UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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FORM 10-K

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Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

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.

Certain information required in Part III hereof is incorporated by reference to the Proxy Statement for the registrant's 20132015 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this Form 10-K.

Apogee Enterprises, Inc. was incorporated under the laws of the State of Minnesota in 1949. The Company believes it is a world leader in certain technologies involving the design and development of value-added glass solutions for enclosing commercial buildings and framing art. Unless the context otherwise requires, the terms "Company," "Apogee," "we," "us" and "our" as used herein refer to Apogee Enterprises, Inc. and its subsidiaries.

The Company is comprised of four reporting segments. The Company transitioned to four segments in fiscal 2013, which reflects the separation of the Architectural Products and Services segment into the Architectural Glass, Architectural Framing Systems and Architectural Services segments, all of which serve the non-residential construction market. The Large-Scale Optical (LSO) segment remains unchanged. All information in this Annual Report on Form 10-K has been recast to conform to this new segment reporting structure.segments:

Financial information about the Company's segments and geographic regions can be found in Item 8, Note 1516 to the Consolidated Financial Statements of the Company contained elsewhere in this report. Additionally, select historical financial

On November 5, 2013, the Company acquired all of the shares of Alumicor Limited (Alumicor). Alumicor's results of operations are included in our Architectural Framing Systems segment. For further information, about the Company's segments can be found in Item 6.see "Acquisition of Alumicor" below.

Apogee provides distinctive value-added glass solutions for enclosing commercial buildings and framing art. We operate in four segments as described in the following paragraphs.

All of these segments participate in various phases of the value chain to design, engineer, manufacture and install customized aluminum and glass window, curtainwall, and storefront and entrance systems for commercial buildings in the non-residential and high-end multi-family construction markets. Through complex processes, we add ultra-thin coatings to uncoated architectural glass to create a variety of aesthetic characteristics and different levels of solar energy management, especially important with the industry trend of “green”increasingly energy-efficient buildings. We also laminate layers of glass and vinyl to create glass that helps protect against hurricanes and bomb blasts. Glass can also be tempered to provide additional strength. In addition, we have the ability to design and build windows, curtainwall, storefront and entrances using our customized aluminum and glass, or glass supplied by others. We also provide finishing services for the metal and plastic components used to frame architectural glass windows and walls and other products. Our installation services allow our customers to meet the timing and cost requirements of their jobs by providing efficiently designed quality window and wall systems and effectively managing the installation of the façade on their building projects.

Our product choices allow architects to create distinctive looks for office towers, hotels, education facilities and dormitories, health care facilities, government buildings, retail centers and multi-family residential buildings, while meeting functional requirements such as energy efficiency, impact resistance or sound control.

The following table describes the products provided by these segments.

All of the businesses within the Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments manufacture their products by fabricating glass or metals in a job-shop environment.to order. Products are shipped to the job site or other location where further assembly or installation may be required by the respective segment's customers.

The LSO segment primarily provides coated glass and acrylic for use in custom picture framing and fine art applications. The variables in the glass and acrylic used for picture framing products are the size and coatings to give the glassproduct UV protection, anti-reflective properties and/or security features. The following table describes the products provided by the LSO segment.

The market forOur architectural products and services isare used in a subset of the construction industry andthat is differentiated by building type, level of customization required, customers, geographic location and project size. Published market data areis not readily available for the marketspecific segments that we serve; however, we estimate market sizedemand by analyzing data for the overall U.S. and Canadian construction industry data.industry.

We estimate the U.S. marketdemand for installation services is approximately $7.5$10.5 billion in annual sales. Within the installation services market,industry, Apogee is one of only a few companies to have a national presence, with 11 offices in 10 locationsand satellite offices serving multiple U.S. markets.geographies. We estimate that these areas representwe are able to service approximately 3560 percent of the total installation market but we have thedemand from our existing locations and our ability to travel to other marketsgeographies where we do not have a local presence. Although installation of building glass in new commercial and institutional construction projects is the primary focus of our business, we also offer installation retrofits or renovations for the outside skin of older commercial and institutional buildings.

The Company's Tru Vue brand is the largest domestically manufactured brand for value-added glass and acrylic for custom picture framing. Through the Company's leadership, the custom picture framing market.industry continues to convert from clear glass to value-added glass and acrylic. Under this brand, products are distributed primarily in North America through independent distributors, which supplyregional and national and regionalretail chains, andas well as through local picture framing shops as well as through national retailers.via an independent distribution network. The Company has also been successful in supplying products directly to museums and public and private galleries. We also have limited distribution in Europe and selected other international marketsgeographies through independent distributors; we view this as a focus area for future growth of this segment.

We offer product and service warranties whichthat we believe are competitive for the markets in which thoseour products and services are sold. The nature and extent of these warranties depend upon the product or service, the market and, in some cases, the customer being served. Our standard warranties are generally from two to 10 years for our architectural glass, curtainwall and window system products, while we generally offer warranties of two years or less on our other products and installation services. In the event of a claim against a product for which we have received a warranty from the supplier, we pass the claim back to our supplier. Although we carry liability insurance with very high deductibles for product failures, we reserve for warranty exposures, as our insurance does not cover warranty claims. There can be no assurance that our insurance will be sufficient to cover all product failure claims in the future; that the costs of this insurance and the related deductibles will not increase materially; or that liability insurance for product failures will be available on terms acceptable to the Company in the future.

Materials used within the Architectural Glass and Architectural Framing Systems segments include raw glass, aluminum billet and extrusions, vinyl, metal targets, insulated glass spacer frames, silicone, plastic extrusions, desiccant, chemicals, paints, lumber and urethane. Within the Architectural Services segment, materials used include fabricated glass, aluminum extrusions, silicone, plastic extrusions and fabricated metal panels. The LSO segment uses glass, hard-coated acrylic, acrylic substrates, metal targets, coating materials and chemicals.

Glass manufacturers have applied surcharges to the cost of glass over the past several years to help offset increases in energy and fuel costs, which we tryare generally able to pass on to our customers through surcharges. We have also seen recent volatility in the cost and supply of aluminum that is used in our window, storefront, entrance and curtainwall systems. Where applicable,possible, we have passed the changes in cost of materials on to our customers in the form of pricing adjustments and/or surcharges.

A majority of our raw materials are readily available from a variety of domestic and international sources, and no supplier delays or shortages are anticipated.sources. While certain glass products may only be available at certain times of the year, all standard glass types and colors are available throughout the year

in reasonable quantities from multiple suppliers. Although we expect glass supply to become tighter in the U.S. due to the recent economic upturn across many industries that consume glass, including automotive manufacturing, residential construction and non-residential construction, no supplier delays or shortages are anticipated.

The Company has several patents pertaining to our glass coating methods and products, including our UV coating and etch processes for anti-reflective glass for the picture framing industry. Despite being a point of differentiation from its competitors, no single patent is considered to be material to the Company.

The domesticNorth American businesses in our Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments experience a slight seasonal effect following the domestic commercial construction industry, with higher demand May through December.industry. Our Brazilian Architectural Glass segment business does not have a significant seasonal trend. A bigger impact to net sales is the fact that the construction industry is highly cyclical in nature and can be influenced differently by the effects of the localized economylocal economies in geographic markets.geographies where our products are marketed.

Within the LSO segment, picture framing glass and acrylic sales tend to increase in the September to December timeframe. However, the timing of customer promotional activities may offset some of this seasonal impact.

Trade accounts receivable is the largest component of working capital for the Company, including receivables relating to contractual retention amounts that can be outstanding throughout the project duration within the Architectural Services segment. Payment terms offered to our customers are similar to those offered by others in the industry. For the Architectural Glass and Architectural Framing Systems segments, inventory requirements are not significant since these businesses make-to-order rather than build-to-stock for the majority of their products. As a result, inventory levels follow customer demand for the products produced.

