BMC INDUSTRIES INC/MN/
DEF 14A, 1996-03-22
COATING, ENGRAVING & ALLIED SERVICES
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C.  20549
                         ______________________________

                            SCHEDULE 14A INFORMATION
                    PROXY STATEMENT PURSUANT TO SECTION 14(A)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                             (AMENDMENT NO. ________)


Filed by the registrant                           [X]
Filed by party other than the registrant          [ ]

Check the appropriate box:

[ ]      Preliminary Proxy Statement
[ ]      Confidential, for use of the Commission only (as permitted by
         Rule 14a-6 (e)(2))
[X]      Definitive Proxy Statement
[ ]      Definitive Additional Materials
[ ]      Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

                              ____________________

                              BMC INDUSTRIES, INC.
                (Name of Registrant as Specified In Its Charter)


   (Name of Person(s) Filing Proxy Statement, if other than the Registrant)
                                                    
                              ____________________

Payment of Filing Fee (Check the appropriate box):

[X]      $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 
         14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ]      $500 per each party to the controversy pursuant to Exchange Act Rule
         14a-6(i)(3).
[ ]      Fee computed on table below per Exchange Act Rules 14a6(i)(4) and 
         0-11.

         1     Title of each class of securities to which transaction applies:
               ............................................................
         2     Aggregate number of securities to which transaction applies: 
               ............................................................
         3     Per unit price or other underlying value of transaction computed
               pursuant to Exchange Act Rule 0-11 (Set forth the amount on
               which the filing fee is calculated and state how it was
               determined): 
               ............................................................
         4     Proposed maximum aggregate value of transaction:
               ............................................................
         5     Total fee paid:
               ............................................................

[ ]      Fee paid previously with preliminary materials.

<PAGE>

[ ]      Check box if any part of the fee is offset as provided by Exchange Act
         Rule 0-11(a)(2) and identify the filing for which the offsetting fee
         was paid previously.  Identify the previous filing by registration
         statement number, or the Form or Schedule and the date of its filing.

         1     Amount Previously Paid:  
               ............................................................
         2     Form, Schedule or Registration Statement No.:  
               ............................................................
         3     Filing Party:   
               ............................................................
         4     Date Filed:    
               ............................................................

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<PAGE>
                                      BMC
                                INDUSTRIES, INC.
                              TWO APPLETREE SQUARE
                          MINNEAPOLIS, MINNESOTA 55425
 
                            ------------------------
 
                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                           TO BE HELD APRIL 25, 1996
 
                            ------------------------
 
TO THE STOCKHOLDERS OF BMC INDUSTRIES, INC.:
 
    The  Annual Meeting of Stockholders of BMC  Industries, Inc. will be held at
the Atrium Center, 3105  East 80th Street,  Bloomington, Minnesota on  Thursday,
April 25, 1996 at 10:00 a.m. local time, for the following purposes:
 
    1.  To elect three directors for a term of two years;
 
    2.   To transact such  other business as properly  may be brought before the
       meeting or any adjournments thereof.
 
    The close of business of March 1, 1996 has been fixed as the record date for
the determination of stockholders who are entitled  to notice of and to vote  at
the meeting or any adjournments thereof.
 
                                          By Order of the Board of Directors
 
                                          Michael P. Hawks
                                          SECRETARY
 
March 22, 1996
 
YOU  ARE CORDIALLY INVITED TO ATTEND THE  ANNUAL MEETING. NO ADMISSION TICKET OR
OTHER CREDENTIALS WILL BE NECESSARY. IF YOU  DO NOT PLAN TO ATTEND THE  MEETING,
PLEASE  BE SURE YOU ARE REPRESENTED AT  THE MEETING BY MARKING, SIGNING, DATING,
AND MAILING YOUR PROXY IN THE REPLY ENVELOPE PROVIDED.
<PAGE>
                                      BMC
                                INDUSTRIES, INC.
                              TWO APPLETREE SQUARE
                          MINNEAPOLIS, MINNESOTA 55425
 
                            ------------------------
 
                                PROXY STATEMENT
                       FOR ANNUAL MEETING OF STOCKHOLDERS
 
                            ------------------------
 
                                  INTRODUCTION
 
    This  proxy statement, which is first  being mailed to stockholders on March
22, 1996,  is furnished  in connection  with the  solicitation by  the Board  of
Directors  of BMC Industries, Inc. (the "Company") of proxies to be voted at the
Annual Meeting of Stockholders to be held  at the Atrium Center, 3105 East  80th
Street, Bloomington, Minnesota on Thursday, April 25, 1996, at 10:00 a.m., local
time, for the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders,  and at  any adjournments  thereof (the  "Meeting"). The Company's
1995 Annual Report to  Stockholders has been mailed  to the stockholders but  is
not to be considered a part of the proxy soliciting materials.
 
    The accompanying proxy is enclosed for your use. You are solicited on behalf
of  the Board of Directors of the Company  (the "Board") to MARK, SIGN, DATE AND
RETURN THE  PROXY IN  THE  ACCOMPANYING SELF-ADDRESSED  ENVELOPE. The  proxy  is
revocable  at any time before it is used  at the Meeting. A proxy may be revoked
by filing a revoking instrument  or a duly executed  proxy bearing a later  date
with  the Secretary  of the Company  or by  attending the Meeting  and voting in
person. The shares represented by proxies received by the Board will be voted at
the Meeting.
 
    The cost  of soliciting  proxies will  be borne  by the  Company.  Officers,
directors  and regular  employees of the  Company may,  but without compensation
other than  their  regular  compensation,  solicit  proxies  by  mail,  personal
conversation,  telephone or otherwise. The Company may reimburse brokerage firms
and others  for expenses  incurred in  forwarding solicitation  material to  the
beneficial owners of the Company's common stock ("Common Stock").
 
                                VOTING OF SHARES
 
    Only  holders of Common Stock of record at the close of business on March 1,
1996 (the "Record Date") will  be entitled to vote at  the Meeting. On March  1,
1996,  the Company had 27,253,294 outstanding  shares of Common Stock, each such
share entitling the holder thereof to one vote on each matter to be voted on  at
the  Meeting. Holders of shares  of Common Stock are  not entitled to cumulative
voting rights.
 
    The presence at  the Meeting, in  person or by  proxy, of the  holders of  a
majority  of the  outstanding shares  of Common  Stock entitled  to vote  at the
Meeting (13,626,648 shares as of March 1, 1996) is required for a quorum for the
transaction of business.  In general, shares  of Common Stock  represented by  a
properly  signed and returned proxy  card will be counted  as shares present and
entitled to vote at  the Meeting for purposes  of determining a quorum,  without
regard  to  whether  the  card  reflects  votes  against  director  nominees  or
abstentions (or  is left  blank) or  reflects a  "broker non-vote"  on a  matter
(i.e.,  a card returned by  a broker on behalf  of its beneficial owner customer
that is not voted  on a particular matter  because voting instructions have  not
been received and the broker has no discretionary authority to vote).
 
    The  election of a nominee  for director requires the  affirmative vote of a
majority of the shares of Common Stock present and entitled to vote in person or
by proxy on that matter (and at least a majority of the minimum number of  votes
necessary  for a quorum to transact business at the Meeting). Shares represented
by  a  proxy  card  voted  as  abstaining  on  any  of  the  proposals  will  be
 
                                       1
<PAGE>
treated  as shares present and entitled to vote that were not cast in favor of a
particular matter, and thus will be counted as votes against that matter. Shares
represented by a proxy card that includes  broker non-votes on a matter will  be
treated  as shares  not entitled to  vote on that  matter, and thus  will not be
counted in determining whether that matter has been approved.
 
