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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________ 
FORM 10-Q
 _________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2019
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
Minnesota
 
55435
(Address of principal executive offices)
 
 
 
(Zip Code)
Registrant’s telephone number, including area code: (952835-1874
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
_________________________________ 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common stock, par value $0.33 1/3 per share
 
APOG
 
NASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    x  Yes    o  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     x  Yes    o  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer
 
x
  
Accelerated filer
 
o
 
 
 
 
 
 
 
Non-accelerated filer
 
o
  
Smaller reporting company
 
 
 
 
 
 
 
 
Emerging growth company
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).      Yes    x  No
As of January 7, 2020, 26,507,935 shares of the registrant’s common stock, par value $0.33 1/3 per share, were outstanding.
 



APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
 
  
 
Page
PART I
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 
 
 

3


PART I. FINANCIAL INFORMATION
Item 1.
Financial Statements

CONSOLIDATED BALANCE SHEETS
(unaudited)
In thousands, except stock data
 
November 30, 2019
 
March 2, 2019
Assets
 
 
 
 
Current assets
 
 
 
 
Cash and cash equivalents
 
$
10,129

 
$
17,087

Restricted cash
 
401

 
12,154

Receivables, net of allowance for doubtful accounts
 
197,976

 
192,767

Inventories
 
75,791

 
78,344

Costs and earnings on contracts in excess of billings
 
72,284

 
55,095

Other current assets
 
40,335

 
16,451

Total current assets
 
396,916

 
371,898

Property, plant and equipment, net
 
326,418

 
315,823

Operating lease right-of-use assets
 
56,315

 

Goodwill
 
185,776

 
185,832

Intangible assets
 
142,779

 
148,235

Other non-current assets
 
41,587

 
46,380

Total assets
 
$
1,149,791

 
$
1,068,168

Liabilities and Shareholders’ Equity
 
 
 
 
Current liabilities
 
 
 
 
Accounts payable
 
$
66,557

 
$
72,219

Accrued payroll and related benefits
 
33,339

 
41,119

Billings on contracts in excess of costs and earnings
 
26,366

 
21,478

Operating lease liabilities
 
9,399

 

Current portion of debt
 
155,400

 

Other current liabilities
 
108,481

 
92,696

Total current liabilities
 
399,542

 
227,512

Long-term debt
 
95,856

 
245,724

Non-current operating lease liabilities
 
48,509

 

Non-current self-insurance reserves
 
25,260

 
21,433

Other non-current liabilities
 
65,645

 
77,182

Commitments and contingent liabilities (Note 8)
 
 
 
 
Shareholders’ equity
 
 
 
 
Common stock of $0.33-1/3 par value; authorized 50,000,000 shares; issued and outstanding 26,552,935 and 27,015,127 respectively
 
8,851

 
9,005

Additional paid-in capital
 
153,188

 
151,842

Retained earnings
 
385,032

 
367,597

Common stock held in trust
 
(675
)
 
(755
)
Deferred compensation obligations
 
675

 
755

Accumulated other comprehensive loss
 
(32,092
)
 
(32,127
)
Total shareholders’ equity
 
514,979

 
496,317

Total liabilities and shareholders’ equity
 
$
1,149,791

 
$
1,068,168


See accompanying notes to consolidated financial statements.

4


CONSOLIDATED RESULTS OF OPERATIONS
(unaudited)
 
