What changed in this filing

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Item 1. Financial Statements

2021-07-01 compared with 2021-01-07 · 142 added, 232 removed, 387 unchanged (49% of the section changed)

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

(In thousands, except stock data) November 28, 2020 February 29, 2020

(In thousands, except stock data) May 29, 2021 February 27, 2021

Current assets

31 unchanged sentences

Retained earnings 352,130 357,243

Common stock held in trust ( 183 ) ( 685 )

Deferred compensation obligations 183 685

Accumulated other comprehensive loss ( 21,455 ) ( 28,027 )

3 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

Three Months Ended Nine Months Ended

(In thousands, except per share data) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

Three Months Ended

(In thousands, except per share data) May 29, 2021 May 30, 2020

Net sales $ 326,006 $ 289,095

4 unchanged sentences

Interest expense, net 1,238 1,414

Other income, net 472 231 684 599

Other expense, net 315 1,049

Earnings before income taxes 14,489 4,006

7 unchanged sentences

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Net earnings $ 10,817 $ 2,876

Other comprehensive earnings (loss):

Unrealized (loss) gain on marketable securities, net of $ — , $( 11 ), $ 39 and $ 38 of tax (benefit) expense, respectively

( 2 ) ( 44 ) 145 145

Unrealized gain on derivative instruments, net of $ 90 , $ 119 , $ 305 and $ 146 of tax expense, respectively

294 387 997 476

Unrealized gain on marketable securities, net of $ — and $ 26 of tax expense, respectively

Unrealized gain (loss) on derivative instruments, net of $ 211 and $( 189 ) of tax expense (benefit), respectively

Foreign currency translation adjustments 5,880 ( 6,151 )

Other comprehensive earnings (loss) 6,572 ( 6,671 )

Total comprehensive earnings $ 38,464 $ 15,086 $ 59,836 $ 49,991

Total comprehensive earnings (loss) $ 17,389 $ ( 3,795 )

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Operating Activities

4 unchanged sentences

Deferred income taxes 941 ( 738 )

Gain on disposal of assets ( 19,346 ) ( 623 )

Noncash lease expense 3,098 2,945

12 unchanged sentences

Capital expenditures ( 4,705 ) ( 8,606 )

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

Other 557 ( 1,082 )

Net cash provided (used) by investing activities 5,518 ( 41,442 )

Net cash used by investing activities ( 4,148 ) ( 9,688 )

Financing Activities

Borrowings on line of credit — 139,500

(Repayment) borrowings on debt ( 5,400 ) 150,000

Payments on line of credit — ( 146,500 )

Proceeds from exercise of stock options 4,115 —

Repurchase and retirement of common stock ( 12,625 ) ( 4,731 )

2 unchanged sentences

Net cash used by financing activities ( 14,257 ) ( 17,334 )

Increase (decrease) in cash and cash equivalents 40,332 ( 18,743 )

Decrease in cash and cash equivalents ( 11,522 ) ( 3,046 )

Effect of exchange rates on cash 714 ( 270 )

10 unchanged sentences

— — — — — — — —

Unrealized loss on foreign currency hedge, net of $ 189 tax benefit

— — — — — — ( 617 ) ( 617 )

Foreign currency translation adjustments — — — — — — ( 6,151 ) ( 6,151 )

Issuance of stock, net of cancellations 183 62 ( 39 ) — ( 11 ) 11 — 23

Share-based compensation — — 1,406 — — — — 1,406

Share repurchases ( 231 ) ( 77 ) ( 1,370 ) ( 3,284 ) — — — ( 4,731 )

Other share retirements ( 26 ) ( 9 ) ( 151 ) ( 505 ) — — — ( 665 )

Cash dividends — — — ( 4,872 ) — — — ( 4,872 )

Balance at May 30, 2020 26,369 $ 8,790 $ 153,862 $ 382,225 $ ( 696 ) $ 696 $ ( 40,733 ) $ 504,144

Net earnings — — — 17,658 — — — 17,658

Unrealized gain on marketable securities, net of $ 13 tax expense

— — — — — — 50 50

Unrealized gain on foreign currency hedge, net of $ 404 tax expense

— — — — — — 1,319 1,319

Foreign currency translation adjustments — — — — — — 6,139 6,139

Issuance of stock, net of cancellations 121 41 ( 23 ) — ( 11 ) 11 — 18

Share-based compensation — — 2,256 — — — — 2,256

Other share retirements ( 23 ) ( 8 ) ( 139 ) ( 390 ) — — — ( 537 )

Cash dividends — — — ( 4,879 ) — — — ( 4,879 )

Balance at August 29, 2020 26,467 $ 8,823 $ 155,956 $ 394,614 $ ( 707 ) $ 707 $ ( 33,225 ) $ 526,168