                                   PROPOSAL 1
                             ELECTION OF DIRECTORS
 
NOMINATION
 
    The Company's Articles provide that the Board shall consist of not less than
three nor more than 17 members, as determined from time to time by the Board  of
Directors,  divided into two  classes of as  nearly equal size  as possible. The
term of each class of directors is two years, and the term of one class  expires
each year in rotation. The Board currently consists of seven (7) directors, with
the  terms of four present members of the  Board expiring as of the Meeting. The
terms of the remaining three members of the Board will not expire this year, but
rather will expire as indicated below.
 
    During 1995, the Board  welcomed one new member  to the Board of  Directors.
The  Board elected Harry A.  Hammerly as a director  effective November 8, 1995,
with a  term  expiring  as  of  the Meeting.  Mr.  Richey  is  not  running  for
re-election to the Board. The Company wishes to extend to Mr. Richey its sincere
gratitude  for his many years  of service. As a  result of Mr. Richey's decision
not to stand for re-election at the meeting, the Board has determined that there
will be six (6)  directors of the  Company for the ensuing  year. The Board  has
nominated  Lyle  D. Altman,  Paul B.  Burke and  Harry A.  Hammerly to  serve as
directors of the Company  for terms of  two years, expiring  at the 1998  Annual
Meeting of Stockholders, or until their successors are elected and qualified.
 
    The  Board recommends a vote  FOR the election of  Messrs. Altman, Burke and
Hammerly. Election requires the affirmative vote of a majority of the shares  of
Common  Stock represented in person  or by proxy at the  Meeting (and at least a
majority of  the minimum  number of  votes necessary  for a  quorum to  transact
business at the Meeting). In the absence of other instructions, the proxies will
be  voted FOR the election  of the nominees. If the  Board should learn prior to
the Meeting that any of the nominees will be unable to serve by reason of death,
incapacity or other unexpected occurrence, the proxies that otherwise would have
been voted for that nominee will be voted for such substitute nominee as may  be
selected  by the Board.  Alternatively, the proxies,  at the Board's discretion,
may be voted  for such  fewer number  of nominees  as results  from such  death,
incapacity  or other unexpected  occurrence. The Board has  no reason to believe
that any of the nominees will be unable to serve.
 
                                       2
<PAGE>
INFORMATION ABOUT DIRECTORS AND NOMINEES
 
    The following  table  gives  certain information  concerning  the  Company's
directors, including this year's nominees.
 
<TABLE>
<CAPTION>
    NAMES OF DIRECTORS                                                                                            DIRECTOR
       AND NOMINEES                                  PRINCIPAL OCCUPATION                               AGE         SINCE
- --------------------------  ----------------------------------------------------------------------      ---      -----------
<S>                         <C>                                                                     <C>          <C>
NOMINEES FOR A TWO-YEAR TERM EXPIRING IN 1998:
Lyle D. Altman              Former  Chairman  of the  Board of  Network Systems  Corporation (data          65         1983
                             communications equipment)
 
Paul B. Burke               Chairman of the Board,  President and Chief  Executive Officer of  BMC          40         1991
                             Industries, Inc.
 
Harry A. Hammerly           Retired Executive Vice President of 3M Company                                  62         1995
 
DIRECTORS NOT STANDING FOR ELECTION THIS YEAR WHOSE TERMS EXPIRE IN 1997:
John W. Castro              President   and  Chief   Executive  Officer   of  Merrill  Corporation          47         1994
                             (financial printing)
 
Joe E. Davis                Private Investor;  former President  and  Chief Executive  Officer  of          61         1982
                             National  Health  Enterprises, Inc.;  former  Chairman of  the Board,
                             Linear Corporation
 
Dr. Richard A. Swalin       Professor Emeritus  of  Materials  Science  &  Technology  Management,          67         1993
                             University  of  Arizona;  Retired  Vice  President  of  Research  and
                             Development, Allied-Signal Corp.
</TABLE>
 
    Except as  indicated  below, there  has  been  no change  in  the  principal
occupations  or  employment during  the  past five  years  for the  directors or
nominees for election as directors.
 
    On March 7, 1995, Mr.  Altman resigned as Chairman  of the Board of  Network
Systems  Corporation ("NSC") in connection with Storage Technology Corporation's
acquisition of NSC. From September 1, 1993  to March 7, 1995, Mr. Altman  served
as  interim  Chief Executive  Officer of  NSC. Mr.  Altman previously  served as
President and Chief  Executive Officer of  NSC until October,  1991, and as  its
Chief Executive Officer until April, 1992.
 
    Mr.  Burke has  been President of  the Company  since May, 1991,  and he has
served as its President and Chief Executive Officer since July, 1991. Mr.  Burke
has  also served as Chairman of the Board  since May, 1995. Mr. Burke joined the
Company as Associate General  Counsel in June, 1983  and became Vice  President,
Secretary  and  General  Counsel in  August,  1985.  In November,  1987,  he was
appointed Vice President, Ft. Lauderdale Operations of the Company's Vision-Ease
Lens division and in May, 1989 he was appointed President of Vision-Ease Lens.
 
    Mr. Hammerly retired  from 3M Company  in July, 1995.  He served in  various
positions  with  3M Company  from June,  1955  to July,  1995, most  recently as
Executive Vice President, International Operations.
 
    Since 1984, Dr. Swalin has served  in various positions with the  University
of  Arizona. Dr. Swalin  was a member  of the Company's  Board of Directors from
1973-1977 and from 1983-1991.
 
    The following Board members also serve as directors of the designated public
companies: Mr. Burke, Apogee Enterprises, Inc.; Mr. Castro, Merrill Corporation;
Mr. Davis, Wilshire Technologies, Inc.  and American Variable Insurance  Series;
Mr.  Hammerly, 3M Company,  Apogee Enterprises, Inc.,  Cincinnati Milacron, Inc.
and The Geon Company; and Dr. Swalin, Medtronic, Inc.
 
INFORMATION ABOUT THE BOARD AND ITS COMMITTEES
 
    COMMITTEES.  The  business and  affairs of the  Company are  managed by  the
Board,  which met seven (7) times in  1995. The Board maintains several standing
committees, including Audit,  Compensation, Finance  and Nominating  Committees.
The  Audit Committee  oversees the Company's  Internal Audit  Department and the
provision of  outside  audit  services.  It  met two  (2)  times  in  1995.  The
 
                                       3
<PAGE>
Compensation  Committee  recommends  the  compensation  of  the  Chief Executive
Officer; reviews and approves compensation  for all elected executive  officers;
reviews,  approves and modifies all general  compensation matters; and, sets the
terms of, and grants awards under,  the Company's 1994 Stock Incentive Plan  and
any other incentive plans. The Compensation Committee met three (3) times during
1995.  The  Finance  Committee  approves  the  Company's  dividends  payable  to
stockholders and reviews  the Company's long-range  financing plan. The  Finance
Committee met five (5) times during 1995. The Nominating Committee is authorized
to identify, evaluate and nominate persons for election to the Board and to make
recommendations  to  the  Board with  respect  to such  persons.  The Nominating
Committee will consider  nominees recommended  by stockholders  if submitted  in
writing  to the Committee  Chair. The Company's Restated  Bylaws also permit any
stockholder entitled to vote for the  election of directors to make  nominations
directly,  without first recommending  the nominee to  the Nominating Committee.
Under the Restated  Bylaws, any such  nomination made by  a stockholder must  be
made  by written notice to the Company's  Secretary not less than 120 days prior
to the Annual Meeting of Stockholders or special meeting called for the election
of directors (as the case may be). The motion must include each nominee's  name,
age,   business  address  and  residence   address,  principal  occupation,  and
beneficial share ownership, together  with the class of  directors to which  the
nominee  is being nominated and such other information as would be required in a
proxy solicitation  concerning the  nominee under  the Securities  and  Exchange
Commission's proxy rules. The Nominating Committee met two (2) times in 1995.
 