 
Three Months Ended
 
Nine Months Ended
In thousands, except per share data
 
November 30,
2019
 
December 1, 2018
 
November 30,
2019
 
December 1,
2018
Net sales
 
$
337,916

 
$
357,718

 
$
1,050,340

 
$
1,056,382

Cost of sales
 
263,606

 
273,628

 
808,856

 
807,096

Gross profit
 
74,310

 
84,090

 
241,484

 
249,286

Selling, general and administrative expenses
 
52,716

 
52,682

 
169,274

 
167,224

Operating income
 
21,594

 
31,408

 
72,210

 
82,062

Interest and other expense, net
 
1,764

 
2,787

 
6,577

 
6,254

Earnings before income taxes
 
19,830

 
28,621

 
65,633

 
75,808

Income tax expense
 
4,596

 
6,730

 
15,677

 
18,030

Net earnings
 
$
15,234

 
$
21,891

 
$
49,956

 
$
57,778

Earnings per share - basic
 
$
0.58

 
$
0.79

 
$
1.89

 
$
2.06

Earnings per share - diluted
 
$
0.57

 
$
0.78

 
$
1.87

 
$
2.04

Weighted average basic shares outstanding
 
26,432

 
27,836

 
26,481

 
28,030

Weighted average diluted shares outstanding
 
26,750

 
28,156

 
26,776

 
28,304


See accompanying notes to consolidated financial statements.

5


CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)
 
 
Three Months Ended
 
Nine Months Ended
In thousands
 
November 30, 2019
 
December 1, 2018
 
November 30,
2019
 
December 1,
2018
Net earnings
 
$
15,234

 
$
21,891

 
$
49,956

 
$
57,778

Other comprehensive (loss) earnings:
 
 
 
 
 
 
 
 
Unrealized (loss) gain on marketable securities, net of ($11), ($16), $38 and ($25) of tax (benefit) expense, respectively
 
(44
)
 
(58
)
 
145

 
(90
)
Unrealized gain (loss) on derivative instruments, net of $119, $10, $146 and ($99) of tax expense (benefit), respectively
 
387

 
32

 
476

 
(327
)
Foreign currency translation adjustments
 
(491
)
 
(3,621
)
 
(586
)
 
(7,518
)
Other comprehensive (loss) earnings
 
(148
)
 
(3,647
)
 
35

 
(7,935
)
Total comprehensive earnings
 
$
15,086

 
$
18,244

 
$
49,991

 
$
49,843



See accompanying notes to consolidated financial statements.

6


CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
 
Nine Months Ended
In thousands
 
November 30, 2019
 
December 1, 2018
Operating Activities
 
 
 
 
Net earnings
 
$
49,956

 
$
57,778

Adjustments to reconcile net earnings to net cash provided by operating activities:
 
 
 
 
Depreciation and amortization
 
34,681

 
38,378

Share-based compensation
 
4,617

 
4,724

Deferred income taxes
 
10,088

 
10,600

Gain on disposal of assets
 
(623
)
 
(2,499
)
Proceeds from New Markets Tax Credit transaction, net of deferred costs
 

 
8,850

Noncash lease expense
 
1,525

 

Other, net
 
(2,007
)
 
(799
)
Changes in operating assets and liabilities:
 
 
 
 
Receivables
 
(5,288
)
 
9,291

Inventories
 
2,474

 
4,398

Costs and earnings on contracts in excess of billings
 
(17,156
)
 
(54,569
)
Accounts payable and accrued expenses
 
(22,457
)
 
(20,072
)
Billings on contracts in excess of costs and earnings
 
4,901

 
14,558

Refundable and accrued income taxes
 
(6,159
)
 
1,831

Other
 
(951
)
 
(1,825
)
Net cash provided by operating activities
 
53,601

 
70,644

Investing Activities
 
 
 
 
Capital expenditures
 
(41,176
)
 
(33,867
)
Proceeds from sales of property, plant and equipment
 
591

 
12,332

Purchases of marketable securities
 
(4,201
)
 
(9,006
)
Sales/maturities of marketable securities
 
4,867

 
5,813

Other
 
(1,523
)
 
(2,209
)
Net cash used by investing activities
 
(41,442
)
 
(26,937
)
Financing Activities
 
 
 
 
Borrowings on line of credit
 
108,000

 
294,500

Proceeds from issuance of term debt
 
150,000

 

Payments on line of credit
 
(252,500
)
 
(278,000
)
Repurchase and retirement of common stock
 
(20,010
)
 