Net earnings — — — 37,273 — — — 37,273

Unrealized loss on marketable securities, net of $ — tax benefit

— — — — — — ( 2 ) ( 2 )

Unrealized gain on foreign currency hedge, net of $ 90 tax expense

Unrealized loss on foreign currency hedge, net of $ 211 tax expense

— — — — — — 692 692

6 unchanged sentences

Cash dividends — — — ( 5,035 ) — — — ( 5,035 )

Balance at November 28, 2020 25,962 $ 8,654 $ 155,974 $ 414,749 $ ( 183 ) $ 183 $ ( 32,034 ) $ 547,343

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Balance at May 29, 2021 25,606 $ 8,535 $ 158,341 $ 352,130 $ ( 189 ) $ 189 $ ( 21,455 ) $ 497,551

(In thousands) Common Shares Outstanding Common Stock Additional Paid-In Capital Retained Earnings Common Stock Held in Trust Deferred Compensation Obligation Accumulated Other Comprehensive (Loss) Income Total Shareholders' Equity

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

Balance at February 29, 2020 26,443 $ 8,814 $ 154,016 $ 388,010 $ ( 685 ) $ 685 $ ( 34,062 ) $ 516,778

Net earnings — — — 2,876 — — — 2,876

1 unchanged sentence

— — — — — — 97 97

Unrealized gain on foreign currency hedge, net of $ 2 tax expense

Unrealized loss on foreign currency hedge, net of $ 189 tax benefit

— — — — — — ( 617 ) ( 617 )

5 unchanged sentences

Cash dividends — — — ( 4,872 ) — — — ( 4,872 )

Balance at June 1, 2019 26,530 $ 8,843 $ 150,240 $ 360,394 $ ( 767 ) $ 767 $ ( 34,501 ) $ 484,976

Net earnings — — — 19,279 — — — 19,279

Unrealized gain on marketable securities, net of $ 2 tax expense

— — — — — — 8 8

Unrealized gain on foreign currency hedge, net of $ 25 tax expense

— — — — — — 84 84

Foreign currency translation adjustments — — — — — — 2,465 2,465

Issuance of stock, net of cancellations 44 15 27 — ( 11 ) 11 — 42

Share-based compensation — — 1,582 — — — — 1,582

Other share retirements ( 20 ) ( 7 ) ( 114 ) ( 629 ) — — — ( 750 )

Cash dividends — — — ( 4,605 ) — — — ( 4,605 )

Balance at August 31, 2019 26,554 $ 8,851 $ 151,735 $ 374,439 $ ( 778 ) $ 778 $ ( 31,944 ) $ 503,081

Net earnings — — — 15,234 — — — 15,234

Unrealized loss on marketable securities, net of $ 11 tax benefit

— — — — — — ( 44 ) ( 44 )

Unrealized gain on foreign currency hedge, net of $ 119 tax expense

— — — — — — 387 387

Foreign currency translation adjustments — — — — — — ( 491 ) ( 491 )

Issuance of stock, net of cancellations ( 1 ) 1 43 — 103 ( 103 ) — 44

Share-based compensation — — 1,417 — — — — 1,417

Other share retirements — ( 1 ) ( 7 ) ( 36 ) — — — ( 44 )

Cash dividends — — — ( 4,605 ) — — — ( 4,605 )

Balance at November 30, 2019 26,553 $ 8,851 $ 153,188 $ 385,032 $ ( 675 ) $ 675 $ ( 32,092 ) $ 514,979

Balance at May 30, 2020 26,369 $ 8,790 $ 153,862 $ 382,225 $ ( 696 ) $ 696 $ ( 40,733 ) $ 504,144

See accompanying notes to consolidated financial statements.

7 unchanged sentences

All adjustments necessary for a fair presentation of quarterly and year to date operating results are reflected herein and are of a normal, recurring nature.

The results of operations for the three- and nine-month periods ended November 28, 2020 are not necessarily indicative of the results to be expected for the full year.

COVID-19 considerations

The ongoing COVID-19 pandemic continues to cause volatility and uncertainty in global markets impacting worldwide economic activity.

We have experienced some delays in commercial construction projects and orders as a result of COVID-19.

In our Architectural Glass and Architectural Framing segments, orders have been delayed or have slowed, as customers and end markets face some uncertainty and delays in timing of work.

In our Architectural Services segment, some construction site closures or project delays have occurred, and job sites have had to adjust to increased physical distancing and health-related precautions.

Within our Large-Scale Optical (LSO) segment, most customers reopened and the segment's two manufacturing locations resumed normal operations during the latter part of the second quarter, after being shutdown for most of the first and second quarters due to governmental orders.

We have also been impacted by quarantine-related absenteeism among our workforce, resulting in labor and capacity constraints at some of our facilities.