    The  Audit, Compensation,  Finance and  Nominating Committees  are presently
comprised of the following incumbent directors of the Company:
 
<TABLE>
<CAPTION>
           AUDIT                     COMPENSATION                   FINANCE                   NOMINATING
         COMMITTEE                     COMMITTEE                   COMMITTEE                  COMMITTEE
- ---------------------------  -----------------------------  ------------------------  --------------------------
<S>                          <C>                            <C>                       <C>
Lyle D. Altman (Chair)       S. Walter Richey (Chair)       Joe E. Davis (Chair)      Dr. Richard A. Swalin
Joe E. Davis                 John W. Castro                 Lyle D. Altman            (Chair)
Harry A. Hammerly            Dr. Richard A. Swalin          S. Walter Richey          John W. Castro
                                                                                      Harry A. Hammerly
</TABLE>
 
    DIRECTORS' FEES.  As  an employee of  the Company, Mr. Burke  is not paid  a
director's  fee. Non-employee directors are paid  an annual retainer of $12,000,
$800 per Board  meeting attended and  $800 ($850  in the case  of the  committee
Chair) per committee meeting attended.
 
    DIRECTORS'  DEFERRED COMPENSATION PLAN.   On December 7,  1984, the Board of
Directors adopted  the  Directors'  Deferred Compensation  Plan  (the  "Deferred
Plan"),  which is  administered by the  Secretary of the  Company in conjunction
with the Human Resources  Department. Each non-employee member  of the Board  of
Directors  may elect  to participate and  defer his  or her receipt  of the fees
described above.  The  amount  of  each  participating  director's  compensation
deferred  under the Deferred Plan is  credited to a separate bookkeeping account
in the director's name. Participants may elect to have compensation credited  to
the  "BMC Stock Performance" account ("Stock  Account") or the "Interest Income"
account ("Interest  Account"). Compensation  credited to  the Stock  Account  is
converted  into share  equivalents of  Common Stock  ("Phantom Stock")  and each
participant is entitled to  additional Stock Account  credits for dividends  (if
any)  paid with respect to  corresponding shares of BMC  Common Stock during the
year.  The  value  of  Phantom  Stock  credited  to  the  Stock  Account,   and,
consequently,  the  value of  a participating  director's account,  increases or
decreases depending on the market performance of the Common Stock.  Compensation
credited  to  the  Interest Account  earns  interest computed  on  the beginning
balance each quarter at an annual rate equal to the effective cost of  borrowing
under  the Company's revolving  credit agreements in  effect during the quarter.
Amounts credited to participating directors' accounts  are payable in cash in  a
lump sum or in two to ten annual installments, at the option of the participant,
upon  termination  from the  Board of  Directors. During  the past  three years,
$74,232 was deferred under  the Deferred Plan by  all current directors who  are
not executive officers, as a group (6 persons).
 
    NON-EMPLOYEE  DIRECTOR  STOCK  OPTIONS.   On  December 10,  1993,  the Board
adopted the 1994  Stock Incentive Plan  (the "1994 Plan")  and the  stockholders
approved  the 1994  Plan on May  5, 1994.  The 1994 Plan  provides for automatic
non-qualified  option  grants  to  the  Company's  non-employee  directors.   In
accordance  with the terms of  the 1994 Plan, new  non-employee directors of the
Company
 
                                       4
<PAGE>
who are  first elected  or  appointed to  the Board  of  Directors to  fill  new
directorships  or vacancies will be automatically granted on a one-time basis on
the date of  their election  or appointment, non-qualified  options to  purchase
20,000  shares of Common  Stock, at an  exercise price equal  to the fair market
value of the Common Stock on the  date of grant. The 1994 Plan further  provides
that  on  the  date of  each  subsequent  Annual Meeting  of  Stockholders, each
non-employee director  will  automatically  be  granted  additional  options  to
purchase  4,000 shares of  Common Stock at  the fair market  value of the Common
Stock on the date of grant. Each option becomes excercisable in full three years
after the date of grant and terminates five years after its date of grant. If  a
non-employee  director ceases to serve as a director for any reason, all options
held by  such  director  will  continue to  become  exercisable  and  expire  in
accordance with their original terms.
 
    In  1995,  all  of the  incumbent  directors  attended 75%  or  more  of the
aggregate meetings of the Board and all such committees on which they served.
 
                         SECURITY OWNERSHIP OF CERTAIN
                        BENEFICIAL OWNERS AND MANAGEMENT
 
    Set forth in the following table is information, as of March 1, 1996 (unless
otherwise indicated), pertaining to  persons who, to the  best of the  Company's
knowledge,  owned beneficially  more than five  percent (5%)  of the outstanding
Common Stock of the Company. Also set forth below is information with respect to
shares of the Common Stock beneficially held by the Company's directors and  the
Company's  executive officers named  in the "Summary  Compensation Table", which
appears below under the heading "Executive Compensation", and for all  directors
and executive officers as a group.
 
<TABLE>
<CAPTION>
                                                          SHARES OF COMMON STOCK
                                                          BENEFICIALLY OWNED(1)
                                                      ------------------------------
                                                                          PERCENT
        NAME AND ADDRESS OF BENEFICIAL OWNER               AMOUNT         OF CLASS
- ----------------------------------------------------  ----------------  ------------
<S>                                                   <C>               <C>
Neuberger & Berman L.P.                                  1,635,080(2)         6.07%
605 Third Avenue
New York, NY 10158-3698
FMR Corp.                                                1,361,400(3)         5.05
82 Devonshire Street
Boston, MA 02109-3614
Lyle D. Altman                                              28,000(4)            *
Paul B. Burke                                              846,352(5)         3.06
John W. Castro                                               8,000               *
Joe E. Davis                                               136,000(6)            *
John L. Gburek                                              36,555(7)            *
Harry A. Hammerly                                            1,000               *
Michael P. Hawks                                           111,296(8)            *
Merle D. Kerr                                              282,595(9)         1.03
Terry R. Nygaard                                            45,735(10)           *
S. Walter Richey                                            28,000(4)            *
Richard A. Swalin                                            6,000               *
All Directors and Executive Officers as a group (11      1,529,533(11)        5.48
persons)
</TABLE>
 
- ------------------------
* = less than 1%.
 
 (1)  Unless otherwise noted, all of the shares shown are held by individuals or
    entities possessing sole voting  and investment power  with respect to  such
    shares.  Unless otherwise  noted, share  amounts and  percentages are  as of
    March  1,  1996.  Shares  not  outstanding  but  deemed  beneficially  owned
 
                                       5
<PAGE>
    by  an individual or by members of the  group (as the case may be) by virtue
    of a right to acquire them within  60 days upon the exercise of options  are
    treated  as outstanding for purposes of determining the percent beneficially
    owned by the individual or the group.
 
 (2) As set  forth in  a Schedule  13G filed  with the  Securities and  Exchange
    Commission  on February  12, 1996,  Neuberger &  Berman L.P.  (Neuberger), a
    registered investment adviser, is deemed to have beneficial ownership as  of
    December  31, 1995  of 1,635,080  shares. As  reported in  the Schedule 13G,
    Neuberger possesses  sole  voting power  with  respect to  837,500  of  such
    shares,  shared  voting power  with respect  to 368,400  of such  shares and
    shared dispositive power with respect to all 1,635,080 shares.
 