(23,313
)
Dividends paid
 
(13,808
)
 
(13,180
)
Other
 
(2,584
)
 
(1,178
)
Net cash used by financing activities
 
(30,902
)
 
(21,171
)
(Decrease) increase in cash and cash equivalents
 
(18,743
)
 
22,536

Effect of exchange rates on cash
 
32

 
(498
)
Cash, cash equivalents and restricted cash at beginning of year
 
29,241

 
19,359

Cash, cash equivalents and restricted cash at end of period
 
$
10,530

 
$
41,397

Noncash Activity
 
 
 
 
Capital expenditures in accounts payable
 
$
1,205

 
$
5,771


See accompanying notes to consolidated financial statements.

7


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)
In thousands
 
Common Shares Outstanding
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Common Stock Held in Trust
 
Deferred Compensation Obligation
 
Accumulated Other Comprehensive (Loss) Income
Balance at March 2, 2019
 
27,015

 
$
9,005

 
$
151,842

 
$
367,597

 
$
(755
)
 
$
755

 
$
(32,127
)
Net earnings
 

 

 

 
15,443

 

 

 

Unrealized gain on marketable securities, net of $47 tax expense
 

 

 

 

 

 

 
181

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

 

 

 

 

 

 
5

Foreign currency translation adjustments
 

 

 

 

 

 

 
(2,560
)
Issuance of stock, net of cancellations
 
79

 
26

 
14

 

 
(12
)
 
12

 

Share-based compensation
 

 

 
1,618

 

 

 

 

Share repurchases
 
(532
)
 
(177
)
 
(3,051
)
 
(16,782
)
 

 

 

Other share retirements
 
(32
)
 
(11
)
 
(183
)
 
(1,266
)
 

 

 

Cash dividends
 

 

 

 
(4,598
)
 

 

 

Balance at June 1, 2019
 
26,530

 
$
8,843

 
$
150,240

 
$
360,394

 
$
(767
)
 
$
767

 
$
(34,501
)
Net earnings
 

 

 

 
19,279

 

 

 

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

 

 

 

 

 

 
8

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

 

 

 

 

 

 
84

Foreign currency translation adjustments
 

 

 

 

 

 

 
2,465

Issuance of stock, net of cancellations
 
44

 
15

 
27

 

 
(11
)
 
11

 

Share-based compensation
 

 

 
1,582

 

 

 

 

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

 

 

Cash dividends
 

 

 

 
(4,605
)
 

 

 

Balance at August 31, 2019
 
26,554

 
$
8,851

 
$
151,735

 
$
374,439

 
$
(778
)
 
$
778

 
$
(31,944
)
Net earnings
 

 

 

 
15,234

 

 

 

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

 

 

 

 

 

 
(44
)
Unrealized gain on foreign currency hedge, net of $119 tax expense
 

 

 

 

 

 

 
387

Foreign currency translation adjustments
 

 

 

 

 

 

 
(491
)
Issuance of stock, net of cancellations
 
(1
)
 
1

 
43

 

 
103

 
(103
)
 

Share-based compensation
 

 

 
1,417

 

 

 

 

Other share retirements
 

 
(1
)
 
(7
)
 
(36
)
 

 

 

Cash dividends
 

 

 

 
(4,605
)
 

 

 

Balance at November 30, 2019
 
26,553

 
$
8,851

 
$
153,188

 
$
385,032

 
$
(675
)
 
$
675

 
$
(32,092
)

See accompanying notes to consolidated financial statements.