The extent to which COVID-19 will continue to impact our business will depend on future developments and public health advancements, which have been buoyed recently by the commencement of vaccine production and distribution.

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

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

COVID-19 update

During fiscal 2021, as a result of the global COVID-19 pandemic, we experienced some delays in commercial construction projects and orders and other disruptions to our business, including various physical distancing and health-related precautions, and we were required to close operations at two facilities in our Large-Scale Optical (LSO) segment for a portion of fiscal 2021 due to governmental orders.

We were also impacted by quarantine-related absenteeism among our production workforce, resulting in labor constraints at some of our facilities.

In the first quarter of fiscal 2022, the negative impacts on our business due to the COVID-19 pandemic have moderated.

The extent to which COVID-19 will continue to impact our business in the future will depend in part on the effectiveness of ongoing public health initiatives, which have been boosted by vaccine production and distribution.

Adoption of new accounting standards

At the beginning of fiscal 2021, we adopted the guidance in ASU 2016-13, Measurement of Credit Losses on Financial Instruments.

The guidance provides for a new impairment model on financial instruments which is based on expected credit losses, which was applied following a modified retrospective approach.

Additionally, the new guidance makes targeted improvements to the impairment model for certain available-for-sale debt securities, including eliminating the concept of "other than temporary" from that model.

The portion of the guidance related to available-for-sale debt securities was adopted following a prospective approach.

The adoption of this ASU did not have a significant impact on earnings or financial condition.

Refer to additional disclosures in Notes 2 and 4.

In the current quarter, we adopted the guidance in ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

The amendments in this ASU removed exceptions on intra-period tax allocations and reporting and provided simplification on accounting for franchise taxes, tax basis goodwill and tax law changes.

The adoption of this ASU did not have a significant impact on the consolidated financial statements.

In the current quarter, we adopted the guidance in ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The amendments in this ASU apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The adoption of this ASU did not have a significant impact on the consolidated financial statements.

Subsequent events

We have evaluated subsequent events for potential recognition and disclosure through the date of this filing.

Subsequent to the end of the quarter, we announced the election of our new Chief Executive Officer, Ty R.

Silberhorn, and entered into an employment agreement with him, effective January 4, 2021.

Silberhorn replaces, Joseph F.

Puishys, who announced his retirement, as an employee of the Company, in September 2020, effective January 4, 2021.

Subsequent to the end of the quarter, we purchased 86,933 shares of stock under our authorized share repurchase program, at a total cost of $ 3.4 million.

Revenue, Receivables and Contract Assets and Liabilities

The following table disaggregates total revenue by timing of recognition (see Note 12 for disclosure of revenue by segment):

Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Recognized at shipment $ 140,283 $ 116,163

8 unchanged sentences

Retainage on construction contracts represents amounts withheld by our customers on long-term projects until the project reaches a level of completion where amounts are released.

(In thousands) November 28, 2020 February 29, 2020

(In thousands) May 29, 2021 February 27, 2021

Trade accounts $ 123,501 $ 120,534

5 unchanged sentences

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

(In thousands) November 28, 2020

(In thousands) May 29, 2021 February 27, 2021

Beginning balance $ 1,947 $ 2,469

10 unchanged sentences

In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.

(In thousands) November 28, 2020 February 29, 2020

(In thousands) May 29, 2021 February 27, 2021

Contract assets $ 77,396 $ 74,664

Contract liabilities 18,955 25,000

The decrease in contract assets was mainly due to a reduction in costs and earnings in excess of billings, which is driven by the settlement of matters related to a legacy EFCO project, as well as the timing of projects.

The change in contract liabilities was due to timing of project activity within our businesses that operate under long-term contracts.

Other contract-related disclosures Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

The change in contract assets and contract liabilities was mainly due to timing of project activity within our businesses that operate under long-term contracts.

Other contract-related disclosures Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Revenue recognized related to contract liabilities from prior year-end $ 14,100 $ 13,011

2 unchanged sentences

Generally, these contracts are in our businesses with long-term contracts which recognize revenue over time.

As of November 28, 2020, the transaction price associated with unsatisfied performance obligations was approximately $ 901.6

As of May 29, 2021, the transaction price associated with unsatisfied performance obligations was approximately $ 855.0 million.

