/ James S. Porter	
 	James S. Porter
Chief Financial Officer	

Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Apogee Enterprises, Inc. (the “Company”) on Form 10-Q for the period ended May 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Joseph F. Puishys, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:
 	 	
(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.	

 	 	
  *	 	
Joseph F. Puishys
President and Chief Executive Officer	 	
July 9, 2015	 	

* By:  /s/ Patricia A. Beithon
Patricia A. Beithon
Attorney-in-Fact

Exhibit 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Apogee Enterprises, Inc. (the “Company”) on Form 10-Q for the period ended May 30, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, James S. Porter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that based on my knowledge:
 	 	
(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
Chief Financial Officer	 	
July 9, 2015