8


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(unaudited)

In thousands
 
Common Shares Outstanding
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
Common Stock Held in Trust
 
Deferred Compensation Obligation
 
Accumulated Other Comprehensive (Loss) Income
Balance at March 3, 2018
 
28,158

 
$
9,386

 
$
152,763

 
$
373,259

 
$
(922
)
 
$
922

 
$
(24,053
)
Cumulative effect adjustment
 

 

 

 
2,999

 

 

 

Reclassification of tax effects
 

 

 

 
737

 

 

 
(737
)
Net earnings
 

 

 

 
15,373

 

 

 

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

 

 

 

 

 

 
10

Unrealized loss on foreign currency hedge, net of $92 tax benefit
 

 

 

 

 

 

 
(304
)
Foreign currency translation adjustments
 

 

 

 

 

 

 
(517
)
Issuance of stock, net of cancellations
 
90

 
30

 
35

 

 
91

 
(91
)
 

Share-based compensation
 

 

 
1,514

 

 

 

 

Exercise of stock options
 
19

 
6

 
177

 

 

 

 

Other share retirements
 
(41
)
 
(13
)
 
(228
)
 
(1,440
)
 

 

 

Cash dividends
 

 

 

 
(4,410
)
 

 

 

Balance at June 2, 2018
 
28,226

 
$
9,409

 
$
154,261

 
$
386,518

 
$
(831
)
 
$
831

 
$
(25,601
)
Net earnings
 

 

 

 
20,514

 

 

 

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

 

 

 

 

 

 
(42
)
Unrealized loss on foreign currency hedge, net of $17 tax benefit
 

 

 

 

 

 

 
(55
)
Foreign currency translation adjustments
 

 

 

 

 

 

 
(3,383
)
Issuance of stock, net of cancellations
 
35

 
12

 
37

 

 
(11
)
 
11

 

Share-based compensation
 

 

 
1,605

 

 

 

 

Other share retirements
 
(1
)
 
(1
)
 
(5
)
 

 

 

 

Cash dividends
 

 

 

 
(4,413
)
 

 

 

Balance at September 1, 2018
 
28,260

 
$
9,420

 
$
155,898

 
$
402,619

 
$
(842
)
 
$
842

 
$
(29,081
)
Net earnings
 

 

 

 
21,891

 

 

 

Unrealized loss on marketable securities, net of $16 tax benefit
 

 

 

 

 

 

 
(58
)
Unrealized gain on foreign currency hedge, net of $10 tax expense
 

 

 

 

 

 

 
32

Foreign currency translation adjustments
 

 

 

 

 

 

 
(3,622
)
Issuance of stock, net of cancellations
 

 

 
54

 

 
97

 
(97
)
 

Share-based compensation
 

 

 
1,605

 

 

 

 

Share repurchases
 
(600
)
 
(200
)
 
(3,436
)
 
(19,677
)
 

 

 

Other share retirements
 
(4
)
 
(1
)
 
(26
)
 
(187
)
 

 

 

Cash dividends
 

 

 

 
(4,357
)
 

 

 

Balance at December 1, 2018
 
27,656

 
$
9,219

 
$
154,095

 
$
400,289

 
$
(745
)
 
$
745

 
$
(32,729
)




See accompanying notes to consolidated financial statements.

9


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

1.
Summary of Significant Accounting Policies

Basis of presentation
The consolidated financial statements of Apogee Enterprises, Inc. (we, us, our or the Company) have been prepared in accordance with accounting principles generally accepted in the United States. The information included in this Form 10-Q should be read in conjunction with the Company’s Form 10-K for the year ended March 2, 2019. 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 nine-month period ended November 30, 2019 are not necessarily indicative of the results to be expected for the full year.

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

Accounting standards not yet adopted
In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments, which revises guidance for the accounting for credit losses on financial instruments within its scope. The new standard introduces an approach based on expected losses, to estimate credit losses on certain types of financial instruments and modifies the impairment model for available-for-sale debt securities. This ASU is effective for our fiscal year 2021. Entities are required to apply the standard's provisions as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. We do not expect the adoption of this ASU to have a significant impact on our consolidated financial statements.

Subsequent events
We have evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined that there were no subsequent events that required recognition or disclosure in the consolidated financial statements.