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

(In thousands) November 28, 2020

(In thousands) May 29, 2021

Within one year

3 unchanged sentences

Supplemental Balance Sheet Information

(In thousands) November 28, 2020 February 29, 2020

(In thousands) May 29, 2021 February 27, 2021

Raw materials $ 36,751 $ 36,681

3 unchanged sentences

Other current liabilities

(In thousands) November 28, 2020 February 29, 2020

(In thousands) May 29, 2021 February 27, 2021

Warranties $ 12,023 $ 12,298

5 unchanged sentences

Other non-current liabilities

(In thousands) November 28, 2020 February 29, 2020

(In thousands) May 29, 2021 February 27, 2021

Deferred benefit from New Market Tax Credit transactions $ 15,717 $ 15,717

2 unchanged sentences

Deferred tax liabilities 9,851 8,310

Deferred payroll taxes 6,789 6,789

Other 16,487 16,430

5 unchanged sentences

(In thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated

November 28, 2020 $ 12,556 $ 459 $ — $ 13,015

May 29, 2021 $ 12,372 $ 384 $ 7 $ 12,749

February 27, 2021 12,517 386 10 12,893

1 unchanged sentence

The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

The amortized cost and estimated fair values of these bonds at November 28, 2020, by contractual maturity, are shown below.

The amortized cost and estimated fair values of these bonds at May 29, 2021, by contractual maturity, are shown below.

Expected maturities may differ from contractual maturities, as borrowers may have the right to call or prepay obligations with or without penalty.

6 unchanged sentences

Derivative instruments

In August 2019, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility.

As of November 28, 2020, the interest rate swap contract had a notional value of $ 55 million.

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

As of November 28, 2020, we held foreign exchange forward contracts and aluminum forward contracts with U.S.

dollar notional values of $ 18.7 million and $ 1.9 million, respectively, with the objective of reducing the exposure to fluctuations in the Canadian dollar, the Euro and the price of aluminum.

We use interest rate swaps, foreign exchange forward contracts, commodity swaps and forward purchase contracts to manage risks generally associated with foreign exchange rate, interest rate and commodity price fluctuations.

The information that follows explains the various types of derivatives and financial instruments we use, how such instruments are accounted for, and how such instruments impact our financial position and performance.

In fiscal 2020, we entered into an interest rate swap to hedge exposure to variability in cash flows from interest payments on our floating-rate revolving credit facility and term loan.

As of May 29, 2021, the interest rate swap contract had a notional value of $ 40 million.

We periodically enter into forward purchase contracts and/or fixed/floating swaps to manage the risk associated with fluctuations in aluminum prices and fluctuations in foreign exchange rates (primarily related to the Canadian dollar).

These contracts generally have an original maturity date of less than one year.

As of May 29, 2021, we held foreign exchange forward contracts and aluminum fixed/floating swaps with U.S.

dollar notional values of $ 10.5 million and $ 5.8 million, respectively.

These derivative instruments are recorded within our consolidated balance sheets within other current assets and liabilities.

9 unchanged sentences

(Level 1) Other Observable Inputs (Level 2) Total Fair Value

November 28, 2020

Money market funds $ 13,991 $ — $ 13,991

Commercial paper — 4,300 4,300

Municipal and corporate bonds — 12,749 12,749

Cash surrender value of life insurance — 18,474 18,474

Foreign currency and aluminum forward/option contracts — 896 896

Foreign currency forward/option contracts — 577 577

Aluminum hedge contracts — 872 872

Deferred compensation — 14,888 14,888

2 unchanged sentences

Money market funds $ 26,034 $ — $ 26,034

Commercial paper — 1,500 1,500

Municipal and corporate bonds — 12,893 12,893

Cash surrender value of life insurance — 18,632 18,632

Foreign currency forward/option contracts — 606 606

Aluminum hedge contracts — 363 363

Deferred compensation — 13,507 13,507

Foreign currency forward/option contract — 340 340

Interest rate swap contract — 504 504

12 unchanged sentences

The interest rate swap is measured at fair value using other observable market inputs, based off of benchmark interest rates.

Forward foreign exchange and forward purchase aluminum contracts are measured at fair value using other observable market inputs, such as quotations on forward foreign exchange points, foreign currency exchange rates, and forward purchase aluminum prices.

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

Derivative positions are primarily valued using standard calculations and models that use as their basis readily observable market parameters.

Industry standard data providers are our primary source for forward and spot rate information for both interest and currency rates and aluminum prices.

Goodwill and Other Identifiable Intangible Assets

Goodwill and Other Intangible Assets

Goodwill represents the excess of the cost over the net tangible and identified intangible assets of acquired businesses.

We evaluate goodwill for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may not be recoverable.

Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis.

A reporting unit is an operating segment or a component of an operating segment for which discrete financial information is available and reviewed by management on a regular basis.

In the third quarter of fiscal 2021, we changed the date of our annual goodwill impairment testing from our year-end to the first day in our fiscal fourth quarter.

This change results in better alignment of the annual impairment testing with our strategic and annual planning processes.

This change was determined to not be material and had no impact on our current or historical consolidated financial statements.

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including a significant decline in our stock price and market capitalization, along with concerns resulting from the COVID-19 pandemic at four of our nine identified reporting units.

Therefore, we performed an interim goodwill impairment evaluation as of May 30, 2020.