 (3) As set forth  in a Schedule  13G, dated February 14,  1996, filed with  the
    Securities  and Exchange Commission and  reflecting such entity's beneficial
    ownership as of December 31,  1995, 1,361,400 shares are beneficially  owned
    by  Fidelity  Management &  Research  Company ("Fidelity"),  a  wholly owned
    subsidiary of FMR Corp. ("FMR"), and an investment adviser registered  under
    Section  203 of the Investment  Advisers Act of 1940  and adviser to several
    investment companies registered  under the  Investment Company  Act of  1940
    (the  "Funds"). Edward C. Johnson  3d, the Chairman of  FMR, owns 12.0%, and
    Abigail P. Johnson  owns 24.5%, of  the outstanding voting  common stock  of
    FMR.  Various  Johnson family  members,  through their  ownership  of voting
    common stock and the execution  of a family stockholders' voting  agreement,
    form  a controlling group with respect to FMR. Edward C. Johnson 3d, FMR and
    the Funds each have sole power to  dispose of the 1,361,400 shares owned  by
    the  Funds. The power to  vote and direct the voting  of the shares owned by
    the Funds is held by the Funds, through guidelines established by the Funds'
    Boards of Trustees.
 
 (4) Includes 8,000 shares that the director has the right to acquire within  60
    days upon the exercise of options.
 
 (5)  Includes 439,600 shares that Mr. Burke  has the right to acquire within 60
    days upon the exercise of options;  400 shares held indirectly as  custodian
    for  Mr. Burke's minor son;  and 14,247 shares allocable  to Mr. Burke as of
    December 31,  1995 in  connection with  his participation  in the  Company's
    401(k) savings plan.
 
 (6)  Includes 4,000 shares  that Mr. Davis  has the right  to acquire within 60
    days upon the exercise of options.
 
 (7) Includes 555  shares allocable to  Mr. Gburek  as of December  31, 1995  in
    connection with his participation in the Company's 401(k) savings plan.
 
 (8)  Includes 22,000 shares that  Mr. Hawks has the  right to acquire within 60
    days upon the exercise of options  and 12,816 shares allocable to Mr.  Hawks
    as  of  December  31,  1995  in connection  with  his  participation  in the
    Company's 401(k) savings plan.
 
 (9) Includes 163,000 shares that  Mr. Kerr has the  right to acquire within  60
    days upon the exercise of options and 15,595 shares allocable to Mr. Kerr as
    of  December 31, 1995 in connection  with his participation in the Company's
    401(k) savings plan.
 
(10) Includes 11,795 shares allocable to Mr. Nygaard as of December 31, 1995  in
    connection with his participation in the Company's 401(k) savings plan.
 
(11)  Includes 400 shares held indirectly by an officer as custodian for a minor
    child. Includes 636,600 shares not outstanding but deemed beneficially owned
    by members of the group by virtue of a right to acquire them within 60  days
    upon  the  exercise  of  options. Includes  55,008  shares  allocable  as of
    December 31, 1995 to executive officers (5 persons) in connection with their
    participation in the Company's 401(k) savings plan.
 
                                       6
<PAGE>
                             EXECUTIVE COMPENSATION
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
    THE COMMITTEE.    The  Compensation  Committee of  the  Company's  Board  of
Directors  (the "Committee") is comprised entirely of non-employee directors and
administers the Company's executive compensation program. See "Information About
the Board and its Committees" for  a more complete description of the  functions
of the Compensation Committee.
 
    COMPENSATION  PHILOSOPHY.   The Company's  executive compensation  policy is
intended  to  support  the  achievement   of  the  Company's  desired   economic
performance by:
 
    - Providing  compensation that will  attract and retain  superior talent and
      reward performance; and
 
    - Aligning executive  officers'  interests  with the  Company's  success  by
      linking   both  annual  incentive  compensation  and  long-term  incentive
      compensation with the Company's success in achieving performance goals.
 
    The executive compensation policy adopted by the Company, as approved by the
Committee, provides for an overall level of potential compensation that is at  a
median level of competitiveness with manufacturing companies of comparable size.
The  Committee, in reviewing  compensation matters, consults  with the Company's
Director  of  Compensation  and   Benefits  and,  as  appropriate,   independent
compensation  consultants. The Committee makes use of a variety of independently
available compensation surveys, each of which provide compensation data for well
over 100 companies,  including many  of the  companies in  the S&P  500 and  S&P
Manufacturing (Diversified Industries) indices used in the Company's performance
graph.  See  "Executive  Compensation  --  Comparative  Stock  Performance". The
compensation  surveys  used  by  the  Committee  report  compensation  data  for
like-sized manufacturing companies and provide statistical analyses that predict
median  compensation  rates  at  profit and  revenue  levels  comparable  to the
Company. Actual individual compensation levels  for officers of the Company  may
be  greater  or  less than  median  competitive  levels, based  upon  annual and
long-term  Company   performance  as   well  as   individual  performance.   The
Compensation Committee, at its discretion, sets executive compensation at levels
which it judges are justified by external, internal, or other circumstances.
 
    COMPLIANCE  WITH FEDERAL TAX LEGISLATION.  The Omnibus Reconciliation Act of
1993 added Section 162(m) to the Internal Revenue Code of 1986, as amended  (the
"Code"),  which generally precludes the Company  and other public companies from
taking  a  tax  deduction  for  compensation  over  $1  million  which  is   not
"performance-based"  and is paid,  or otherwise taxable,  to executives named in
the Summary Compensation Table  and employed by  the Company at  the end of  the
applicable  tax year. No  named executive is  likely to earn  over $1 million in
1996 as defined in  the Code. The Company  does not have a  policy at this  time
regarding   qualifying  compensation   paid  to   its  executive   officers  for
deductibility under Section 162(m), but continues to monitor the situation.
 
    ELEMENTS OF EXECUTIVE OFFICER COMPENSATION POLICY.  The Company's  executive
officer  compensation  policy is  comprised  of base  salary,  annual management
incentive compensation in the form of cash, long-term incentive compensation  in
the  form of  stock options  and/or restricted  stock awards,  and various other
benefits, including both medical, retirement  and other benefit plans  generally
available  to employees  of the Company  and also  certain perquisites available
only to executive officers (as described more fully below).
 
    BASE SALARY.   Base  salary  levels for  the Company's  executive  officers,
including  the Chief  Executive Officer,  are generally  set at  or below median
levels of competitiveness  compared to manufacturing  companies of similar  size
and  profitability.  In  determining  individual salaries,  in  addition  to the
comparison with similar companies, the  Committee also takes into  consideration
individual  experience and  performance, as  well as  competitive and comparable
data related to the executive officer's specific areas of expertise. As a matter
of philosophy, the Company  does not emphasize base  salaries in an  executive's
total compensation package.
 
                                       7
<PAGE>
    ANNUAL  INCENTIVE COMPENSATION.   Under  the Company's  management incentive
bonus plan  (the "Bonus  Plan"), executive  officers and  key employees  of  the
Company,  designated  by the  Chief Executive  Officer,  may receive  cash bonus
awards after the  close of  the fiscal year  if the  Company achieves  financial
performance  goals  set by  the Board  for that  year. Target  bonus rates  of a
percentage of base salary are established for each executive officer,  depending
upon  the individual's level of responsibility and the median level of incentive
compensation  opportunity  offered  by  like-sized  manufacturing  companies  as
reported  in salary  surveys. In 1995,  the Company  achieved performance beyond
established financial performance  goals. Accordingly,  executive officers  were
eligible to receive the maximum bonus under the Bonus Plan for 1995.
 
    LONG-TERM INCENTIVE COMPENSATION.  On December 10, 1993, the Company's Board
of  Directors  approved the  1994 Plan  which subsequently  was approved  by the
Company's stockholders at the 1994 Annual Meeting of Stockholders. The 1994 Plan
provides for  grants to  eligible employees  of the  Company of  stock  options,
restricted stock awards, performance units, stock bonuses and stock appreciation
rights.  The Committee  has the discretion  to select participants,  the type of
award and the terms and conditions for  each award, to the extent not  otherwise
fixed  by the terms of the 1994 Plan. Awards under the 1994 Plan are intended to
align management and stockholder long-term  interests by creating a direct  link
between  executive compensation and stockholder return, and to enable executives
to develop and maintain an equity position in the Company.
 
    The Committee does not rely on any single formula in determining the size of
grants or selecting recipients, but considers relevant median level  competitive
data, the potential and performance of the recipient, grants made in prior years
and options which remain outstanding.
 
    OTHER  BENEFITS.   The Company provides  medical and  retirement benefits to
executive officers that are generally available to Company employees,  including
participation  in medical and dental benefit  plans, a qualified 401(k) employee
savings plan  and  a  qualified defined  contribution  profit-sharing  plan.  In
addition,  the  Company  offers  executive  officers  and  other  key management
employees a nonqualified benefit equalization plan which is designed to  restore
benefits that would otherwise be lost due to limits imposed by IRS code Sections
401(a)(17),  401(k)(3), 401(m),  402(g) and  415 of  the Code.  The Company also
offers executive officers certain executive  perquisites which may be deemed  to
be  a personal  benefit or constitute  compensation to  such executive officers,
including (for example) the  use of leased  automobiles, reimbursement for  club
membership  dues,  tax preparation  services,  annual physical  examinations and
supplemental health insurance. The Company provides an interest rate  supplement
to  executive officers who obtain commercial loans to pay the cost of exercising
stock options or of acquiring shares of the Company's stock in the open  market.
In  addition, the Company offers interest-free  loans to employees to facilitate
the exercise of stock options. See "Certain Transactions."
 
    CHIEF EXECUTIVE OFFICER COMPENSATION.   Base salary, incentive  compensation
awards, and other compensation paid to Mr. Burke, as well as stock option awards
made to Mr. Burke during his tenure as an executive officer, are consistent with
the  design of the overall program described  above, and are shown in the tables
below. The potential value  of Mr. Burke's compensation  package is designed  to
"pay  for results"  by placing  a high degree  of pay  at risk  and by providing
significant emphasis on stockholder value through the granting of stock options.
Annual incentive  compensation is  targeted at  50% of  his base  salary with  a
maximum  of 75%. Benefits and  perquisites are not emphasized  and are set at or
below median levels of  competitiveness. Mr. Burke's base  salary and his  stock
option awards are determined after a review of competitive compensation compiled
by   independent  consultants  and  after  taking  into  account  the  Company's
performance under his leadership. The Company's performance is measured  against
financial   goals  for  earnings,  earnings  per  share  and  cash  flow.  Other
measurements used  to  evaluate  Mr.  Burke  are  stock  price  performance  and
soundness of strategic
 
                                       8
<PAGE>
operating  plans. Mr. Burke's 1995 base salary remains the same as his 1994 base
salary. Because the Company significantly exceeded its financial goals for  1995
as  defined by the Company's Bonus Plan, Mr. Burke received a bonus equal to 75%
of his 1995 base salary.
 
Members of the Compensation Committee
S. Walter Richey, Chairman
John W. Castro
Dr. Richard A. Swalin
 
                                       9
<PAGE>
COMPARATIVE STOCK PERFORMANCE
 
    The graph  below compares  the cumulative  total stockholder  return on  the
Company's  Common Stock for the  last five fiscal years  to the total cumulative
return on the S&P 500 Index  and the S&P Manufacturing (Diversified  Industries)
Index  over the same period, assuming a $100 investment in Common Stock and each
such index on December 31, 1990 and reinvestment of all dividends (if any).
 
<TABLE>
<CAPTION>
                                                           S & P MANUFACTURING
             BMC INDUSTRIES, INC.        S & P 500         (DIVERS. INDUSTRIES)
             --------------------   --------------------   --------------------
<S>          <C>                    <C>                    <C>
Dec-90                100.00                     100.00            100.00
Dec-91                783.37                     122.78            154.30
Dec-92                865.84                     121.36            148.49
Dec-93               1262.12                     122.63            149.13
Dec-94               1941.28                     223.59            156.43
Dec-95               2338.33                     234.93            156.39
</TABLE>
 
                                       10
<PAGE>
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
 
    The following table describes the cash and non-cash compensation for each of
the last three  fiscal years of  the Company's Chief  Executive Officer and  its
four  other executive officers  whose annual salary and  bonus for 1995 exceeded
$100,000.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                            LONG-TERM
                                                                                          COMPENSATION
                                                                                          -------------
                                                                                             AWARDS
                                                        ANNUAL COMPENSATION(1)            -------------
                                              ------------------------------------------   SECURITIES
                                                                          OTHER ANNUAL     UNDERLYING       ALL OTHER
                                                SALARY      BONUS(2)    COMPENSATION(3)    OPTIONS(4)    COMPENSATION(5)
   NAME AND PRINCIPAL POSITION       YEAR         ($)          ($)            ($)              (#)             ($)
- ---------------------------------  ---------  -----------  -----------  ----------------  -------------  ----------------
<S>                                <C>        <C>          <C>          <C>               <C>            <C>
Paul B. Burke                           1995  $   250,000  $   187,500     $   73,357                0      $   67,012
 Chairman of the Board,                 1994      250,000      187,500         78,055                0          67,046
 President and CEO                      1993      220,000      165,000         48,250          400,000          58,757
Merle D. Kerr,                          1995      155,000       81,375         73,528           40,000          38,130
 Former Senior Vice                     1994      155,000       81,133         46,253                0          38,164
 President of Finance                   1993      143,000       75,075         34,075           40,000          35,113
 and Administration and Chief
 Financial Officer (6)
Michael P. Hawks                        1995      109,538       45,369         26,043           40,000          25,194
 Vice President of                      1994      100,000       37,438         24,000                0          22,399
 Finance &                              1993       95,700       35,888         18,267           20,000          21,241
 Administration, Chief Financial
 Officer and Secretary (7)
John L. Gburek,                         1995      114,789       36,879          5,768                0          27,333
 Vice President of                      1994      --           --              --              --               --
 Corporate Development (8)              1993      --           --              --              --               --
Terry R. Nygaard,                       1995       93,000       34,875         20,796                0          20,607
 Vice President of Taxes (9)            1994       91,269       34,226         22,073                0          19,845
                                        1993       85,231       27,808         10,715           40,000          17,857
</TABLE>
 
- ------------------------
(1) Annual compensation (including compensation deferred at the election of  the
    named  executive officer pursuant to qualified benefit plans) is included in
    the appropriate category in the year earned.
 
(2) Bonuses are  included in  the year  earned. Under  the Company's  management
    incentive  bonus plan, bonuses earned during  any given fiscal year are paid
    to participants by April of the following year.
 
(3) Includes the value of all perquisites and personal benefits provided by  the
    Company  to the named individuals, including  the use of leased automobiles,
    reimbursement of club  membership dues, tax  preparation services,  physical
    examinations,  supplemental health insurance and an interest rate supplement
    related to the exercise of stock options or the acquisition of shares in the
    open market. For the purposes of this table, the above mentioned perquisites
    and benefits were valued  at their incremental cost  to the Company, not  on
    the  taxable  benefit derived  by the  named  individuals. In  addition, the
    Company permits executive  officers to  exercise stock options  and pay  any
    related  income taxes due through interest-free  loans from the Company. See
    "Certain Transactions"  below. The  value of  such interest-free  loans  was
    determined by calculating the interest
 
                                       11
<PAGE>
    imputed on such loans for the applicable year at the applicable federal rate
    provided  by the Code.  Specific perquisites or  personal benefits exceeding
    25% of the total reported for each of the named individuals were as follows:
 
    (a) Mr. Burke: Leased  auto, $15,681, $31,581 and  $20,887 for fiscal  1995,
       1994  and 1993,  respectively; imputed  interest on  interest free loans,
       $44,143 and $32,805 for fiscal 1995 and 1994, respectively.
 
    (b) Mr.  Kerr:  Moving  expenses,  $31,756 for  fiscal  1995;  leased  auto,
       $12,271,   $13,305  and   $12,022  for   fiscal  1995,   1994  and  1993,
       respectively; imputed  interest  on  interest  free  loans,  $13,107  and
       $17,973 for fiscal 1995 and 1994, respectively.
 
    (c)  Mr. Hawks: Leased  auto, $12,166, $12,544 and  $11,730 for fiscal 1995,
       1994 and 1993,  respectively; imputed  interest on  interest free  loans,
       $8,362 for fiscal 1995.
 
    (d)  Mr. Gburek:  Leased auto, $3,965  for fiscal 1995;  imputed interest on
       interest free loans, $4,518 for fiscal 1995.
 
    (e) Mr. Nygaard: Leased auto, $11,638,  $12,089 and $7,364 for fiscal  1995,
       1994 and 1993, respectively.
 
(4)  The  number  of  shares  have  been  adjusted,  where  appropriate,  for  a
    two-for-one stock split in both 1994 and 1995.
 
(5) Includes contributions made and to be  made by the Company to the  Company's
    qualified   401(k)  savings   plan,  qualified   profit  sharing   plan  and
    nonqualified benefit equalization  plan on behalf  of the named  individuals
    for services performed in fiscal 1995, as follows:
 
    (a)  Mr. Burke: Savings plan, $3,000;  profit sharing plan, $18,000; benefit
       equalization plan, $46,012.
 
    (b) Mr. Kerr: Savings  plan, $3,000; profit  sharing plan, $18,000;  benefit
       equalization plan, $17,130.
 
    (c)  Mr. Hawks: Savings plan, $5,278;  profit sharing plan, $15,900; benefit
       equalization plan, $4,016.
 
    (d) Mr. Gburek: Savings plan, $4,170; profit sharing plan; $16,830;  benefit
       equalization plan, $6,333.
 
    (e) Mr. Nygaard: Savings plan, $7,634; profit sharing plan, $12,973.
 
(6)  Mr. Kerr resigned from his position as Senior Vice President of Finance and
    Administration and  Chief Financial  Officer  on August  3, 1995  to  become
    General  Manager of  Buckbee-Mears Europe  GmbH, the  Company's wholly-owned
    German subsidiary.
 
(7) Mr.  Hawks  became  Vice  President of  Finance  and  Administration,  Chief
    Financial  Officer and Secretary  on August 7,  1995, prior to  which he was
    Treasurer and Secretary.
 
(8) Mr. Gburek became Vice President of Corporate Development on August 2, 1995,
    prior to which he was General Manager of Buckbee-Mears St. Paul.
 
(9) Mr. Nygaard  became Corporate Controller  on May 6,  1993. He resigned  from
    that position on January 29, 1996 to become Vice President of Taxes.
 
                                       12
<PAGE>
OPTION GRANTS AND EXERCISES
 
    The  following  tables summarize  options granted  to  and exercised  by the
executive officers named in the  Summary Compensation Table above during  fiscal
1995 and the potential realizable value of the options held by those individuals
at year-end 1995.
 
                          OPTION GRANTS IN FISCAL 1995
 
<TABLE>
<CAPTION>
                                        INDIVIDUAL GRANTS
                       ---------------------------------------------------
                                     % OF TOTAL                              GRANT DATE
                        NUMBER OF      OPTIONS                                VALUE (1)
                       SECURITIES    GRANTED TO                             -------------
                       UNDERLYING   EMPLOYEES IN   EXERCISE OR               GRANT DATE
                         OPTIONS       FISCAL      BASE PRICE   EXPIRATION  PRESENT VALUE
        NAME           GRANTED (#)     1995(2)      ($/SH)(3)      DATE          ($)
- ---------------------  -----------  -------------  -----------  ----------  -------------
<S>                    <C>          <C>            <C>          <C>         <C>
Paul B. Burke                   0             0        --           --           --
Merle D. Kerr              40,000(4)        13.3%  $   12.4375     7/11/00   $   262,000
Michael P. Hawks           40,000(5)        13.3       12.4375     7/11/05       356,400
John L. Gburek                  0             0        --           --           --
Terry R. Nygaard                0             0        --           --           --
</TABLE>
 
- ------------------------
(1) Present  value  determinations  were  made  using  the  Black-Scholes option
    pricing model. The assumptions used in  the model are dependent on the  date
    of  option grant. The assumptions used  included expected volatility of .54,
    risk-free rate of return  of 5.52% - 6.16%,  dividend yield of .000625%  and
    time  to exercise of  five years for Mr.  Kerr and ten  years for Mr. Hawks.
    These determinations are  not intended to  forecast future appreciation,  if
    any,  of the Common Stock.  Actual gains (if any)  on stock option exercises
    are dependent upon the Company's  future performance and the performance  of
    its  Common Stock, overall  market conditions, and  the executives continued
    employment with  the Company  through the  vesting dates  of the  respective
    option grants.
 
(2) All option grants were under the Company's 1994 Plan.
 
(3) Fair market value of the Company's Common Stock on the date of grant.
 
(4) Options  were granted on July 11, 1995 and become exercisable in three equal
    annual installments  commencing on  July 11,  1996. Reflects  a  two-for-one
    stock split in 1995.
 
(5) Options  were granted on July 11, 1995  and become exercisable in five equal
    annual installments  commencing on  July 11,  1997. Reflects  a  two-for-one
    stock split in 1995.
 
   AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
                                     VALUES
 
<TABLE>
<CAPTION>
                                                      NUMBER OF SECURITIES
                         SHARES                      UNDERLYING UNEXERCISED        VALUE OF UNEXERCISED
                       ACQUIRED ON      VALUE           OPTIONS AT FISCAL          IN-THE-MONEY OPTIONS
                        EXERCISE      REALIZED             YEAR-END(#)             AT FISCAL YEAR-END($)
        NAME            (#)(1)(2)      ($)(3)      EXERCISABLE/UNEXERCISABLE(2) EXERCISABLE/UNEXERCISABLE(4)
- ---------------------  -----------  -------------  ---------------------------  ---------------------------
<S>                    <C>          <C>            <C>                          <C>
Paul B. Burke             105,000   $   1,435,000         519,600/475,000           $10,804,302/$9,176,383
Merle D. Kerr              10,000         138,125         158,000/127,000             3,344,007/2,188,807
Michael P. Hawks           16,000         112,500          26,000/64,000                536,310/894,624
John L. Gburek             20,000         117,500           6,000/114,000               110,344/1,965,428
Terry R. Nygaard            5,000          30,781           4,000/26,000                 73,562/495,186
</TABLE>
 
- ------------------------
(1) Under  the 1994 Plan, the exercise price of  options may be paid in cash or,
    at the Compensation Committee's discretion, in shares of Common Stock valued
    at fair market  value on the  date of  exercise, or pursuant  to a  cashless
    exercise   procedure   under  which   the  executive   provides  irrevocable
    instructions to a brokerage firm to  sell the purchased shares and to  remit
    to  the Company, out of  the sale proceeds, an  amount equal to the exercise
    price plus all applicable withholding
 
                                       13
<PAGE>
    taxes. The exercise price may also be  paid with an interest free loan  from
    the Company pursuant to the BMC Stock Option Exercise Loan Program (the "BMC
    Loan  Program"). See "Certain Transactions"  for a more detailed description
    of the BMC Loan Program.
 
(2) The  number  of  shares  have  been  adjusted,  where  appropriate,  for   a
    two-for-one stock split in both 1994 and 1995.
 
(3) Market  value  of  underlying  securities on  date  of  exercise,  minus the
    exercise price.
 
(4) Based on  the closing  price  of the  Common Stock  on  the New  York  Stock
    Exchange  -- Composite Transactions at December 31, 1995 ($23.25), minus the
    exercise price.
 
OFFICER AGREEMENTS AND CHANGE IN CONTROL ARRANGEMENTS
 
    Each of Messrs.  Burke, Kerr, Hawks,  Gburek and Nygaard  have entered  into
change  of control  agreements (the "Agreements")  with the Company  in the form
described immediately below.
 
    Under the  Agreements,  termination  of an  individual  executive  officer's
employment  with the Company  in connection with any  change of control triggers
severance benefits. A  "change of  control" includes  the sale,  lease or  other
transfer  of  substantially all  of  the assets  of  the Company;  a stockholder
approved dissolution  or liquidation;  a  change of  control reportable  to  the
Securities and Exchange Commission on Form 8-K; acquisition by any person of 50%
or  more  of the  Company's voting  stock; or,  a change  in composition  of the
Company's Board of Directors, such that current directors cease to constitute  a
majority  (but only  if the  nominations of the  newly elected  members were not
approved by  the current  directors).  With the  exception  of payments  to  Mr.
Gburek,  severance benefits payable under the Agreements consist of three years'
base salary, payable in the form of a lump sum payment of one year's base salary
and a payout of  the remainder over 24  months. Mr. Gburek's severance  benefits
payable  under his  Agreement consist  of one year's  base salary  payable in 12
monthly payments. The monthly payments under  all of the Agreements are  reduced
to  the extent of any base salary received as a result of subsequent employment,
but the terminated executive officer has no duty to seek subsequent  employment.
In  the event  the standard  severance benefits  constitute an  excess parachute
payment under the rules of the Internal Revenue Service, severance benefits will
be reduced to an amount  equal to the severance  payment amount less the  amount
required  to avoid any excise tax.  Under the Agreements, each executive officer
remains employed by the Company for  a six-month period following any change  of
control.  During that period, he or she may resign for "good reason" and receive
contractual severance  benefits.  "Good  reason"  includes  adverse  changes  in
compensation  and/or duties, forced relocation to a new locale, or the Company's
failure to continue to provide benefit plans equivalent to those offered by  the
Company  prior to the change of control. At the end of the six-month period, the
executive has a 30-day period in which  to decide whether to remain employed  by
the  successor;  during  that  period,  the  executive  may  elect  to terminate
employment, with  or  without good  reason,  and receive  contractual  severance
benefits. Any termination by the successor during the above periods without good
cause,  or by the Company prior  to a change in control  at the insistence of an
acquiror, also triggers  severance benefits. "Good  cause" includes (i)  willful
and  continued failure to perform duties or (ii) conviction of a felony or gross
misdemeanor materially injurious to the Company.  Death or attainment of age  65
prior  to the end of the period during  which monthly payments are made ends all
further obligations of the Company.
 
    To the  extent  not already  exercisable,  options also  become  immediately
exercisable  under the 1994  Plan in the  event of any  "change in control." For
purposes of  the 1994  Plan, a  "change in  control" of  the Company  means  the
following  (a) the sale or other transfer  of substantially all of the assets of
the Company; (b) the liquidation or dissolution of the Company; (c) a merger  or
consolidation  involving the Company if (i) less than 50% of the voting stock of
the surviving company is  held by persons who  were stockholders of the  Company
immediately  before the merger  or consolidation, or  (ii) less than  80% of the
voting stock of the surviving company  is held by persons who were  stockholders
of  the Company  immediately prior  to the  merger or  consolidation without the
prior approval  of the  continuity directors  of the  Company (directors  as  of
December 10, 1993 and additional directors nominated or elected by a majority of
the    "continuity    directors");   (d)    ownership    by   any    person   or
 
                                       14
<PAGE>
group of 50%  or more  of the  Company's voting  stock, or  20% or  more of  the
Company's  voting stock without the prior  approval of the continuity directors;
(e) the continuity directors ceasing to  constitute a majority of the Board;  or
(f) any change of control that is required to be reported on Form 8-K.
 
    Under the Company's 1984 Omnibus Stock Program, which terminated pursuant to
its  terms  on January  10, 1994,  if any  person makes  a successful  tender or
exchange offer for the  Common Stock of  the Company that  the Board opposes  or
does  not affirmatively  recommend, then  (i) all  incentive stock  options, and
non-qualified options with respect  to which no  stock appreciation rights  have
been  granted,  will  become  immediately  exercisable,  (ii)  all non-qualified
options with respect to  which stock appreciation rights  have been granted  and
which  have been  outstanding for at  least six months,  will become immediately
exercisable, provided that exercise may  only take place during certain  periods
following  the public release  of certain financial reports  by the Company, and
(iii)  all  restrictions  on  any  outstanding  restricted  stock  awards   will
immediately lapse.
 
    To  the extent not  already vested, all benefits  under the Company's Profit
Sharing Plan 1994  Revision (the "Profit  Sharing Plan") and  Savings Plan  1994
Revision (the "Savings Plan") become fully vested in the event of any "change in
control."  For purposes of the Profit Sharing Plan and Savings Plan, a change in
control of the Company means  the following: (a) the  sale or other transfer  of
substantially  all  of  the  assets  of  the  Company;  (b)  the  liquidation or
dissolution of the  Company; (c)  a person becomes  the beneficial  owner of  50
percent  or  more of  the  voting power  of  the outstanding  securities  of the
Company; (d) individuals who constitute  "incumbent directors" (directors as  of
January  1, 1994 and additional directors nominated  or elected by a majority of
the "incumbent directors") cease to constitute at least a majority of the Board;
or (e) any change in control that is required to be reported under Section 13 or
15(d) of the Securities Exchange Act of 1934.
 
                              CERTAIN TRANSACTIONS
 
    Effective April 22, 1993 (and as amended on December 14, 1994), the  Company
adopted  the BMC Loan Program pursuant to  which employees can borrow money from
the Company,  generally on  an interest-free  basis, to  exercise the  Company's
stock  options and to pay any related income taxes due. The shares obtained upon
exercise of the underlying stock options  are held by the Company as  collateral
for  the loan. The purpose of the BMC Loan Program is to facilitate the exercise
of stock options,  to encourage share  ownership by employees,  to minimize  tax
consequences  to key employees, and  to minimize the need  to sell shares in the
open market to pay income  taxes due upon the  exercise of options. Approval  of
the loans are subject to the sole and absolute discretion of the Committee.
 
    The  total  amount  that  any  employee  may  borrow  under  the  program is
determined by the Committee but may not exceed the following: (i) for the  first
loan  request, 100% of the exercise price of  the option, plus 100% of the state
and federal income taxes actually paid within 15 months of such exercise on  any
income  recognized by reason of such exercise  and (ii) for any subsequent loan,
the lesser of (a)  100% of the exercise  price of the option,  plus 100% of  the
state  and federal income taxes actually paid  within 15 months of such exercise
on any income recognized by reason of such exercise or (b) the amount that, when
added to  the principal  amount of  all  outstanding loans  under the  BMC  Loan
Program,  will not exceed 60% of the market  value of all of the Company's stock
pledged as collateral  by the  employee immediately  following the  loan or  (c)
eight  times  the  employee's  then  current  base  salary.  Notwithstanding the
foregoing criteria, no loan may be  made which would cause the aggregate  amount
of  principal and  accrued interest outstanding  under all loans  to an employee
exceed 100%  of the  market  value of  all of  the  Company's stock  pledged  as
collateral by that employee under the BMC Loan Program.
 