2.
Revenue, Receivables and Contract Assets and Liabilities

Revenue
The following table disaggregates total revenue by timing of recognition (see Note 13 for disclosure of revenue by segment):
 
 
Three Months Ended
 
Nine Months Ended
In thousands
 
November 30, 2019
 
December 1, 2018
 
November 30, 2019
 
December 1, 2018
Recognized at shipment
 
$
153,093

 
$
158,164

 
$
472,695

 
$
481,565

Recognized over time
 
184,823

 
199,554

 
577,645

 
574,817

Total
 
$
337,916

 
$
357,718

 
$
1,050,340

 
$
1,056,382



Receivables
Trade and construction accounts receivable consist of amounts billed and due from customers. The amounts due are stated at their estimated net realizable value. We maintain an allowance for doubtful accounts to provide for the estimated amount of receivables that will not be collected. This allowance is based on an assessment of customer creditworthiness, historical payment experience and the age of outstanding receivables. 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 30, 2019
 
March 2, 2019
Trade accounts
 
$
141,448

 
$
145,693

Construction contracts
 
23,096

 
19,050

Contract retainage
 
35,287

 
32,396

Total receivables
 
199,831

 
197,139

Less: allowance for doubtful accounts
 
(1,855
)
 
(4,372
)
Net receivables
 
$
197,976

 
$
192,767



10


Contract assets and liabilities
Contract assets consist of retainage, costs and earnings in excess of billings and other unbilled amounts typically generated when revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of billings in excess of costs and earnings and other deferred revenue on contracts. Retainage is classified within receivables and deferred revenue is classified within other current liabilities on our consolidated balance sheets.

The time period between when performance obligations are complete and when payment is due is not significant. In certain of our businesses that recognize revenue over time, progress billings follow an agreed-upon schedule of values, and retainage is withheld by the customer until the project reaches a level of completion where amounts are released.
In thousands
 
November 30, 2019
 
March 2, 2019
Contract assets
 
$
107,571

 
$
87,491

Contract liabilities
 
28,863

 
24,083



The increase in contract assets was due to timing of costs incurred in advance of billings, primarily on a legacy EFCO project. 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 30, 2019
 
December 1, 2018
 
November 30, 2019
 
December 1, 2018
Revenue recognized related to contract liabilities from prior year-end
 
$
4,589

 
$

 
$
22,044

 
$
10,398

Revenue recognized related to prior satisfaction of performance obligations
 
1,776

 
1,470

 
5,298

 
3,798


Some of our contracts have an expected duration of longer than a year, with performance obligations extending over that timeframe. Generally these contracts are in our businesses with long-term contracts which recognize revenue over time. As of November 30, 2019, the transaction price associated with unsatisfied performance obligations was approximately $896.7 million. The performance obligations are expected to be satisfied, and the corresponding revenue to be recognized, over the following estimated time periods:
In thousands
 
November 30, 2019
Within one year
 
$
480,803

Within two years
 
344,827

Beyond
 
71,044

Total
 
$
896,674



3.
Supplemental Balance Sheet Information

Inventories
In thousands
 
November 30, 2019
 
March 2, 2019
Raw materials
 
$
39,746

 
$
43,890

Work-in-process
 
19,255

 
15,533

Finished goods
 
16,790

 
18,921

Total inventories
 
$
75,791

 
$
78,344



Other current assets
In thousands
 
November 30, 2019
 
March 2, 2019
Prepaid assets
 
$
11,662

 
$
11,682

Insurance receivable
 
15,000

 

Refundable income taxes
 
4,278

 