Based on the results of the interim quantitative goodwill impairment analysis, the estimated fair value of each reporting unit exceeded its carrying value and, therefore, goodwill impairment was not indicated as of May 30, 2020.

However, the estimated fair value did not exceed carrying value by a significant margin at two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall, which had goodwill balances of $90.4 million and $26.7 million, respectively, at May 30, 2020.

We utilized a discount rate of 11.0 percent in determining the discounted cash flows for EFCO and a discount rate of 10.4 percent in determining the discounted cash flows for Sotawall.

We utilized a long-term growth rate of 3.0 percent in our fair value analysis for all reporting units.

If our discount rates were to increase by 100 basis points at Sotawall and EFCO, the fair value of these reporting units would fall below carrying value, which would indicate impairment of the goodwill.

Additionally, this discounted cash flow analysis is dependent upon achieving forecasted levels of revenue and profitability.

If revenue or profitability were to fall below forecasted levels, or if market conditions were to decline in a material or sustained manner, impairment could be indicated at these reporting units, and potentially at other reporting units.

During the third quarter, we combined two reporting units into one reporting unit, following certain structural and leadership changes at the Company, specifically within the Architectural Framing Systems segment.

Within this segment, as a result of integration efforts that are ongoing, leadership over our Tubelite and Alumicor reporting units have been combined and functional leaders in areas such as operations, sales, marketing and general and administrative areas are responsible for allocating resources and reviewing results of the combined business.

The goodwill of these individual reporting units was aggregated to the combined reporting unit.

We evaluated goodwill on a qualitative basis prior to and subsequent to this change

and have concluded no adjustment to the carrying value of goodwill was necessary as a result of this change.

In addition, for all reporting units, no qualitative indicators of impairment were identified during the third quarter, and therefore, no interim quantitative goodwill impairment evaluation was performed.

We evaluate goodwill for impairment annually as of the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable.

Based on the impairment analysis performed in the fourth quarter of fiscal 2021, estimated fair value was in excess of carrying value at six of our eight reporting units.

However, estimated fair value did not exceed carrying value for two reporting units within the Architectural Framing Systems segment, EFCO and Sotawall.

As a result, as of February 27, 2021, we incurred goodwill impairment expense of $ 46.7 million and $ 17.1 million in our EFCO and Sotawall reporting units, respectively.

The goodwill impairment expense recorded during the year ended February 27, 2021, as reflected in the table below, represents the total accumulated goodwill impairment expenses recorded.

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

1 unchanged sentence

Optical Total

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

Foreign currency translation ( 263 ) ( 53 ) — — ( 316 )

Balance at February 29, 2020 $ 148,183 $ 25,656 $ 1,120 $ 10,557 $ 185,516

1 unchanged sentence

6,315 — — — 6,315

Impairment expense ( 63,769 ) — — — ( 63,769 )

Foreign currency translation 2,370 ( 334 ) — — 2,036

Balance at November 28, 2020 $ 155,973 $ 25,233 $ 1,120 $ 10,557 $ 192,883

(1) During the quarter ended May 30, 2020, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods.

Balance at February 27, 2021 93,099 25,322 1,120 10,557 130,098

Foreign currency translation 1,457 ( 94 ) — — 1,363

Balance at May 29, 2021 $ 94,556 $ 25,228 $ 1,120 $ 10,557 $ 131,461

(1) During the first quarter of fiscal 2021, we recorded a $6.3 million increase to goodwill and corresponding increase to deferred tax liabilities to correct an immaterial error related to prior periods.

The error was not material to any previously reported annual or interim consolidated financial statements.

Indefinite-lived intangible assets

We hold intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives.

Similar to the change in goodwill measurement date discussed above, we historically evaluated the reasonableness of the useful life and tested indefinite-lived intangible assets for impairment annually at our year-end, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

In the third quarter of fiscal 2021, we changed the date of our annual impairment testing from our year-end to the first day in our fiscal fourth quarter.

During the first quarter of fiscal 2021, we identified qualitative indicators of impairment, including deteriorating macroeconomic conditions resulting from the COVID-19 pandemic.

Therefore, the Company performed a quantitative indefinite-lived intangible asset impairment evaluation as of May 30, 2020.

If the carrying amount of an indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess.

If an impairment loss is recognized, the adjusted carrying amount becomes the asset's new accounting basis.

Fair value is measured using the relief-from-royalty method.

This method assumes the trade name or trademark has value to the extent that the owner is relieved of the obligation to pay royalties for the benefits received from the asset.

This method requires us to estimate the future revenue from the related asset, the appropriate royalty rate, and the weighted average cost of capital.

The assessment of fair value involves significant judgment and projections about future performance.