    The  loans  made to  employees under  the BMC  Loan Program  are made  on an
interest-free basis  with respect  to all  amounts advanced  to pay  the  option
exercise  price. The  loans are also  interest-free with respect  to the amounts
advanced to  pay  income  taxes, but  only  to  the extent  that  the  aggregate
principal  amount attributable to tax payments is not greater than two times the
employee's base annual compensation plus  target bonus (the "Interest Free  Loan
Amount"). The applicable interest rate for the amounts in excess of the Interest
Free  Loan Amount is the rate applicable  under any short-term borrowings by the
Company or, if the Company has no such borrowings, the interest rate payable  to
the  Company under its short-term money  market investments. Upon termination of
the
 
                                       15
<PAGE>
employee's employment, the  loan must be  repaid within 45  days or such  longer
period as the Committee may determine. Upon the death or long term disability of
the  employee, the Committee may extend the term of the repayment of the loan up
to six months. Notwithstanding the above, the Committee may demand repayment  of
the notes at any time.
 
    Each  individual  borrowing arrangement  is  evidenced by  a  written demand
promissory note executed  by the  employee at the  time of  borrowing. The  note
provides that thirty percent (30%) of the employee's bonus compensation received
under  the Bonus Plan (net of applicable estimated taxes and other withholdings)
will be applied to repay the principal under the note. In addition, a portion of
the proceeds from any  sale of the  Company's stock pledged  under the BMC  Loan
Program  must be applied to  the repayment of amounts  outstanding under the BMC
Loan Program. All dividends received by an employee for BMC stock pledged for  a
loan,  net  of  applicable  estimated  taxes  and  other  withholdings  on  such
dividends, are also applied to the loan.
 
    The amount outstanding under the BMC Loan Program for Messrs. Burke,  Hawks,
Gburek  and Nygaard as of  March 1, 1996 was  $1,417,475, $222,875, $292,000 and
$116,172, respectively. The largest loan  amount outstanding for Messrs.  Burke,
Kerr,  Hawks, Gburek and Nygaard during 1995 was $1,453,460, $345,952, $152,759,
$103,991 and $76,248, respectively.
 
                             SECTION 16 COMPLIANCE
 
    Section 16(a) of the Securities Exchange  Act of 1934, as amended,  requires
the Company's directors and executive officers, and persons who beneficially own
more  than 10% of  the Company's Common  Stock, to file  with the Securities and
Exchange Commission  (the "SEC")  initial reports  of ownership  and reports  of
changes in ownership of Common Stock and other equity securities of the Company.
Directors,  executive officers and greater than 10% stockholders are required by
SEC regulations to furnish the Company with copies of all Section 16(a)  reports
they  file. To the Company's knowledge, based  solely on review of the copies of
such reports furnished to the Company with respect to the period ended  December
31,  1995, all  Section 16(a) filing  requirements applicable  to its directors,
executive officers and greater than 10% stockholders were complied with,  except
that:  Merle D.  Kerr failed  to timely  file a  Form 5,  which was subsequently
filed.
 
                              INDEPENDENT AUDITORS
 
    During 1995, in  addition to  auditing the  Company's financial  statements,
Ernst  & Young,  LLP performed  services in  connection with  preparation of the
Company's tax returns and related tax planning, audits of employee benefit plans
of the  Company and  its operating  units and  provision of  general  accounting
advice.
 
    Ernst  & Young, LLP, or its  predecessor, has been the Company's independent
auditors since 1980 and has been selected  by the Board to continue as such  for
the  current fiscal year. The Company has requested and expects a representative
of Ernst & Young, LLP to be present at the Meeting, to make a statement if he or
she so desires and to respond to appropriate questions.
 
                           1997 STOCKHOLDER PROPOSALS
 
    Stockholder proposals  intended  to  be presented  in  the  proxy  materials
relating  to the  1997 Annual  Meeting of Stockholders  must be  received by the
Company on or before November 25, 1996.
 
                                       16
<PAGE>
                                 OTHER BUSINESS
 
    The Company knows of no business  which will be presented for  consideration
at  the Meeting other than  that described in this  proxy statement. As to other
business, if any, that may properly come before the Meeting, it is intended that
proxies solicited by the Board will be voted in accordance with the judgment  of
the person or persons voting the proxies.
 
    THE  COMPANY WILL FURNISH,  WITHOUT CHARGE, A  COPY OF ITS  ANNUAL REPORT ON
FORM 10-K (EXCLUSIVE OF EXHIBITS) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 TO
EACH PERSON  WHO IS  A STOCKHOLDER  OF THE  COMPANY AS  OF MARCH  1, 1996,  UPON
RECEIPT  FROM ANY SUCH  PERSON OF A  WRITTEN REQUEST FOR  SUCH AN ANNUAL REPORT.
SUCH REQUESTS SHOULD BE SENT TO: INVESTOR RELATIONS DEPARTMENT, BMC  INDUSTRIES,
INC., TWO APPLETREE SQUARE, MINNEAPOLIS, MN 55425.
 
Dated: March 22, 1996
BMC Industries, Inc.
Two Appletree Square
Minneapolis, Minnesota 55425
 
                                       17
<PAGE>
 
PROXY
                               THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
                               DIRECTORS.
                               The  undersigned  hereby  appoint(s)  Michael  P.
                               Hawks, and Jeffrey L.  Wright, and each of  them,
                               as  Proxies, each  with the power  to appoint his
                               substitute, and hereby authorizes each of them to
                               represent and to vote,  as designated below,  all
                               the  shares  of common  stock of  BMC Industries,
     [LOGO]                    Inc. held of record  by the undersigned on  March
                               1, 1996, at the Annual Meeting of Stockholders to
Two Appletree Square           be  held on  April 25,  1996, or  any adjournment
Minneapolis, Minnesota 55425   thereof.
- ----------------------------
 
 1.  ELECTION OF DIRECTORS  FOR all nominees listed    AGAINST all nominees
                            below / /                  listed below / /
                            (except as marked to the
                            contrary below)
 
 (INSTRUCTION: TO VOTE AGAINST ANY INDIVIDUAL NOMINEE(S), STRIKE A LINE THROUGH
                             HIS NAME ON THE LIST)
 
         Lyle D. Altman         Paul B. Burke         Harry A. Hammerly
 
2.  In  their discretion, the  Proxies are  authorized to vote  upon such  other
    business as may properly come before the meeting.
 
         The Board of Directors Recommends a Vote FOR Proposal 1 Above.
 
                         (PLEASE SIGN ON REVERSE SIDE.)
<PAGE>
THIS  PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO  DIRECTION IS MADE, THIS PROXY WILL  BE
VOTED FOR ALL NOMINEES NAMED IN PROPOSAL 1 ABOVE.
 
Please  sign  exactly as  name  appears below.  When  shares are  held  by joint
tenants, both should  sign. When signing  as attorney, executor,  administrator,
trustee  or guardian, please give  full title as such.  If a corporation, please
sign in  full corporate  name by  President or  other authorized  officer. If  a
partnership, please sign in partnership name by authorized person.
- --------------------------------------------------------------------------------
                                                    Dated: ______________, 1996.
                                                    ____________________________
                                                    Print name(s) of
                                                    stockholder(s)
                                                    ____________________________
                                                    Signature
                                                    ____________________________
                                                    Signature if held jointly
 
                                                    PLEASE  MARK, SIGN, DATE AND
                                                    RETURN   THE   PROXY    CARD
                                                    PROMPTLY  USING THE ENCLOSED
                                                    ENVELOPE, WHICH REQUIRES  NO
                                                    POSTAGE  IF  MAILED  IN  THE
                                                    UNITED STATES.


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