Since the LSO segment builds-to-stock for the majority of its products, it requires greater inventory levels to meet the demands of its customers.

We do not have any one customer that exceeds 10 percent of the Company's consolidated net sales. However, there are important customers within each of our segments; the loss of one or more customers could have an adverse effect on the Company.

The markets served by the Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments are very competitive, are price and lead-time sensitive, and are primarily affected by changes in the North American commercial construction industry, as well as changes in general economic conditions. Additionally, due to the Architectural Glass segment's operations in Brazil, it is impacted by the commercial construction industry and general economic conditions found in Brazil and the immediatesurrounding region.

Interest rates, credit availability for commercial construction projects, material costs, employment rates, office vacancy rates, building construction starts and office absorption rates are key indicators to the commercial construction market conditions. As each of these economic indicators moves favorably, our businesses typically experience sales growth, and vice-versa. In recent history, economic conditions have had a significant adverse impact on the U.S. commercial construction industry as a whole, resulting in increased competition.

These segments primarily serve the custom portion of the commercial construction market,industry, which is generally highly fragmented. The primary competitive factors are price, product quality, reliable service, on-time delivery, warranty and the ability to provide technical engineering and design services. There is potential to offset some competitive pressures in the market for newly constructed buildings through increased renovation of the exteriors of commercial and institutional buildings using some of our segments' products and services due to their premium energy-efficiency properties.

We believe that our domestic competition does not provide the same level of custom coatings to the marketindustry as our Architectural Glass segment, but regional glass fabricators can provide somewhat similar products with similar attributes. Regional glass fabricators incorporate high performance, post-temperable glass products, procured from primary glass suppliers, into their insulated glass products. The availability of these products has enabled regional glass fabricators in some cases to bid on more complex projects than in the past. Since we typically target the more complex projects, we have encountered increased competition from these regional glass fabricators. On a limited basis,In certain regions of the U.S., we encounter competition from international competitors on complex projects.

Our businesses in the Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments maintain significant relationships with architects, who influence the selection of products and services on a project. Additionally, throughout a construction project, the Architectural Services segment must maintain significant relationships with general contractors, who are the segment's direct customers. This is due to the high degree of dependence on general contractors and architects for project initiation and development of specifications. Additionally, the timing of a project depends on the schedule established by the general contractors and their ability to maintain this schedule. If a general contractor fails to keep a construction project on its established timeline, the timing and profitability of the project could be negatively impacted.

Product attributes, pricing, quality, marketing, and marketing services and support are the primary competitive factors in the markets within the LSO segment. The Company's competitive strengths include our excellent relationships with our customers and the product performance affordedprovided by our proprietary and/or patented processes.unique value-added products. While there is significant price sensitivity in regard to sales of clear glass to picture framers, there is somewhat less price sensitivity on certain of our value-added glass products since

Executive officers are elected annually by the Board of Directors and serve for a one-year period. There are no family relationships between any of the executive officers or directors of the Company.

Our business faces many risks. Any of the risks discussed below, or elsewhere in the Form 10-K or our other filings with the Securities and Exchange Commission, could have a material adverse impact on our business, financial condition or results of operations.

Our Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments are dependent on global economic conditions and the cyclical nature of the North American commercial construction industry. There has traditionally been a lag between the general economy in the United States and the North AmericanThe commercial construction industry. Thereindustry is an additional lagimpacted negatively by volatility in global financial markets, including, among other things, volatility in securities prices, availability of approximately eight months to when we delivercredit, unemployment rates, consumer confidence, interest rates and commodity prices. To the products or services and recognize revenue. These industry and economic conditions may adverselyextent changes in these factors negatively impact the markets we serve or the timing of the lag, resulting in lower net salesoverall commercial construction industry, our revenue and earnings.profits could be significantly reduced.

Our Architectural Glass segment's operation located in Brazil is subject to the economic, political and tax conditions prevalent in the region. The economic conditions in this region are subject to different growth expectations, market weaknesses and business practices than seen in the U.S. market. We cannot predict how changing marketeconomic conditions in this region will impact our financial results.

Our LSO segment depends on the strength of the retail custom picture framing market.industry. This marketindustry is highly dependent on consumer confidence and the conditions of the U.S. economy. We have been able to partially offset the impact of economic slowdowns in the recent past with an increase in the mix of higher value-added picture framing products. If consumer confidence further declines, whether as a result of an economic slowdown, uncertainty regarding the future or other factors, our use of these strategies may not be as successful in the future, resulting in a potential decrease in net sales and operating income.

All of our operating segments operate in competitive marketsindustries where the actions of our existing competitors or new market entrantscompetitors could result in a loss of customers or share of that customer's purchases. Additionally, changescustomers' demand. Changes in our competitor'scompetitors' products, prices or services could negatively impact our market share of demand, net sales or margins.

Our Architectural Glass and Architectural Framing Systems segments have seen an increase in imports of competitive products from lower-cost, international suppliers that, if this were to continue, could negatively impact our net sales and margins. Our LSO segment competes with several small international specialty glass manufacturers that have traditionally not penetrated the domestic markets.U.S. custom picture framing industry. Although these LSO competitors tend to be low price providers and have not been able to meet the specification level of our products, upgrades to our competitor's products could drive prices down, which could have a negative impact on our share of demand, net sales or margins.

Near-term performance depends, to a significant degree, on our ability to increase and appropriately utilize available production capacity. The failure to successfully utilize or managemaintain existing capacity, the impact of closing a facilityinvest in the future, or re-opening a currently closed facility,additional physical capacity and recruit necessary manufacturing labor could adversely affect our operating results. Additionally, advances in product or process technologies on the part of existing or prospective competitors could have a significant impact on our ability to utilize our capacity and, therefore, have an adverse impact on our net sales and operating results.

We manufacture and/or install a significant portion of our products based on the specific requirements of each customer. We believe that future orders of our products or services will depend on our ability to maintain the performance, reliability and quality standards required by our customers. If our products or services have performance, reliability or quality problems, or products are installed withusing incompatible glazing materials or installed improperly, we may experience additional warranty and service expense; reduced or canceled orders; diminished pricing power; higher manufacturing or installation costs; or delays in the collection of accounts receivable. Additionally, performance, reliability or quality claims from our customers, with or without merit, could result in costly and time-consuming litigation that could require significant time and attention of management and involve significant monetary damages that could negatively impact our financial results.

The Architectural Services segment is typically awarded fixed-price contracts for installation services. Often, bids are required before all aspects of a construction project are known. An underestimate in the amount of labor required and/or cost of materials for a project; a change in the timing of the delivery of product; difficulties or errors in execution; use of incompatible glazing materials; or significant project delays, caused by us or other trades, could result in failure to achieve the expected results. Any such issues could result in losses on individual contracts that could impact our operating results.

We have recently made commitments to expand certain manufacturing facilities and make investments in new manufacturing capabilities. Contributing to the decision to make such investments was the availability of federal, state and local tax incentives including tax credits, tax increment financing and grants. If the Company is not able to realize the benefits of planned tax incentive packages, future operating results could be negatively impacted.

Any change in customer preference, architectural trends or building codes that reduces window-to-wall ratios in non-residential construction would negatively impact net sales and operating income in our Architectural Glass, Architectural Framing SystemsServices and Architectural ServicesFraming Systems segments. The LSO segment depends on U.S. consumers framing art and other decorative items. Any shift in customer preference away from framed art to other forms of decorative media could negatively impact future net sales and operating income.income in the LSO segment.

The LSO segment is highly dependent on a relatively small number of customers for its sales. We continue to expect to derivecontinue deriving a significant portion of our net sales from a small number of customers. Accordingly, loss of a significant customer or a significant reduction in pricing, or a shift to a less favorable mix of value-added picture framing glass or acrylic products for one of those customers could materially reduce LSO net sales and operating results in any one year.

Our net sales and operating results may fall belowdiffer from Company-provided guidance and the expectations of securities analysts or investors in future periods. Our annual net sales and operating results may vary depending on a number of factors, including, but not limited to, fluctuating customer demand, delay or timing of shipments, construction delays or cancellations due to lack of financing for construction projects, changes in product and project, mix orand market acceptance of new products. Manufacturing or operational difficulties that may arise due to quality control, capacity utilization of our production equipment or staffing requirementsunplanned operational downtime may also adversely impact our annual net sales and operating results. In addition, competition, including new entrants into our markets, the introduction of new products by competitors, adoption of competitive technologies by our customers, andor competitive pressures on prices of our products and services, could adversely impact our annual net sales and operating results. Finally, our annual net sales and operating results may vary depending on raw material pricing and the potential for disruption of supply, andor changes in legislation that could have an adverse impact on our labor or other costs. Our failure to meet net sales and operating result expectations would likely adversely affect the market price of our common stock.

 

We obtain third-party insurance for potential losses from general liability, employment practices, workers' compensation and automobile liability risk. However, a high amount of risk is retained on a self-insured basis through a wholly-owned insurance subsidiary. Therefore, a material product liability event, such as a material rework event, could have a material adverse effect on our operating results.

We use hazardous chemicals in producing our products. One of our facilities has certain historical environmental conditions whichthat we believe require remediation. Our inability to remediate the historical environmental conditions at the facility at or below the amounts reserved, therefore, could have a material adverse impact on future financial results. Additionally, we are subject to a variety of local, state and federal governmental regulations relating to storage, discharge, handling, emission, generation and disposal of toxic or other hazardous substances used to manufacture our products, compliance with which is expensive. Our failure to comply with current or future environmental regulations could result in the imposition of substantial fines, on us, suspension of production, alteration of our manufacturing processes or increased costs. Our financial results could also be adversely impacted by rising energy and material costs associated with environmental regulations.

Our success depends on the skills, experience and efforts of our executive management and other key personnel. If, for any reason, one or more senior executives or key personnel were not to remain active in our Company, our financial results could be adversely affected.

In addition to the locations listed above, the Architectural Services segment business operates 1011 leased locations, serving multiple markets.

One of the Viracon facilities, a portion of the Wausau Window and Wall Systems facility, a portion of the Linetec facility and the Tru Vue facilities were constructed with the use of proceeds from industrial revenue bonds issued by their applicable cities. These properties are considered owned since, at the end of the bond term, title reverts to the Company.

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 has also been 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.

Not applicable

Apogee common stock is traded on the NASDAQ Stock Market LLC (Nasdaq) under the ticker symbol APOG.

The following chart shows the quarterly range and year-end closing prices for one share of the Company's common stock over the past five fiscal years.

The Board of Directors quarterly evaluates declaring dividends based on operating results, available funds and the Company's financial condition. Cash dividends have been paid each quarter since 1974. The chart below shows quarterly and annual cumulative cash dividends per share for the past five fiscal years.

The line graph below compares the cumulative total shareholder return on our common stock for the last five fiscal years with cumulative total return on the Standard & Poor's Small Cap 600 Growth Index and the Russell 2000 Index. This graph assumes a $100 investment in each of Apogee, the Standard & Poor's Small Cap 600 Growth Index and the Russell 2000 Index at the close of trading on March 1, 2008,February 27, 2010, and also assumes the reinvestment of all dividends.

ITEM 6. SELECTED FINANCIAL DATA

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 in this Form 10-K. From time to time, we also may 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 in this Form 10-K.

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.

We are a leader in certain technologies involving the designthat provide distinctive solutions for enclosing commercial buildings and development of value-added glass products, services and systems. The Company transitioned to four segments in fiscal 2013, which reflects the separation of the Architectural Products and Services

All of theseThese three segments serve the commercial construction market, which is highly cyclical. They participate in various phases of the value chain to design, engineer, manufacture and install customized aluminum and glass window, curtainwall, and storefront and entrance systems for commercial buildings - each with nationally recognized brands and leading positions in their target market segments.

The window, curtainwall and storefront systems manufactured by our Architectural Framing Systems segment, as well as the glass products fabricated by our Architectural Glass segment, are sold to installers who enclose commercial buildings, such as offices, hospitals, educational facilities, government facilities, high-end multi-family buildings and retail centers. We believe buildinggeneral contractors and architects value our ability to reliably deliver quality, customized window and curtainwall solutions. Their customers - building owners and developers - value the distinctive look, energy efficiency, and hurricane and blast protection features of our window and curtainwall systems. These benefitsattributes can contribute to higher lease rates, lower operating costs due to the energy efficiency of our value-added glass and aluminum systems, a more comfortable environment for building occupants, and protection for buildings and occupants from hurricanes and blasts.

Our Architectural Services segment provides services to fabricatefabricates and install glassinstalls window and curtainwall systems on newly constructed commercial buildings, as well as providing large scalelarge-scale retrofit services for the window and curtainwall systems on existing commercial buildings. We collaborate closely with our customers, the general contractors, to complete installation projects on time and on budget in order to minimize costly job-site labor overruns.

We look at several market indicators, such as office space vacancy rates, architectural billing statistics, employment and other economicmacroeconomic indicators, to gain insight into the commercial construction market. One of our primary indicators is U.S. non-residential construction market activity as documented by Dodge Data & Analytics (Dodge) (formerly McGraw-Hill Construction (McGraw-Hill)Construction), a leading independent provider of construction industry analysis, forecasts and trends. We utilize the information for the building types that we typically serve (office towers, hotels, retail centers, education facilities and dormitories, health care facilities, government buildings and high-end multi-family buildings) and adjust this information (which is based on construction starts) to align with our fiscal year and the lag that is required to account for when our products and services typically are initiated in a construction project - approximately eight

Our overall strategy in thesethe Architectural Glass and Architectural Framing Systems segments is to growdeliver organic growth faster than our commercial construction markets. While our Architectural Services segment will continue to deliver organic growth, the strategy of this segment will be focused on project selection and improved project margins. We will grow through geographic expansion and entry into adjacent markets through new products, new geographies and new markets,product offerings, while remaining focused on distinctive solutions for enclosing commercial buildings. We draw upon our leading brands, energy-efficient products and reputation for high quality and service in pursuit of our strategies. Each of our operating segments has the ability to grow through geographic or product line expansion, and we regularly evaluate acquisition opportunities in complementary markets. Finally, weWe also aspire to lead our markets in the development of practical, energy-efficient products for “green” buildings for new construction and renovation. We have introduced products and services designed to meet the growing demand for greenenergy-efficient building materials. These products have included new energy-efficient glass coatings, thermally enhanced aluminum framing systems, and systems with a high percentage of recycled content.

During fiscal 2011, we began to restore pricingWhile each of our Architectural Glass segment's productsoperating segments has the ability to better reflectgrow through geographic expansion and product line extension, we regularly evaluate business development opportunities in complementary markets. This strategy can take the value our products deliver to the marketplace, and have seen the benefitsform of those price increases during fiscal 2013. acquisition or strategic alliances.

In addition,recent years, we have been and continue to take measures to keepincreased our cost structure in line with revenue, including continuing to focus on productivity while maintaining and upgrading our capacity to gain market share. We acquired Glassec, a leading architectural glass fabricator in Brazil, in November 2010, establishing an architectural glass footprint in a developing and fast-growing market where we can provide technical and operational excellence. We have been successful in winning and profitably executing installation and storefront work in new domestic metropolitan markets. We are focusing on renovation ofthe window and curtainwall systems where allretrofit and renovation market. We have seen increased interest from the non-residential and high-end multi-family building sectors are increasing their interest in upgrading the façades and improving the energy efficiency of their buildings. We consider this to be a significant opportunity for Apogee in the coming years.

During fiscal 2013,Additionally, we made capital investments for growth,are constantly working to improve the efficiency and productivity of our manufacturing and for new products and capabilities.installation operations. During fiscal 2014, we will makecompleted the initial roll-out of lean manufacturing principles to all of our operating units. In fiscal 2015, we continued to see increasing maturity of many of the lean manufacturing disciplines. We expect this initiative to continue to deliver gross margin expansion into the foreseeable future.

Lastly, we consistently evaluate capital investments for growth,to improve productivity and product development capabilities, including a new state-of-the-art coater in our Architectural Glass segment.as well as to provide appropriate manufacturing capacity to support growth.

Our basic strategy in this segment is to convert the custom picture framing market from clear uncoated glass and acrylic products to value-added products that protect art from UV damage while minimizing reflection from the glass, so that viewers see the art rather than the glass. We estimate that over 60 percent of the demand for U.S. custom picture framing marketglass has converted to value-added glass. Although we are finding it more difficult to convertfurther increase the remaininguse of value-added glass in the U.S. market, we continue to see conversion in the U.S. market.to value-added glass. We offer a variety of products with varying levels of reflection control and promote the benefits to consumers with point-of-purchase displays and other promotional materials.

Over the past four years, we have enteredWe also participate in the global fine art market,sector, which includes demand from museums and private art collections. This marketsector appreciates the conservation and anti-reflective properties of our products, primarily our acrylic products. Acrylic is a preferred material in the fine art marketsector because the product is light weight, which allows forits use with art that is much larger and for which weight is an important consideration. We have developed several acrylic productswill continue to supportexpand our presence in this market.sector through international expansion and product line extensions.

InAdditionally, this is the third fiscal 2012,year where we began sellinghave been executing on our strategy of increasing custom picture framing glass and acrylicsales in selected geographies outside the U.S. We now have distributors in over 30 countries, mainly in Europe, where, historically,that are serviced from our warehouse in the Netherlands and directly from the U.S. As we have had very little presence. We have had success in entering new international markets during fiscal 2013. We believeleverage our products and distribution networksnetwork, we will enable us to grow at a faster pace internationally than in the United States.U.S.

Fiscal 20132015 Compared to Fiscal 20122014

Sales increased 5.7to $933.9 million, up 21.1 percent during fiscal 2013 largely due to share gains through domestic geographic expansion and increased penetration in target markets in the Architectural Services and Architectural Framing Systems segments, representing approximately 4 percentage points of the increase. Improved pricing in the Architectural Glass segment also had a favorable impact on fiscal 2013 revenues, representing another approximately 4 percentage points of the increase over fiscal 2012. Fiscal 2013 included 52 weeks compared to2014 sales of $771.4 million. Organic growth was 16.9 percent, or $127.5 million, when excluding the prior-year 53-week period,sales generated by our Canadian storefront and entrance business, which had a negative impact of approximately 2 percentage points on current-year sales.

Sales grew 10.2 percent in fiscal 2014 to $771.4 million compared to $700.2 million in fiscal 2013. The inclusion of Alumicor sales since the date of acquisition accounted for 2 percentage points of the increase in fiscal 2012. In addition, fiscal 2012 included 53 weeks compared to the prior-year 52-week period, which had a 2 percent favorable impact on current-year sales. These items were partially offset by volume declinesthis increase. Improved product mix and pricing in the Architectural Glass segment during fiscal 2012 ofdrove approximately 4 percentage points.points of the increase. Volume growth in the Architectural Services segment favorably impacted fiscal 2014 by about 2 percentage points and the remainder of the increase resulted from improved volume in our Architectural Framing segment's U.S. storefront and finishing businesses.

The relationship between various components of operations, as a percentage of net sales, is illustrated below for the past three fiscal years.