In determining the discounted future revenue in our fair value analysis, we used discount rates that are appropriate with the risks and uncertainties inherent in the respective businesses in the range of 10.9 percent to 11.5 percent, royalty rates of 1.5 to 2.0 percent, and a long-term growth rate of 3.0 percent.

Based on our analysis, the fair value of each of our trade names exceeded its carrying amount and impairment was not indicated as of May 30, 2020.

During the third quarter of fiscal 2021, no additional qualitative indicators of impairment were identified and therefore, no interim quantitative indefinite-lived intangible asset impairment evaluation was completed.

We continue to conclude that the useful life of our indefinite-lived intangible assets is appropriate.

If future revenue were to fall below forecasted levels or if market conditions were to decline in a material or sustained manner, due to COVID-19 or otherwise, impairment could be indicated on one or more of our indefinite-lived intangible assets.

Other intangible assets

We have intangible assets for certain acquired trade names and trademarks which are determined to have indefinite useful lives.

We test indefinite-lived intangible assets for impairment annually at the same measurement date as goodwill, the first day of our fiscal fourth quarter, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired.

Based on our analysis, the fair value of each of our trade names and trademarks exceeded carrying amount,

except for the EFCO tradename, within our Architectural Framing Systems segment.

The fair value determined for the EFCO tradename was less than its carrying value by $ 6.3 million;

this amount was recognized as impairment expense in the fourth quarter ended February 27, 2021, as reflected in the table below.

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

1 unchanged sentence

Amount Accumulated

Amortization Foreign

Amortization Impairment Expense Foreign

Translation Net

November 28, 2020

Definite-lived intangible assets:

13 unchanged sentences

Total intangible assets $ 206,240 $ ( 74,677 ) $ ( 6,300 ) $ 4,790 $ 130,053

Amortization expense on definite-lived intangible assets was $ 5.6 million and $ 5.7 million for the nine-month periods ended November 28, 2020 and November 30, 2019, respectively.

Amortization expense on definite-lived intangible assets was $ 2.0 million and $ 1.8 million for the three-month periods ended May 29, 2021 and May 30, 2020, respectively.

Amortization expense of other identifiable intangible assets is included in selling, general and administrative expenses.

At November 28, 2020, the estimated future amortization expense for definite-lived intangible assets was:

At May 29, 2021, the estimated future amortization expense for definite-lived intangible assets was:

(In thousands) Remainder of Fiscal 2022 Fiscal 2023 Fiscal 2024 Fiscal 2025 Fiscal 2026

Estimated amortization expense $ 6,257 $ 8,302 $ 8,041 $ 7,651 $ 7,635

As of November 28, 2020, we had a committed revolving credit facility with maximum borrowings of up to $ 235 million with a maturity of June 2024 and a $ 150 million term loan.

The term loan was amended during the third quarter of fiscal 2021 to extend the maturity date to June 2024.

Total debt outstanding was $ 168.5 million, compared to $ 217.9 million as of February 29, 2020.

There were no outstanding borrowings under the revolving credit facility as of November 28, 2020, while there were $ 47.5 million in outstanding borrowings under the revolving credit facility as of February 29, 2020.

As of May 29, 2021, we had a committed revolving credit facility with maximum borrowings of up to $ 235 million with a maturity of June 2024.

There were no outstanding borrowings under the revolving credit facility as of May 29, 2021 and February 27, 2021.

At May 29, 2021 and February 27, 2021, we also had a $ 150 million term loan with a maturity date of June 2024.

Our revolving credit facility and term loan contain two financial covenants that require us to stay below a maximum debt-to-EBITDA ratio and maintain a minimum ratio of interest expense-to-EBITDA.

Both ratios are computed quarterly, with EBITDA calculated on a rolling four-quarter basis.

At November 28, 2020, we were in compliance with both financial covenants.

Additionally, at November 28, 2020, we had a total of $ 18.7 million of ongoing letters of credit related to industrial revenue bonds, construction contracts and insurance collateral that expire in fiscal year 2022 and reduce borrowing capacity under the revolving credit facility.

At November 28, 2020, debt included $ 15.0 million of industrial revenue bonds that mature in fiscal years 2022 through 2043.

In June 2020, a $ 5.4 million industrial revenue bond matured and was repaid.

The fair value of the industrial revenue bonds approximated carrying value at November 28, 2020, due to the variable interest rates on these instruments.

At May 29, 2021, we were in compliance with both financial covenants.

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

At May 29, 2021, debt included $ 15.0 million of industrial revenue bonds that mature in fiscal years 2022 through 2043.

The fair value of the industrial revenue bonds approximated carrying value at May 29, 2021, due to the variable interest rates on these instruments.

All debt would be classified as Level 2 within the fair value hierarchy described in Note 4.

We also maintain two Canadian committed, revolving credit facilities totaling $ 25.0 million (USD).

As of November 28, 2020, $ 3.5 million was outstanding under the facilities, while at February 29, 2020, there were no borrowings under the facilities.

