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Commitments and Contingent Liabilities | 12 Months Ended
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Feb. 27, 2021
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Bond commitments In the ordinary course of business, predominantly in the 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 February 27, 2021, $1.1 billion of these types of bonds were outstanding, of which, $532.4 million is on our backlog. These bonds do not have stated expiration dates, as we are released from the bonds upon completion of the contract. We have never been required to make payments under surety or performance bonds with respect to our existing businesses. Warranty and project-related contingencies We reserve estimated exposures on known claims, as well as on a portion of anticipated claims, for product warranty and rework costs based on historical product liability claims as a ratio of sales. Claim costs are deducted from the accrual when paid. Factors that could have an impact on the warranty accrual in any given period include the following: changes in manufacturing quality, changes in product mix and any significant changes in sales volume. A warranty rollforward follows:
(In thousands) |  | 2021 |  | 2020
Balance at beginning of period |  | $ | 15,629 |  |  | $ | 16,737 |
Additional accruals |  | 5,758 |  |  | 8,224 |
Claims paid |  | (6,388) |  |  | (9,332) |
Balance at end of period |  | $ | 14,999 |  |  | $ | 15,629 |
Additionally, we are subject to project management and installation-related contingencies as a result of our fixed-price material supply and installation service contracts, primarily in our Architectural Services segment and certain of our Architectural Framing Systems businesses. 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 $4.6 million and $49.0 million as of February 27, 2021 and February 29, 2020, respectively. In the second quarter of fiscal 2021, 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. During fiscal 2020, we received $15.0 million of insurance proceeds related to this project matter, which was included within cost of sales on our consolidated results of operations. Letters of credit At February 27, 2021, we had $18.7 million of ongoing letters of credit, all of which have been issued under our revolving credit facility, as discussed in Note 7. 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. Purchase obligations Purchase obligations, primarily for raw material commitments and capital expenditures totaled $253.5 million as of February 27, 2021. Environmental liability In fiscal 2008, we acquired one manufacturing facility which has certain historical environmental conditions. Remediation of these conditions is ongoing without significant disruption to our operations. The estimated remaining liability for these remediation activities was $0.5 million and $0.7 million at February 27, 2021 and February 29, 2020, respectively. New Markets Tax Credit (NMTC) transactions As of year-end fiscal 2021, 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 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 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 of fiscal 2021, we settled one arrangement at the end of the seven year term 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 outstanding NMTC transactions (in millions):
|  | Inception date |  | Termination date |  | Proceeds received |  | Deferred costs |  | Net benefit
|  | June 2016 |  | June 2023 |  | $ | 6.0 |  |  | $ | 1.2 |  |  | $ | 4.8 |
|  | August 2018 |  | August 2025 |  | 6.6 |  |  | 1.3 |  |  | 5.3 |
|  | September 2018 |  | September 2025 |  | 3.2 |  |  | 1.0 |  |  | 2.2 |
|  | Total |  |  |  | $ | 15.8 |  |  | $ | 3.5 |  |  | $ | 12.3 |
Litigation From time to time, the Company is a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply and services industry, the Company 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. The Company is also subject to litigation arising out of areas such as employment practices, workers compensation and general liability matters. Although it is very difficult to accurately predict the outcome of any such proceedings, facts currently available indicate that no matters will result in losses that would have a material adverse effect on the results of operations, cash flows or financial condition of the Company.

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