Other
 
9,395

 
4,769

Total other current assets
 
$
40,335

 
$
16,451




11



Other current liabilities
In thousands
 
November 30, 2019
 
March 2, 2019
Warranties
 
$
10,601

 
$
12,475

Accrued project losses
 
47,562

 
37,085

Property and other taxes
 
7,156

 
8,026

Accrued self-insurance reserves
 
9,297

 
9,537

Other
 
33,865

 
25,573

Total other current liabilities
 
$
108,481

 
$
92,696



Other non-current liabilities
In thousands
 
November 30, 2019
 
March 2, 2019
Deferred benefit from New Market Tax Credit transactions
 
$
15,717

 
$
26,458

Retirement plan obligations
 
7,633

 
7,633

Deferred compensation plan
 
11,743

 
10,408

Other
 
30,552

 
32,683

Total other non-current liabilities
 
$
65,645

 
$
77,182



4.
Financial Instruments

Marketable securities
Through our wholly-owned insurance subsidiary, Prism Assurance, Ltd. (Prism), we hold the following available-for-sale marketable securities, made up of municipal and corporate bonds: 
In thousands
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Estimated
Fair Value
November 30, 2019
 
$
11,750

 
$
152

 
$
18

 
$
11,884

March 2, 2019
 
12,481

 
59

 
108

 
12,432



Prism insures a portion of our general liability, workers’ compensation and automobile liability risks using reinsurance agreements to meet statutory requirements. The reinsurance carrier requires Prism to maintain fixed-maturity investments for the purpose of providing collateral for Prism’s obligations under the reinsurance agreements.

The amortized cost and estimated fair values of these bonds at November 30, 2019, 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
 
$
835

 
$
837

Due after one year through five years
 
8,581

 
8,710

Due after five years through 10 years
 
2,259

 
2,262

Due after 10 years through 15 years
 

 

Due beyond 15 years
 
75

 
75

Total
 
$
11,750

 
$
11,884



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

We periodically enter into forward purchase foreign currency cash flow hedge contracts, generally with an original maturity date of less than one year, to hedge foreign currency exchange rate risk. As of November 30, 2019, we held foreign exchange

12


forward contracts with a U.S. dollar notional value of $24.7 million, with the objective of reducing the exposure to fluctuations in the Canadian dollar and the Euro.

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

Fair value measurements
Financial assets and liabilities are classified in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement: Level 1 (unadjusted quoted prices in active markets for identical assets or liabilities); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). We do not have any Level 3 financial assets or liabilities.
In thousands
 
Quoted Prices in
Active Markets
(Level 1)
 
Other Observable Inputs (Level 2)
 
Total Fair Value
November 30, 2019
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Money market funds
 
$
2,680

 
$

 
$
2,680

Commercial paper
 

 
500

 
500

Municipal and corporate bonds
 

 
12,384

 
12,384

Liabilities:
 
 
 
 
 
 
Foreign currency forward/option contract
 

 
69

 
69

Interest rate swap contract
 

 
16

 
16

 
 
 
 
 
 
 
March 2, 2019
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
Money market funds
 
$
2,015

 
$

 
$
2,015

Commercial paper
 

 
300

 
300

Municipal and corporate bonds
 

 
12,432

 
12,432

Liabilities:
 
 
 
 
 
 
Foreign currency forward/option contract
 

 
470

 
470



Money market funds and commercial paper
Fair value of money market funds was determined based on quoted prices for identical assets in active markets. Commercial paper was measured at fair value using inputs based on quoted prices for similar securities in active markets. These assets are included within cash and cash equivalents on our consolidated balance sheets.

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

Derivative instruments
The interest rate swap is measured at fair value using unobservable market inputs, based off of benchmark interest rates. Forward foreign exchange contracts are measured at fair value using unobservable market inputs, such as quotations on forward foreign exchange points and foreign currency exchange rates. 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.


13


5.
Goodwill and Other Identifiable Intangible Assets

The carrying amount of goodwill attributable to each reporting segment was:  
In thousands
 
Architectural Framing Systems
 
Architectural Glass
 
Architectural Services
 
Large-Scale
Optical
 
Total
Balance at March 3, 2018
 
$
143,308

 
$
25,971

 
$
1,120

 
$
10,557

 
$
180,956

Goodwill adjustments for purchase accounting

 
6,267