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

As of May 29, 2021 and February 27, 2021, there were no borrowings outstanding under the facilities.

Interest payments were $ 1.1 million and $ 1.4 million for the three months ended May 29, 2021 and May 30, 2020, respectively.

We lease certain of the buildings and equipment used in our operations.

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The components of lease expense were as follows:

Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Operating lease cost $ 3,381 $ 3,561

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Other supplemental information related to leases was as follows:

Nine Months Ended

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

Three Months Ended

(In thousands except weighted-average data) May 29, 2021 May 30, 2020

Cash paid for amounts included in the measurement of operating lease liabilities $ 3,602 $ 3,327

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Future maturities of lease liabilities are as follows:

(In thousands) November 28, 2020

(In thousands) May 29, 2021

Remainder of Fiscal 2022 $ 10,459

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Present value of lease liabilities $ 59,622

In September 2020, we sold a building in McCook, IL used within our LSO segment for $ 25.1 million.

The carrying value of the building was $ 4.3 million, and we recognized a gain on this sale of approximately $ 19.3 million, net of associated transaction costs, which is included as a reduction of selling, general and administrative expenses within our consolidated

statements of operations.

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

Commitments and Contingent Liabilities

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In the ordinary course of business, predominantly in our Architectural Services and Architectural Framing Systems segments, we are required to provide surety or performance bonds that commit payments to our customers for any non-performance.

At November 28, 2020, $ 1.1 billion of these types of bonds were outstanding, of which $ 527.8 million is in our backlog.

At May 29, 2021, $ 1.2 billion of these types of bonds were outstanding, of which $ 527.3 million is in our backlog.

These bonds do not have stated expiration dates.

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A warranty rollforward follows:

Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Balance at beginning of period $ 14,999 $ 15,629

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We manage the risk of these exposures through contract negotiations, proactive project management and insurance coverages.

The liability for these types of project-related contingencies was $ 3.3 million and $ 49.0 million as of November 28, 2020 and February 29, 2020, respectively.

In June 2020, we settled contract claims related to a majority of these project-related contingencies on a legacy EFCO project for an amount equal to the recorded contingency at May 30, 2020.

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

Letters of credit

At November 28, 2020, we had $ 18.7 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6.

In connection with the settlement of contract claims related to a legacy EFCO project referenced above, the original project performance and payment bond related to the project was replaced, which required a $25.0 million letter of credit.

The letter of credit for the replacement bond was issued outside of our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.

At May 29, 2021, we had $ 18.7 million of ongoing letters of credit, all of which have been issued under our committed revolving credit facility, as discussed in Note 6.

We also have a $6.9 million letter of credit which has been issued outside our committed revolving credit facility, with no impact on our borrowing capacity and debt covenants.

Purchase obligations

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

Purchase obligations for raw material commitments and capital expenditures totaled $ 235.9 million as of May 29, 2021.

New Markets Tax Credit (NMTC) transactions

We have four separate NMTC transactions to support our operational expansion.

We have three outstanding NMTC arrangements which help to support operational expansion.

Proceeds received from investors on these transactions are included within other non-current liabilities on our consolidated balance sheets.

The NMTC arrangements are subject to 100 percent tax recapture for a period of seven years from the date of each respective transaction.

Therefore, upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits.

The NMTC arrangements are subject to 100 percent tax credit recapture for a period of seven years from the date of each respective transaction.

Upon the termination of each arrangement, these proceeds will be recognized in earnings in exchange for the transfer of tax credits.

The direct and incremental costs incurred in structuring these arrangements have been deferred and are included in other non-current assets on our consolidated balance sheets.

These costs will be recognized in conjunction with the recognition of the related proceeds on each arrangement.

During the construction phase, we are required to hold cash dedicated to fund each capital project which is then classified as restricted cash on our consolidated balance sheets.

During the construction phase for each project, we are required to hold cash dedicated to fund each capital project which is classified as restricted cash on our consolidated balance sheets.

Variable-interest entities, which have been included within our consolidated financial statements, have been created as a result of the structure of these transactions, as investors in the programs do not have a material interest in their underlying economics.

During the third quarter ended November 28, 2020, an NMTC transaction was settled as expected and as a result, $ 7.4 million of operating income was recognized as a reduction to selling, general and administrative expenses within the Architectural Glass segment.

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

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

Inception date Termination date Proceeds received Deferred costs Net benefit

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In particular, like others in the construction supply and services industry, the Company is routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement.

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

The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters.

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Share-Based Compensation

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

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

Stock options and SARs

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

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

Stock options and SARs Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value

Outstanding at February 27, 2021 633,700 $ 23.04

Awards granted 660,600 23.04

Awards exercised ( 178,564 ) 23.04

Outstanding at November 28, 2020 633,700 $ 23.04 9.6 years $ 2,889,672

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

For the nine-months ended November 28, 2020, cash proceeds from the exercise of stock options were $ 1.5 million and the aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $ 1.8 million.