Fiscal 20132015 Compared to Fiscal 20122014

Consolidated grossGross profit was up 3.1improved 0.9 percentage points to 22.3 percent of sales in fiscal 2015 from 21.4 percent in fiscal 2014. The increase in gross margins was due to the impact of operating leverage on increased volume and improved pricing in the Architectural Glass segment, productivity improvements across all segments, and the margin impact from the revenue growthas well as operating leverage on increased volume in the Architectural Services and Architectural Framing Systems segments. In addition, we benefited from completing higher margin work and positive project execution in the Architectural Services segment.

Architectural Glass

Operating income improved to $16.4 million in fiscal 2015, compared to $3.9 million in fiscal 2014, an improvement of $12.6 million. Operating margins improved to 4.7 percent in fiscal 2015 compared to 1.3 percent in fiscal 2014. As the commercial construction activity has increased, the Architectural Glass segment has benefited from operating leverage on volume growth and improved pricing. The segment also demonstrated positive manufacturing productivity that was partially offset by inefficiencies experienced as the business expanded its workforce to meet demand and costs incurred to restart the Utah facility.

Operating income of $3.9 million in fiscal 2014 was an $8.3 million improvement over the fiscal 2013 loss of $4.4 million. Operating margins improved pricing.to 1.3 percent in fiscal 2014 compared to negative 1.6 percent in fiscal 2013. The volume declines wereimprovement in operating results was largely due to a planned decline in export sales as we focus on more profitable domestic projects, as well as the impact of exchange rates on our Brazilian business.

ForFiscal 2014 operating income of $14.9 million was up slightly over the $14.6 million reported in fiscal 2013, while operating margins decreased to 6.9 percent in fiscal 2014 from 7.6 percent in fiscal 2013. The favorable impact of increased volumes in the segment incurredU.S. storefront and finishing businesses was partially offset by lower sales in the window business related to the anticipated gap in the schedule for more complex projects, resulting in lower capacity utilization. Additionally, the Canadian storefront business that was acquired late in fiscal 2014 delivered an operating loss of $1.0 million, with an operating margin of negative 0.5 percent, compared to an operating loss of $2.9 million and a negative operating margin of 1.9 percent in fiscal 2012. The fiscal 2013 improvement was primarily due to the leverage on the net sales growth discussed above and positive project execution. These items were partially offset by costs incurred in the current fiscal year to start the domestic geographic expansion. In fiscal 2013 the segment was still working off projects that were bid at lower margins, but began to see higher-margin projects positively impact its results.acquisition costs.

Large-Scale Optical Technologies (LSO)

In fiscal 2014, we made capital investments of $41.9 million as we made investments for productivity and product development capabilities, including a new state-of-the-art coater in our Architectural Glass segment. We reduced our restricted investments by $23.9 million, as we released $10.0 million of cash held in escrow for the recovery zone facility bonds that was used to redeem the bonds and also released $12.0 million of cash collateral to unrestricted cash related to the letter of credit supporting these bonds. We decreased our investments in marketable securities by $26.5 million in fiscal 2014 to fund the acquisition of Alumicor.

In fiscal 2013, we made capital investments of $34.7 million for growth and productivity improvements, as well as equipment to support new product introductions, and maintenance capital. The net position of our investments for fiscal 2013 resulted in $17.6 million in net purchases as a result of generating excess cash through operating activities noted above. Net purchases of $4.5 million for restricted investments during the periodfiscal 2013 were the result of $10.0 million of industrial development bonds (reflected in financing activities) that were made available for current and future investment in our storefront and entrance business in Michigan, the proceeds of which are reported as restricted investments until disbursed. We increased our investments in marketable securities by $17.6 million in fiscal 2013 as a result of generating excess cash through operating activities noted above.

We expect fiscal 20142016 capital expenditures to be $40range from $45 to $45$50 million for investments for growth,to increase capabilities, capacity and productivity, and product development capabilities, including a new state-of-the-art coater in our Architectural Glass segment.as well as maintenance capital.

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, and/or further invest in, fully divest and/or sell parts of our current businesses.