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Apogee Enterprises Inc. Reports Operating Results (10-K)

April 28, 2010 | About:
10qk

10qk

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Apogee Enterprises Inc. (APOG) filed Annual Report for the period ended 2010-02-27.

Apogee Enterprises Inc. has a market cap of $379 million; its shares were traded at around $13.55 with a P/E ratio of 12 and P/S ratio of 0.5. The dividend yield of Apogee Enterprises Inc. stocks is 2.4%. Apogee Enterprises Inc. had an annual average earning growth of 11.4% over the past 10 years.APOG is in the portfolios of Diamond Hill Capital of Diamond Hill Capital Management Inc, Chuck Royce of Royce& Associates, Jim Simons of Renaissance Technologies LLC.

Highlight of Business Operations:

Geographic location We supply architectural glass fabrication products primarily to the U.S. market, with some international distribution of our high-performance architectural glass. We estimate the U.S. market for architectural glass fabrication in commercial buildings is approximately $1.5 billion in annual sales. Our aluminum framing systems, including custom and standard windows, storefront and entrances, are marketed in the United States, where we estimate the market size is approximately $2.0 billion in annual sales. We estimate the U.S. market for installation services is approximately $7.5 billion in annual sales. Within the installation services market, Apogee is one of only a few companies to have a national presence, with offices in 10 locations serving multiple U.S. markets. We estimate that these areas represent approximately 20 percent of the total installation market. Installation of building glass in new commercial and institutional construction projects is the primary focus of our business; we also offer glass services and retrofitting or renovating the outside skin of older commercial and institutional buildings.

At February 27, 2010, the Companys total backlog of orders considered to be firm was $228.5 million, compared with $317.4 million at February 28, 2009. Of these amounts, approximately $227.5 million and $316.2 million of the orders were in the Architectural segment at February 27, 2010 and February 28, 2009, respectively. We expect to produce and ship $183.2 million, or 81 percent, of the Companys February 27, 2010 backlog in fiscal 2011 compared to $237.7 million, or 75 percent, of the February 28, 2009 backlog that was expected to be produced and shipped in fiscal 2010.

The amount spent on research and development activities over the past three fiscal years was $6.8 million, $9.3 million and $11.1 million in fiscal 2010, 2009 and 2008, respectively. Of this amount, $3.2 million, $6.3 million and $9.9 million, respectively, was focused primarily upon design of custom window and curtainwall systems in accordance with customer specifications and is included in cost of sales in the accompanying consolidated financial statements.

We use hazardous materials in our manufacturing operations, and have air and water emissions that require controls. As a result, we are subject to stringent federal, state and local regulations governing the storage, use and disposal of wastes. We contract with outside vendors to collect and dispose of waste at our production facilities in compliance with applicable environmental laws. In addition, we have procedures in place that we believe enable us to properly manage the regulated materials used in our manufacturing processes and wastes created by the production processes, and we have implemented a program to monitor our compliance with environmental laws and regulations. Although we believe we are currently in material compliance with such laws and regulations, current or future laws and regulations could require us to make substantial expenditures for compliance with chemical exposure, waste treatment or disposal regulations. During fiscal 2010, 2009 and 2008, we spent approximately $0.3 million, $0.1 million and $0.2 million, respectively, at facilities to reduce wastewater solids and further reduce hazardous air emissions. We expect to incur costs to continue to comply with laws and regulations in the future for our ongoing manufacturing operations but do not expect these to be material to our financial statements.

On December 21, 2007, we purchased 100 percent of the stock of Tubelite, Inc. for $45.7 million, including transaction costs of $1.0 million and net of cash acquired of $0.9 million. Tubelite fabricates aluminum storefront, entrance and curtainwall products for the U.S. commercial construction industry. The purchase is part of our strategy to grow our presence in commercial architectural markets and is reported within our Architectural segment for the period subsequent to the acquisition date. Item 8, Note 6 of the Notes to Consolidated Financial Statements contains further information regarding this acquisition.

During the years ended February 27, 2010, February 28, 2009 and March 1, 2008, the Companys export sales, principally from the sale of architectural glass, amounted to approximately $68.3 million, $73.2 million and $71.4 million or 10 percent of net sales in fiscal 2010 a

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