No awards were issued or exercised during the nine-months ended November 30, 2019.

Nonvested shares and share units

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

Awards canceled ( 37,036 ) 23.04

Outstanding at May 29, 2021 418,100 $ 23.04 9.1 years $ 6,258,957

Vested or expected to vest at May 29, 2021 418,100 $ 23.04 9.1 years $ 6,258,957

For the three-months ended May 29, 2021, cash proceeds from the exercise of stock options were $ 4.1 million and the aggregate intrinsic value of securities exercised (the amount by which the stock price on the date of exercise exceeded the stock price of the award on the date of grant) was $ 2.7 million.

No awards were issued or exercised during the three-months ended May 30, 2020.

Executive Compensation Program

In fiscal 2022, the Compensation Committee of the Board of Directors implemented an executive compensation program for certain key employees.

In the first quarter of fiscal 2022, we issued performance shares in the form of nonvested share unit awards, which give the recipient the right to receive shares earned at the vesting date.

The number of share units issued at grant is equal to the target number of performance shares and allows for the right to receive an additional number of shares dependent on achieving a defined performance goal of return on invested capital and being employed at the end of the performance period.

Nonvested share awards and units

Nonvested share activity, including performance share units, for the current three-month period is summarized as follows:

Nonvested shares and units Number of Shares and Units Weighted Average Grant Date Fair Value

Nonvested at February 27, 2021 475,227 $ 27.52

Granted 342,196 20.46

141,956 34.71

Vested ( 52,892 ) 24.82

Canceled ( 2,059 ) 34.38

Nonvested at November 28, 2020 508,443 $ 27.29

At November 28, 2020, there was $ 8.6 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 25 months.

The total fair value of shares vested during the nine months ended November 28, 2020 was $ 3.2 million.

Nonvested at May 29, 2021 (1)

564,291 $ 29.58

(1) Includes a total of 52,023 nonvested share units granted and outstanding at target level for the fiscal 2022-2024 performance period.

At May 29, 2021, there was $ 11.3 million of total unrecognized compensation cost related to nonvested share and nonvested share unit awards, which is expected to be recognized over a weighted average period of approximately 31 months.

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

The Company files income tax returns in the U.S.

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The Company is no longer subject to U.S.

federal tax examinations for years prior to fiscal 2017, or state and local income tax examinations for years prior to fiscal 2013.

federal tax examinations for years prior to fiscal 2018, or

state and local income tax examinations for years prior to fiscal 2013.

The Company is not currently under U.S.

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state jurisdictions or international jurisdictions.

The total liability for unrecognized tax benefits was $ 4.3 million and $ 4.1 million at November 28, 2020 and February 29, 2020, respectively.

The total liability for unrecognized tax benefits was $ 3.8 million at May 29, 2021 and February 27, 2021, respectively.

Penalties and interest related to unrecognized tax benefits are recorded in income tax expense.

The total liability for unrecognized tax benefits is expected to decrease by approximately $ 0.4 million during the next 12 months due to lapsing of statutes.

Earnings per Share

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

Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Basic earnings per share – weighted average common shares outstanding

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Weighted average effect of nonvested share grants and assumed exercise of stock options

342 318 282 295

Diluted earnings per share – weighted average common shares and potential common shares outstanding

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Stock awards excluded from the calculation of earnings per share because the effect was anti-dilutive (award price greater than average market price of the shares)

159 152 238 152

Segment Information

The Company has four reporting segments:

Architectural Framing Systems, Architectural Glass, Architectural Services and LSO.

Business Segment Data

We have four reporting segments:

• The Architectural Framing Systems segment designs, engineers, fabricates and finishes the aluminum frames used in customized aluminum and glass window, curtainwall, storefront and entrance systems comprising the outside skin and entrances of commercial, institutional and high-end multi-family residential buildings.

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

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

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

Three Months Ended Nine Months Ended

(In thousands) November 28, 2020 November 30, 2019 November 28, 2020 November 30, 2019

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

• The Architectural Services segment provides full-service installation of the walls of glass, windows and other curtainwall products making up the outside skin of commercial and institutional buildings.

• The Large-Scale Optical (LSO) segment manufactures value-added glass and acrylic products primarily for framing and display applications.

Three Months Ended

(In thousands) May 29, 2021 May 30, 2020

Architectural Framing Systems $ 151,840 $ 150,164

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Large-Scale Optical 5,847 ( 3,132 )

26,114 6,754 25,131 15,561

Corporate and other ( 4,530 ) ( 2,544 )

Operating income $ 16,042 $ 6,469

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

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements