APOGEE ENTERPRISES INC, 424B4, 1994-10-19

APOGEE ENTERPRISES INC
424B4, 1994-10-19
CONSTRUCTION - SPECIAL TRADE CONTRACTORS

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<PAGE>

Filed Pursuant to Rule 424(b)(4)
Registration Number 33-55635

800,000 SHARES

LOGO

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by the
Selling Shareholder. See "Selling Shareholder." The Company will not receive
any of the proceeds from the sale of these shares. The Company's Common Stock
is traded on the Nasdaq National Market under the symbol "APOG." On October 18,
1994, the last reported sale price of the Common Stock was $16.25 per share.
See "Dividends and Price Range of Common Stock."

----------------

SEE "INVESTMENT CONSIDERATIONS" FOR INFORMATION PROSPECTIVE INVESTORS SHOULD
CONSIDER.

----------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) SHAREHOLDER(2)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share........................ $16.25 $0.85 $15.40
- ---------------------------------------------------------------------------------------------
Total (3)........................ $13,000,000 $680,000 $12,320,000
- ---------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------

(1) The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting offering expenses payable by the Selling Shareholder
estimated at $160,000.

(3) The Selling Shareholder has granted the Underwriters a 30-day option to
purchase an aggregate of up to 120,000 additional shares of Common Stock to
cover over-allotments, if any. If the option is exercised in full, the
total Price to Public, Underwriting Discounts and Commissions, and Proceeds
to the Selling Shareholder will be $14,950,000, $782,000 and $14,168,000,
respectively. See "Underwriting."

----------------

The shares of Common Stock are offered by the Underwriters subject to prior
sale, when, as and if delivered to and accepted by them, and subject to the
right of the Underwriters to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Common
Stock will be made on or about October 26, 1994.

[LOGO OF DAIN BOSWORTH]

THE DATE OF THIS PROSPECTUS IS OCTOBER 19, 1994.
<PAGE>

AVAILABLE INFORMATION

Apogee Enterprises, Inc. ("Apogee" or the "Company") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at
the Commission's regional offices located at 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.

The Company has filed with the Commission a Registration Statement on Form S-
3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
thereto, as permitted by the rules and regulations of the Commission. For
further information pertaining to the Company and the Common Stock, reference
is made to the Registration Statement and the exhibits thereto, which may be
inspected without charge at, and copies thereof may be obtained at prescribed
rates from, the office of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Statements contained herein concerning provisions
of any document filed as an exhibit are not necessarily complete and, in each
instance, reference is made to the copy of each document filed as an exhibit to
the Registration Statement. Each such statement is qualified in its entirety by
such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended February 26,
1994, and Quarterly Reports on Form 10-Q for the quarters ended May 28, 1994
and August 27, 1994, which have been filed with the Commission, are hereby
incorporated by reference in this Prospectus.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering covered by this Prospectus will be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of any such person, a
copy of any or all of the documents incorporated by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to the
Company, 7900 Xerxes Avenue South, Suite 1800, Minneapolis, Minnesota 55431-
1159, Attention: Chief Financial Officer. Telephone requests may be directed to
the Chief Financial Officer at (612) 835-1874.

----------------

HARMON GLASS(R), HARMON GLASS NETWORK(R), HARMON CONTRACT(R), NORMENT(R),
AIRTEQ(R), EMSS(R), VIRATEC(R), TRU VUE(R), THE GLASS DEPOT(R), NANIK(R), THE
SHUTTERY(R), AND LINETEC(R) ARE REGISTERED TRADEMARKS OF APOGEE ENTERPRISES,
INC. OR ITS SUBSIDIARIES. MARVIN WINDOWS IS A TRADEMARK OF MARVIN LUMBER AND
CEDAR COMPANY.

----------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ NATIONAL MARKET IN
ACCORDANCE WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE
"UNDERWRITING."

2
<PAGE>

APOGEE ENTERPRISES, INC.

NONRESIDENTIAL CONSTRUCTION

Apogee's Commercial Construction, Glass Fabrication and Window Fabrication
Divisions provide products and services to the domestic and international
nonresidential construction markets. Nonresidential construction is the primary
market served by Apogee, comprising 62% of fiscal year 1994 sales. The
Commercial Construction Division (Harmon Contract) is the nation's largest
curtainwall and window systems subcontractor; the Glass Fabrication Division
(Viracon) is a leading architectural glass fabricator; and the Window
Fabrication Division (Wausau Metals) specializes in high-end architect-specified
windows.

(Photograph - See Graphic Material Cross-Reference Page for description)
LIBRARY OF CONGRESS,
WASHINGTON, D.C.
Wausau Metals' S.E.A.L. (Sound, Energy, Air and Light Control) windows have been
installed in historic buildings to improve the thermal and acoustical
performance without changing the exterior appearance of the buildings.

(Photograph - See Graphic Material Cross-Reference Page for description)
FIRST BANK PLACE,
MINNEAPOLIS, MINNESOTA
Harmon Contract installed the curtainwall for this landmark building, procuring
the architectural glass from Viracon and the aluminum framing system from Wausau
Metals.

(Photograph - See Graphic Material Cross-Reference Page for description)
GRAND SLAM CANYON, LAS VEGAS, NEVADA
Viracon supplied over 300,000 square feet of pink reflective, double laminated,
insulating glass for the Grand Slam Canyon, a five-acre theme park totally
encased within a climate-controlled glass adventuredome, which is the largest
space-frame dome in the United States.

(Photograph - See Graphic Material Cross-Reference Page for description)
PETRONAS TOWERS,
KUALA LUMPUR, MALAYSIA
Harmon Contract is providing curtainwall for the 88-story twin towers, which are
currently under construction and will be the world's tallest office building.
This is Harmon Contract's largest curtainwall contract to date at $80 million.

<PAGE>

AUTOMOTIVE GLASS

Apogee serves the replacement automotive glass market through its Glass
Fabrication and Installation and Distribution Divisions. The replacement
automotive glass market is the second largest market served by Apogee,
representing 32% of fiscal year 1994 sales. The Glass Fabrication Division
(Viracon/Curvlite) is a leading manufacturer of replacement automotive glass for
foreign cars. The Company believes that its Installation and Distribution
Division is the second largest replacement automotive glass retailer (Harmon
Glass) in the U.S. The Installation and Distribution Division also operates
automotive glass wholesale distribution centers under the "The Glass Depot"
name.

(Photograph -- See Graphic Material Cross-Reference Page for description)
HARMON GLASS AND THE
GLASS DEPOT LOCATIONS
There are 238 Harmon Glass service centers and 51 Glass Depot distribution
centers located throughout 38 states.

(Photograph -- See Graphic Material Cross-Reference Page for description)
HARMON GLASS service centers offer fast, convenient and guaranteed auto glass
repair or replacement.

(Photograph -- See Graphic Material Cross-Reference Page for description)
THE HARMON GLASS
NETWORK refers insurance claims to Harmon Glass service centers, as well as to a
network of over 3,200 automotive glass stores, and efficiently handles claims
processing for both the insurer and insured.

(Photograph -- See Graphic Material Cross-Reference Page for description)
VIRACON/CURVITE specializes in fabricating limited volume, foreign and domestic
replacement windshields that meet or exceed original manufacturer's
specifications.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus.

THE COMPANY

The Company is a leader in the engineering, fabrication and installation of
exterior wall panels ("curtainwall"), aluminum window systems, glass panels,
windshields and related products and services for the nonresidential
construction, replacement automotive glass and selected consumer products
markets. Operating through four divisions and two joint ventures, the Company's
strategy is to establish leading competitive positions in markets related to
its expertise in the fabrication and installation of curtainwall, window
systems and glass. The Company's primary operating units include:

. COMMERCIAL CONSTRUCTION DIVISION ("CCD"). CCD is the nation's largest
subcontractor of curtainwall and window systems for the commercial and
institutional construction markets. The division markets its services
domestically and internationally to general contractors, architectural
design firms and building owners, emphasizing its extensive engineering,
design and technical capabilities, project management expertise and
customer service focus.

. WINDOW FABRICATION DIVISION ("WFD"). WFD manufactures aluminum window
systems and curtainwalls for commercial and institutional buildings. The
division's products are sold to distributors, contractors and
subcontractors, including CCD, primarily on the basis of extensive design
and technical capabilities and responsive customer service. WFD
specializes in high-end customized window products, and targets remodeling
and renovation projects, in addition to new construction projects. WFD
also produces window coverings, such as venetian blinds and shutters, for
the commercial and residential markets.

. GLASS FABRICATION DIVISION ("GFD"). GFD is a leading fabricator in the
United States of architectural glass, including tempered, laminated and
insulating glass, for the nonresidential construction market. GFD sells
architectural glass to building contractors and subcontractors, including
CCD, and emphasizes its single source, large scale manufacturing
capabilities, broad product line and competitive pricing. Marcon Coatings,
Inc. ("Marcon"), a joint venture with Marvin Windows ("Marvin"), provides
glass coating services to Marvin for residential windows and to GFD for
architectural glass, as well as to outside customers. The division is also
a leading fabricator of replacement windshields for foreign cars, and is a
major manufacturer of picture frame glass.

. INSTALLATION AND DISTRIBUTION DIVISION ("IDD"). IDD is a leading
installer of replacement automotive glass through its 238 Harmon Glass
service centers located nationwide. The Company believes it is the second
largest replacement automotive glass retailer in the United States. Harmon
Glass provides automotive windshield and window replacement and repair
services to insurance company claims offices and their policyholders,
automotive leasing and fleet operators and individual car owners. IDD also
operates 51 Glass Depot automotive glass wholesale distribution centers
that distribute windshields and other automotive glass products to Harmon
Glass and other retail automotive glass service centers.

. VIRATEC THIN FILMS ("VIRATEC"). As part of a joint venture with Marvin,
Viratec produces anti-reflective and highly reflective thin film, optical
grade coatings for personal computer anti-glare screens, electronic
displays, projectors, laser scanners and similar equipment. The Company
has made significant investments in Viratec's operations in recent years
and is developing commercial applications for Viratec's more advanced
technologies, including a project to develop commercially feasible
manufacturing capabilities to apply thin film anti-glare coatings directly
to the curved face of cathode ray tubes ("CRTs") used in computer
monitors, televisions and other electronic displays.

3
<PAGE>

The Company believes it has been able to maintain its position as a leader in
its nonresidential construction markets despite difficult market conditions in
recent years by competing more effectively through cost reductions, improving
project bidding procedures, expanding its international project capabilities
(particularly in Asia which has experienced growth in nonresidential
construction in recent years) and increasing its institutional building and
renovation project efforts. In addition, the Glass Fabrication Division has
invested in new equipment and has increased its manufacturing capacity in order
to reduce production costs and to increase quality, timeliness and service. In
recent years, the replacement automotive glass industry's pricing structure has
changed significantly as major purchasers of automotive glass, such as
insurance companies, increasingly have negotiated volume pricing and entered
into preferred or exclusive provider arrangements with a limited number of
replacement glass providers at significant discounts from historical levels. In
response to these changes, the Installation and Distribution Division is
investing in information systems and electronic processing to handle more
efficiently all aspects of insurance claims processing, while closing
underperforming retail stores and expanding retail locations selectively in
markets providing opportunities for growth. The Company seeks to maintain a
decentralized divisional structure to respond quickly to changes in market
conditions, while seeking opportunities to coordinate the operations of the
divisions and provide integrated services and products on appropriate projects.
During the first half of fiscal 1995, the Company's financial results have
benefitted from these initiatives, as well as slowly improving conditions in
the nonresidential construction market.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Selling 800,000 shares
Shareholder.......................
Common Stock outstanding........... 13,417,081 shares (1)
Use of proceeds.................... The Selling Shareholder will receive all of
the proceeds from the sale of the shares
being offered.
Nasdaq National Market symbol...... APOG
</TABLE>
- --------
(1) Does not include 616,514 shares of Common Stock reserved for issuance upon
exercise of outstanding stock options.

SELLING SHAREHOLDER

The Russell H. Baumgardner Trust of 1986 (the "Selling Shareholder") is
selling all of the shares of Common Stock offered hereby. The Selling
Shareholder owns shares of Common Stock previously held by Russell H.
Baumgardner, the Company's founder and former Chairman and Chief Executive
Officer, who died in January 1994. The trustees of the Selling Shareholder have
recommended the sale of the shares of Common Stock to be sold in this offering
in order to obtain funds to satisfy certain of the trust's obligations and to
diversify the assets to be distributed to the trust's beneficiaries pursuant to
the terms of the trust. The trustees of the trust are Donald W. Goldfus, the
Company's Chairman and Chief Executive Officer, and Laurence J. Niederhofer and
O. Walter Johnson, who are also members of the Company's Board of Directors.
See "Management." Upon completion of this offering the Selling Shareholder will
beneficially own 1,403,614 shares of Common Stock (assuming the over-allotment
option is not exercised), or approximately 10.5% of the outstanding shares of
Common Stock.

4
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

----------------
Except as otherwise specified, all information in this Prospectus assumes
that the Underwriters' over-allotment option is not exercised. See
"Underwriting."

5
<PAGE>

INVESTMENT CONSIDERATIONS

In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following investment
considerations in evaluating the Company and its businesses before purchasing
shares of the Common Stock offered hereby.

INDUSTRY CONDITIONS

The Commercial Construction Division, Window Fabrication Division and the
Glass Fabrication Division serve the United States and international
nonresidential construction markets, which tend to be cyclical in nature and
sensitive to changes in general economic conditions. Nonresidential
construction, particularly the domestic office building segment, has declined
significantly in recent years both in terms of dollars and square feet of new
contract awards. As a result of this declining market, the Company has
experienced reduced margins and operating losses for these divisions. While
industry conditions for the domestic nonresidential construction market have
slowly improved over the past several quarters, there can be no assurance that
market conditions will continue to improve. In addition, the Glass Fabrication
and the Installation and Distribution Divisions serve the replacement
automotive glass market which tends to be cyclical in nature. This market's
pricing structure has changed significantly in recent years as insurance
companies seek volume pricing at significant discounts from historical levels
and attempt to enter into preferred or exclusive provider arrangements with a
limited number of providers. There can be no assurance that the Company will be
able to improve or maintain its margins or that it will be selected by
insurance companies as a provider of replacement automotive glass on a regional
or national basis. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."

COMPETITIVE ENVIRONMENT

The Company's divisions operate in industries that are highly competitive and
that, other than the industry in which the Company's Viratec joint venture
competes, are fairly mature. These competitive factors, as well as difficult
industry conditions in recent years, have caused declines in sales volumes and
increased pricing pressures in the Company's markets, resulting in over-
capacity and consolidation in these markets. The Company expects its markets to
remain highly competitive. The Company faces competition from other major
contractors, subcontractors, manufacturers, fabricators and installers in each
of its markets, certain of which may have greater financial or other resources
than the Company. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business."

INTERNATIONAL OPERATIONS

The Company is making increased efforts to develop business in international
markets, including Asia and Europe. In order to enter international markets
effectively, the Company faces certain challenges, including establishing the
acceptance of the Company in the local market, adapting its business practices
to local patterns and developing commercial relationships with local market
participants. In addition, the Company's international businesses are subject
to the general risks of doing business abroad, including that it has less
experience in international sales and markets than in its domestic markets and
it is subject to the risk of adverse fluctuations in currency exchange rates.
For fiscal 1993 and fiscal 1994, these factors and start up costs for the
Company's international offices contributed to operating losses by the
Commercial Construction Division for its international operations. The
Company's international operations may be adversely affected by governmental,
political, economic and competitive conditions in other countries in which it
does business. See "Discussion and Analysis of Financial Condition and Results
of Operations" and "Business."

RESTRUCTURING PROGRAM

In response to difficult industry conditions and increasing competitive
pressures, the Company has taken steps to reorganize and restructure its
nonresidential construction businesses. The restructuring was undertaken to
better position the Company in its markets going forward, and as a result of
such restructuring, the Company recorded a $5.6 million (pre-tax) restructuring
and asset valuation charge in the fourth quarter of fiscal 1994. There can be
no assurance that these restructuring charges are adequate for the Company's
businesses or that they will result in meaningful cost reductions or
improvements. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Business."

6
<PAGE>

USE OF PROCEEDS

All of the shares of Common Stock offered hereby are being sold by the
Selling Shareholder. The Selling Shareholder will receive all of the proceeds,
and the Company will not receive any of the proceeds, from the sale of the
shares being offered.

CAPITALIZATION

The following table sets forth the short-term debt and total capitalization
of the Company and its subsidiaries at August 27, 1994.

<TABLE>
<CAPTION>
AUGUST 27,
1994
--------------
(IN THOUSANDS)
<S> <C>
Short-term debt (including current installments of long-term
debt)...................................................... $ 22,581
========
Long-term debt, less current installments................... $ 50,341
Shareholders' equity:
Common stock, $.33 1/3 par value; authorized 50,000,000
shares; issued and outstanding, 13,417,081 shares (1).... 4,472
Additional paid-in capital................................ 19,039
Retained earnings......................................... 96,796
--------
Total shareholders' equity.............................. 120,307
--------
Total capitalization.................................. $170,648
========
</TABLE>
- --------
(1) Does not include 616,514 shares of Common Stock reserved for issuance upon
exercise of outstanding stock options.

DIVIDENDS AND PRICE RANGE OF COMMON STOCK

The following table sets forth the high and low sales prices of the Common
Stock on the Nasdaq National Market and the cash dividends declared per share
of Common Stock for the fiscal periods indicated.

<TABLE>
<CAPTION>
MARKET PRICE DIVIDENDS DECLARED
--------------- PER SHARE OF
FISCAL QUARTER (ENDED) HIGH LOW COMMON STOCK
---------------------- ------- ------- ------------------
<S> <C> <C> <C>
1993
First (May 30, 1992)...................... $12 3/4 $10 1/4 $.065
Second (August 29, 1992).................. 10 3/4 8 1/4 .065
Third (November 28, 1992)................. 12 1/4 9 3/4 .070
Fourth (February 27, 1993)................ 12 1/4 9 / 3/4 .070
1994
First (May 29, 1993)...................... $12 1/2 $10 1/4 $.070
Second (August 28, 1993).................. 14 1/4 11 1/2 .070
Third (November 27, 1993)................. 14 1/2 11 1/4 .075
Fourth (February 26, 1994)................ 17 3/4 13 1/2 .075
1995
First (May 28, 1994)...................... $15 1/4 $11 1/2 $.075
Second (August 27, 1994).................. 15 3/4 11 3/4 .075
Third (through October 18, 1994).......... 17 14 3/4 .080
</TABLE>

It is the Company's policy to pay quarterly cash dividends in May, August,
November and February to holders of Common Stock. Cash dividends have been paid
each quarter since 1974 and have been increased each year since 1974. Future
dividends will be determined by the Company's Board of Directors after
consideration of the earnings and financial condition of the Company.

7
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following table presents selected financial data derived from the
Company's financial statements. The financial data for the six months ended
August 28, 1993 and August 27, 1994 have been derived from the Company's
unaudited financial statements, which, in the opinion of management, include
all adjustments necessary for a fair presentation of the results of operations
and financial position for the periods and as of the dates presented. The
results of operations for the six months ended August 27, 1994 are not
necessarily indicative of the results to be anticipated for the entire fiscal
year. The table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Financial
Statements and the notes thereto contained elsewhere in this Prospectus.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED, SIX MONTHS ENDED,
-------------------------------------------------------- ---------------------
MARCH 3, MARCH 2, FEBRUARY 29, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 27,
1990 1991 1992 1993 1994 1993 1994
-------- -------- ------------ ------------ ------------ ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
DATA:
Net sales............... $589,657 $599,525 $596,281 $572,450 $688,233 $324,320 $364,898
Cost of sales........... 495,939 499,428 494,701 494,249 604,338 282,280 310,270
-------- -------- -------- -------- -------- -------- --------
Gross profit........... 93,718 100,097 101,580 78,201 83,895 42,040 54,628
Selling, general and
administrative
expenses............... 61,685 66,830 76,531 71,832 71,659 36,539 42,435
Equity in net (earnings)
loss of affiliated
companies.............. 1,634 3,035 2,529 (1,875) (2,294) (1,194) (471)
Provision for business
restructuring and asset
valuation.............. -- -- 5,800 -- 5,178 -- --
-------- -------- -------- -------- -------- -------- --------
Operating income....... 30,399 30,232 16,720 8,244 9,352 6,695 12,664
Interest expense, net... 3,824 1,059 970 1,794 2,735 1,320 1,383
Other expense, net...... 3,200 331 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Earnings before income
taxes and other items
below................. 23,375 28,842 15,750 6,450 6,617 5,375 11,281
Income taxes............ 9,280 11,825 7,245 1,936 2,634 2,016 4,512
Minority interest....... -- -- -- -- 675 -- (125)
-------- -------- -------- -------- -------- -------- --------
Net earnings before
cumulative effect of
change in accounting
for income taxes...... 14,095 17,017 8,505 4,514 3,308 3,359 6,894
Cumulative effect of
change in accounting
for income taxes....... -- -- -- -- 525 525 --
-------- -------- -------- -------- -------- -------- --------
Net earnings........... $ 14,095 $ 17,017 $ 8,505 $ 4,514 $ 3,833 $ 3,884 $ 6,894
======== ======== ======== ======== ======== ======== ========
Earnings per share
before cumulative
effect of change in
accounting for income
taxes.................. $ 1.04 $ 1.25 $ .63 $ .34 $ .25 $ .25 $ .51
Cumulative effect per
share of change in
accounting for
income taxes........... -- -- -- -- .04 .04 --
-------- -------- -------- -------- -------- -------- --------
Earnings per share..... $ 1.04 $ 1.25 $ .63 $ .34 $ .29 $ .29 $ .51
======== ======== ======== ======== ======== ======== ========
Dividends per share..... $ .20 $ .24 $ .26 $ .27 $ .29 $ .14 $ .15
Weighted average shares
outstanding............ 13,566 13,630 13,512 13,293 13,289 13,240 13,412
BALANCE SHEETS DATA:
Working capital......... $ 59,897 $ 60,184 $ 65,365 $ 69,242 $ 80,440 $ 83,614 $ 96,948
Total assets............ 244,103 250,343 249,509 251,456 306,188 289,321 315,107
Long-term debt.......... 41,366 29,398 25,267 28,419 35,688 42,120 50,341
Shareholders' equity.... 95,754 109,050 113,781 112,335 114,063 114,896 120,307
</TABLE>

8
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's discussion and analysis of financial condition and results of
operations should be read in conjunction with the Company's Consolidated
Financial Statements and notes thereto included elsewhere in this Prospectus.

INTRODUCTION

In the ten years prior to fiscal 1992, the Company posted consistent growth
in net sales and net earnings. The Company's net sales decreased during fiscal
1992 and 1993, while its net earnings decreased in each of those fiscal years
and in fiscal 1994. These sales and earnings declines were primarily caused by
difficult conditions in the nonresidential construction market and a changing
competitive environment in the replacement automotive glass market. In fiscal
1993 and fiscal 1994, the Company invested in technology, strengthened controls
and cut operating costs, in order to increase operating efficiencies and to
enhance its competitive position. These initiatives included restructuring
efforts which resulted in a provision in fiscal 1994 of $5.6 million pre-tax
($4.5 million after tax). During the first six months of fiscal 1995, the
Company's financial results have benefitted from these initiatives, as well as
slowly improving conditions in the nonresidential construction market.

OPERATING RESULTS

The following table sets forth certain components of operations, stated as a
percent of net sales, for the three fiscal years ended February 26, 1994 and
for the six months ended August 28, 1993 and August 27, 1994.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED, SIX MONTHS ENDED,
-------------------------------------- ---------------------
FEBRUARY 29, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 27,
1992 1993 1994 1993 1994
------------ ------------ ------------ ---------- ----------
<S> <C> <C> <C> <C> <C>
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........... 83.0 86.3 87.8 87.0 85.0
----- ----- ----- ----- -----
Gross profit.......... 17.0 13.7 12.2 13.0 15.0
Selling, general and
administrative
expenses............... 12.8 12.5 10.4 11.3 11.6
Equity in net (earnings)
loss of affiliated
companies.............. 0.4 (0.3) (0.3) (0.4) (0.1)
Provision for business
restructuring and asset
valuation.............. 1.0 -- 0.8 -- --
----- ----- ----- ----- -----
Operating income...... 2.8 1.4 1.4 2.1 3.5
Interest expense, net... 0.2 0.3 0.4 0.4 0.4
----- ----- ----- ----- -----
Earnings before income
taxes and other
items................ 2.6 1.1 1.0 1.7 3.1
Income taxes............ 1.2 0.3 0.4 0.6 1.2
Minority interest....... -- -- 0.1 -- --
----- ----- ----- ----- -----
Net earnings before
cumulative effect of
change in accounting
for income taxes..... 1.4 0.8 0.5 1.0 1.9
Cumulative effect of
change in accounting
for income taxes....... -- -- 0.1 0.2 --
----- ----- ----- ----- -----
Net earnings.......... 1.4% 0.8% 0.6% 1.2% 1.9%
===== ===== ===== ===== =====
</TABLE>

9
<PAGE>

The following table sets forth the sales and operating income of the
Company's divisions for the three fiscal years ended February 26, 1994.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED,
----------------------------------------
FEBRUARY 29, FEBRUARY 27, FEBRUARY 26,
1992 1993 1994
------------ -------------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
SALES:
Commercial construction............ $274,863 $248,532 $307,036
Window fabrication................. 89,101 75,325 83,228
Glass fabrication.................. 108,530 111,933 135,208
Installation and distribution...... 153,561 165,842 197,471
-------- -------- --------
Total............................ 626,055 601,632 722,943
Intersegment elimination........... (29,774) (29,182) (34,710)
-------- -------- --------
Net sales........................ $596,281 $572,450 $688,233
======== ======== ========
OPERATING INCOME (LOSS):
Commercial construction............ $ 14,972 $ (5,092) $(18,959)
Window fabrication................. 7,426 (506) (3,484)
Glass fabrication.................. (2,292) 7,845 13,560
Installation and distribution...... (43) 5,845 13,918
-------- -------- --------
Total............................ 20,063 8,092 5,035
Interest expense, net.............. (970) (1,794) (2,735)
Other income (expense)............. (3,343) 152 4,317
-------- -------- --------
Earnings before income taxes and
other items..................... $ 15,750 $ 6,450 $ 6,617
======== ======== ========
</TABLE>

SIX MONTHS ENDED AUGUST 27, 1994 COMPARED TO SIX MONTHS ENDED AUGUST 28, 1993

Net sales and net earnings for the six months ended August 27, 1994 increased
13% and 105%, respectively, from the results generated during the comparable
period of fiscal 1994, excluding a $525,000 gain from a change in accounting
principle recorded in the first quarter of the fiscal 1994. After the effect of
the accounting change, net earnings for the first six months of fiscal 1995
were 77% greater than a year ago. Improved net sales at GFD's architectural
glass group and IDD's replacement automotive glass groups accounted for most of
the increased net sales. A reduction in CCD's operating loss and improved
profitability at GFD's architectural glass group and IDD's replacement
automotive glass groups combined to produce higher net earnings for the six
months ended August 27, 1994.

The following table presents the percentage change in net sales and operating
income for the Company's four divisions and on a consolidated basis, for the
six months ended August 27, 1994 as compared to the corresponding period in
fiscal 1994.

<TABLE>
<CAPTION>
NET OPERATING
DIVISION SALES INCOME
-------- ----- ---------
<S> <C> <C>
Commercial construction................................... 8% --(1)
Window fabrication........................................ 8 --(2)
Glass fabrication......................................... 20 34%
Installation and distribution............................. 12 12
Consolidated............................................ 13 89
</TABLE>
- --------
(1) CCD's operating loss for the first six months of fiscal 1995 was reduced by
39% as compared to its operating loss for the same period in fiscal 1994.
(2) WFD had operating income for the first six months of fiscal 1995 as
compared to an operating loss for the same period of fiscal 1994.

10
<PAGE>

For the six months ended August 27, 1994, gross profit as a percentage of net
sales improved as a result of firmer pricing at GFD and IDD and stronger
margins at CCD's detention/security group. Selling, general and administrative
expenses increased for items such as commissions, bonus, profit sharing and bad
debt expense due to higher sales. Significant expenditures also were made at
IDD on information and communication systems improvements. Equity in earnings
of affiliated companies decreased, as first quarter earnings at Viratec were
significantly lower than last year's results. Net interest expense increased
slightly from a year ago, as higher borrowing levels were partially offset by
lower interest rates. The Company's effective income tax rate of 40% remained
higher than last year's effective rate, when a significant portion of its
earnings were derived from equity in the net earnings of affiliated companies.

The Commercial Construction Division's net sales for the six months ended
August 27, 1994 increased 8% compared to the same period of the prior fiscal
year. Higher international new construction and detention/security activity was
offset, in part, by lower domestic new construction sales due to a reduction in
the number of active contract offices and delayed starts on some projects.
Although CCD's operating loss was 39% lower than a year ago, CCD's results
reflected high international overhead and the completion of several low margin
projects. During the first half of fiscal 1995, the division continued efforts
to improve its organizational structure and procedures, including project
bidding and project management.

For the first six months of fiscal 1995, the Window Fabrication Division had
increased sales and a modest operating profit, compared with a loss in the same
period of fiscal 1994. The results reflect improved market conditions in the
institutional window market and the effects of the fiscal 1994 restructuring.
The division's window coverings group had increased net sales, but experienced
lower earnings as a result of margin pressure caused by competitive price
discounting.

The Glass Fabrication Division produced continuing sales and earnings growth
in the first half of fiscal 1995. This growth was principally attributable to
strong demand for fabricated architectural and automotive glass. GFD's
architectural glass group reported increased revenues and operating income for
the period, reflecting improved export sales, plant utilization and pricing on
domestic business. As a result of the architectural glass group's strong sales,
Marcon also generated improved results. GFD's replacement automotive glass
group reported improved sales and earnings as it operated near capacity.
Despite some price discounting by competitors, GFD's picture framing glass
group reported slightly improved results for the period.

Increased demand and firmer pricing for replacement automotive glass
favorably affected the Installation and Distribution Division's results.
Wholesale operations accounted for most of the sales and earnings gains. The
Harmon Glass Network, which subcontracts automotive glass replacement sales
nationwide, reported 4% unit growth over the same period a year ago. IDD's
operating income improvement was reduced, in part, by ongoing expenditures to
overhaul its information and communications systems.

Viratec reported increased sales, but had lower operating income than a year
ago. Its earnings were adversely affected by higher research and development
expenditures on potential products and process improvements.

11
<PAGE>

FISCAL 1994 COMPARED TO FISCAL 1993

For fiscal 1994, the Company reported a 20% increase in net sales and a 15%
decrease in net earnings. Sales increased as a result of strong replacement
automotive glass markets, higher overseas nonresidential construction activity
and improved demand for architectural glass products. The Company's window
coverings and picture framing groups also reported improved sales. Pricing
pressures in the nonresidential construction market and inefficient factory
utilization by the Window Fabrication Division's architectural products group
caused the Company's gross profit as a percentage of sales to decrease for the
second straight year from 13.7% in fiscal 1993 to 12.2% in fiscal 1994.
Replacement automotive glass and architectural glass markets continued to be
very competitive, but strong demand for such products allowed for firmer
pricing, partially offsetting the negative impact of the factors noted above.
Selling, general and administrative expenses decreased slightly from a year
earlier, resulting from cost containment efforts throughout the Company. Higher
information systems costs and expanded marketing expenditures were offset by
improvements made in other areas. The Company's equity in net earnings of
affiliated companies (Marcon and Viratec) rose 22% in fiscal 1994. Despite
lower interest rates, net interest expense increased 52% to $2.7 million in
fiscal 1994, as borrowing levels increased to meet working capital needs.

During the fourth quarter of fiscal 1994, the Company recorded a provision of
$5.6 million ($4.5 million after tax, or $.34 per share), for business
restructuring and asset valuation to reflect the costs of consolidating or
closing 10 Commercial Construction Division offices and facilities, of writing
down certain assets and of reorganizing the Window Fabrication Division's
architectural products group. The provision consisted of asset write-downs of
$2.5 million plus projected cash outlays of $3.1 million. Most of the $3.1
million will be expended in fiscal 1995 for equipment relocation, employee
severance and facility closing costs. The asset valuation component of the
provision included a $1.6 million write-off of certain intangible assets,
principally patents and non-compete agreements. The Company determined, based
on its review of expected results for the related operations, that the
intangible assets held no future value and should be written off. The Company
also wrote down to estimated net realizable value ($850,000) a facility
scheduled for closure.

The provision for business restructuring and asset valuation and the
performance of the Company's nonresidential construction units combined to
offset the strong results of the Company's architectural glass and replacement
automotive glass operations, resulting in consolidated net earnings, including
the SFAS 109 accounting change, decreasing 15% to $3.8 million, or $.29 per
share in fiscal 1994, from $4.5 million, or $.34 per share, in fiscal 1993.

The Commercial Construction Division recorded a $19.0 million operating loss
in fiscal 1994, compared to a $5.1 million operating loss in fiscal 1993. The
division incurred these losses in a competitive nonresidential construction
market where the division's traditional market, domestic office buildings,
remained at construction levels nearly 50% below those in 1988. The division's
loss included $4.7 million of the provision for business restructuring and
asset valuation described above. While growth in overseas markets contributed
to an increase in net sales in fiscal 1994 of 24%, highly competitive pricing
and the high costs of international marketing had a negative effect on margins.
CCD took several steps to lower overhead during fiscal 1994, including closing
or consolidating several domestic sales offices. CCD's international sales
increased to approximately $65.0 million in fiscal 1994 from $6.5 million in
fiscal 1993. CCD's international operations had a $887,000 operating loss in
fiscal 1994 compared to an operating loss of $1.3 million in fiscal 1993.

The Window Fabrication Division recorded an operating loss of $3.5 million in
fiscal 1994, after losing $506,000 the previous year. Although WFD had a 10%
rise in net sales, to $83.2 million, the sales gain was more than offset by
lower margins and costs of re-work and rush shipping orders. The division's
results included $850,000 of the restructuring and asset valuation provision.
The difficult market conditions in the nonresidential construction industry
contributed to losses in the division's architectural products group. The

12
<PAGE>

window coverings group of WFD produced revenues and earnings gains, partially
offsetting WFD's architectural products group's losses. Within the window
coverings group, sales volume increased, but a change in sales mix toward lower
margin products resulted in a decline in margins.

The Glass Fabrication Division leveraged sales growth across all product
lines into a 73% improvement in operating income, to $13.6 million in fiscal
1994. Sales rose 21% to $135 million. Increased demand for replacement
automotive glass enabled Curvlite, the division's automotive glass fabricating
group, to operate at near-capacity levels throughout the year. The resulting
efficiency led to lower unit costs, offsetting price weakness. GFD's
architectural glass group, Viracon, also experienced strong product demand, as
key competitors exited the industry due to difficult market conditions. Pricing
also improved slightly as industry demand temporarily exceeded capacity. The
division's picture framing glass group, Tru Vue, reported an increase in sales
of 7% in fiscal 1994, which combined with productivity gains to improve
operating income by 34%. Marcon placed its second coater in service during
fiscal 1994. In fiscal 1994 Marcon was able to increase shipments to both GFD
and Marvin. Although Marcon produced a profit for the fiscal year, it had lower
earnings in fiscal 1994 than in fiscal 1993 due to higher depreciation,
debugging costs and training expenses. The Company's export sales, principally
from sales of Viracon's high performance glass products into Asia, increased to
approximately $27.6 million in fiscal 1994 from $22.8 million in fiscal 1993.

The Installation and Distribution Division's sales increased 19% and earnings
138% in fiscal 1994. In fiscal 1993, IDD realigned its structure from a
regional to a national focus, and split its lines of business into retail and
wholesale. This realignment helped the division capitalize on increased unit
movement and firmer pricing in the replacement automotive glass market. Same-
store sales rose 15% in fiscal 1994, reflecting industry growth and increased
market penetration. Harmon Glass Network sales increased to both Company owned
stores and nonaffiliated stores. The division also increased its market
penetration by adding five wholesale distribution centers during fiscal 1994,
for a year-end total of 45 locations.

Viratec Thin Films achieved both sales and earnings growth, reporting a 71%
sales increase and a seven-fold increase in pretax earnings in fiscal 1994.
Viratec experienced strong demand, particularly in overseas markets, and
improved margins. Viratec initiated an expansion of its facility, with plans to
nearly double its square footage to provide increased capacity and allow for
new product development.

FISCAL 1993 COMPARED TO FISCAL 1992

For the year ended February 27, 1993, the Company reported a 4% decrease in
net sales and a 47% decrease in net earnings. Lower demand and severe
competitive pricing pressures were experienced in each of the Company's
business segments. Sales gains achieved by architectural fabricated glass and
installed automotive glass were more than offset by declines in curtainwall
contracting and aluminum window fabrication. Gross margins declined as volume
decreased and sales prices were under pressure in all business units. Selling,
general and administrative expenses were reduced through cost containment
programs at GFD, restructuring efforts at IDD and lower bad debt expense. CCD
experienced higher selling costs as the division furthered its efforts to
penetrate international and detention/security markets. A turnaround in equity
in net earnings of affiliates was due to improvements at Viratec and the
consolidation of Marcon's coating operations. Net interest expense increased
85%, as bank borrowings rose and less interest income was earned on invested
funds. Lower consolidated profits led to a decrease in the tax rate.

CCD reported a 10% reduction in division revenues in fiscal 1993, to $249
million, and a $5.1 million operating loss for the year, compared with $15.0
million operating income in fiscal 1992. The primary factors behind the
division's results were narrowing margins, competitive conditions in the
nonresidential construction market, including a domestic office building market
that remained at levels nearly 50% below 1988, and higher marketing costs
related to the pursuit of international and detention/security sales.

13
<PAGE>

WFD reported a 15% decline in revenues, to $75.3 million, and a $506,000
operating loss in fiscal 1993. The architectural products group sales fell 23%
from fiscal 1992. The window coverings group, however, reported a 22% increase
in sales and strong profits, nearly offsetting the architectural group's loss.
The window coverings group's results resulted from operations improvements and
the absence of losses from a business sold a year earlier.

GFD improved earnings in fiscal 1993. The division's net sales increased only
3%, but operating income increased to $7.8 million, compared with a $2.3
million operating loss in fiscal 1992. The consolidation of architectural glass
production to its Minnesota facilities and the cumulative effect of several
years of continuous cost reduction efforts throughout the division were
significant factors leading to the reported gains. Marcon reported modest
growth in both net sales and operating income due to rising popularity of
coated glass. The Company's export sales, principally from sales of Viracon's
high performance glass products into Asia, increased to approximately $22.8
million in fiscal 1993 from $18.7 million in fiscal 1992.

IDD was able to achieve sales growth and a return to profitability in fiscal
1993 despite competitive pricing conditions. The division began the process of
transformation from a regional to a national company with a line-of-business
concept, which resulted in greater accountability for separate retail and
wholesale operations. Increased demand also helped the recovery. The Harmon
Glass Network reported growth in sales to both Company owned stores and
nonaffiliated stores. The division closed 31 retail stores, while adding 10.

Viratec Thin Films made substantial improvements in fiscal 1993, closing the
year with a modest profit.

LIQUIDITY AND CAPITAL RESOURCES

At August 27, 1994, the Company's working capital stood at $96.9 million, up
$16.5 million, or 21%, from February 26, 1994. Reductions in accounts payable,
an increase in costs in excess of billings on uncompleted contracts and a
decrease in current bank debt primarily accounted for the working capital
growth. Despite sales gains during the first six months of fiscal 1995,
accounts receivable fell slightly as the Company's days' sales outstanding
improved, reflecting in part a change in receivables mix towards operations
with shorter payment cycles.

Investments in property, plant and equipment totaled $11.9 million for the
first half of the fiscal year. Major components of these additions included
expenditures for manufacturing facilities and equipment at GFD and for
information and communications systems throughout the Company, particularly at
IDD.

Earnings from operations, as well as use of the Company's credit facilities,
provided the funding for the working capital growth, capital spending and
dividend payments. Subsequent to the end of the quarter, the Company entered
into a $15.0 million revolving credit agreement, with a final maturity of March
1996. Accordingly, an additional $15.0 million of the Company's short-term bank
borrowings were classified as long-term debt at August 27, 1994. The Company
believes that cash flow from operations and its existing credit capacity will
be sufficient to meet the Company's current cash requirements.

BACKLOG

The Company's backlog (anticipated revenue from the uncompleted/unfilled
portion of firm orders) is significant for the Company's three construction-
related activities: window fabrication, glass fabrication and contract
installation. At August 27, 1994, the Company's total backlog of orders
considered to be firm was

14
<PAGE>

$394 million compared with $375 million at August 28, 1993. Approximately $110
million of the backlog will not be reflected as revenue in the next 12 months.
CCD's backlog at August 27, 1994 was $348 million, 3% higher than at August 28,
1993. The backlog for international projects was $121 million, approximately
$56 million of which is expected to be reflected as revenue in the next 12
months. Viratec's backlog at August 27, 1994 was $10.7 million, 17% higher than
at August 28, 1993. The Company believes the backlog numbers are firm, subject
only to the cancellation and modification provisions contained in various
orders. Substantially all of the orders in the backlog may be canceled or
modified at the election of the customer. The Company has not been materially
adversely affected by contract cancellations or modifications in the past.

15
<PAGE>

BUSINESS

THE COMPANY

The Company is a leader in the engineering, fabrication and installation of
exterior wall panels, aluminum window systems, glass panels, windshields and
related products and services for the nonresidential construction, replacement
automotive glass and selected consumer products markets. Operating through four
divisions and two joint ventures, the Company's strategy is to establish
leading competitive positions in markets related to its expertise in the
fabrication and installation of curtainwall, window systems and glass.

The Commercial Construction Division is the nation's largest subcontractor of
curtainwall and aluminum window systems for the commercial and institutional
construction markets, while the Window Fabrication Division manufactures
complete window systems and curtainwalls for commercial and institutional
builders. The Glass Fabrication Division is a leading fabricator in the United
States of architectural glass, including tempered, laminated and insulating
glass, for the nonresidential construction markets. Sales to the nonresidential
construction market contributed approximately 62% of the Company's net sales in
fiscal 1994.

In the replacement automotive glass market, the Installation and Distribution
Division is a leading installer of automotive replacement glass through its 238
Harmon Glass service centers located nationwide, while it also operates 51
Glass Depot automotive glass wholesale distribution centers. In addition, the
Glass Fabrication Division is a leading fabricator of replacement windshields
for foreign cars. Sales to the replacement automotive glass market contributed
approximately 32% of the Company's net sales in fiscal 1994.

The Company also competes in selected consumer products markets through its
Window Fabrication and Glass Fabrication Divisions and Viratec. WFD
manufactures window coverings, such as venetian blinds and shutters, for the
commercial and residential markets, while GFD is a major manufacturer of
picture frame glass. Viratec produces anti-reflective and highly reflective
thin film, optical-grade coatings for personal computer anti-glare screens,
electronic displays, projectors, laser scanners and similar equipment.

BUSINESS STRATEGY

Apogee's business strategy is to establish leading competitive positions in
markets related to the fabrication and installation of curtainwall, window
systems and glass. Key elements of this strategy include:

. FOCUS ON OPERATING EFFICIENCIES. The Company has initiated programs to
strengthen internal controls, cut costs and improve operating systems in
order to increase efficiencies and enhance its competitive position.
These initiatives include increasing control by senior management of
bidding on major construction projects, restructuring the Commercial
Construction and Window Fabrication Divisions and investing in new
production equipment for the Glass Fabrication Division.

. COMMITMENT TO TECHNOLOGY. The Company seeks to be a leader in applying
technology to the markets it serves. In the nonresidential construction
and architectural glass markets, the Company competes, in part, on the
basis of its design and engineering capabilities, such as its computer-
aided design systems and extensive engineering software. IDD is investing
in information and communication systems that enable the division to
handle more efficiently all aspects of insurance claims processing. In
addition, the Company continues to develop new coating technologies at
its Marcon and Viratec joint ventures.

. EXPAND INTERNATIONAL OPERATIONS. The Company believes the Asian and
European markets provide attractive opportunities in the construction of
new office buildings. In order to position itself for these
opportunities, the Company has increased its efforts to develop business
in these markets and has opened offices in Malaysia, Singapore, Hong Kong
and France in recent years.

16
<PAGE>

. CONTINUE ENTREPRENEURIAL TRADITIONS. The Company operates its divisions
as independent profit centers within a decentralized corporate structure
while seeking opportunities to coordinate the operation of the divisions
and provide integrated services and products on appropriate projects.
Management believes that this corporate structure enables each division
to maintain an entrepreneurial approach to business which focuses
attention on customer satisfaction and responsiveness to changes in
market conditions.

COMMERCIAL CONSTRUCTION DIVISION

General. The Commercial Construction Division is the nation's leading
subcontractor of curtainwall and aluminum window systems for commercial and
institutional construction markets. CCD's primary commercial market is new
office buildings. Institutional projects include museums, libraries, hospitals
and other facilities, which are often publicly financed. The division also
designs, manufactures and installs security and detention systems primarily for
correctional facilities and governmental buildings. CCD markets its services
domestically and internationally to general contractors, architectural design
firms and building owners, emphasizing its extensive engineering, design and
technical capabilities, project management expertise and customer service
focus.

CCD provides a broad range of engineering and design services to its
customers. Unlike many of its competitors, CCD has a full staff of engineers.
These engineers often work with the architect of a building to develop the
specific design for the building's window systems or curtainwall, within the
architect's general plan. The engineers are supported with advanced computer-
aided design capabilities and extensive engineering software. The Company
believes that CCD's engineering and design skills enable it to compete more
effectively for projects which require greater technical sophistication and to
provide high quality and on-time performance.

Industry Conditions. The nonresidential construction market in the United
States has declined in recent years. New construction of office buildings has
declined 50% since 1988 due to over-building in past years, tax law changes,
general economic recession, tightening credit standards, business
restructurings and other factors. As a result, competition in the new
construction market has intensified and the industry has experienced
significant consolidation. Construction of institutional buildings has
increased in recent years offsetting, in part, the decline in commercial
construction. In addition, certain international markets have expanded during
recent years, particularly in Asia.

In response to the decline in CCD's United States markets, the Company
restructured the division's operations in fiscal 1994. The Company reorganized
the division into three groups: new construction, full service and
detention/security. In fiscal 1994, the new construction group closed or
consolidated 12 construction offices and reduced personnel. At the same time,
the new construction group introduced new procedures to centralize the bidding
and management of major new construction contracts. The division has also
sought to change its mix of projects by increasing its share of the
institutional building market and expanding its presence in overseas markets.
In fiscal 1994, the division acquired an 80% interest in CFEM Facades, a French
company engaged in the manufacture and installation of curtainwall, and was
awarded an $80 million contract to provide and install curtainwall for the
world's tallest office towers in Kuala Lumpur, Malaysia.

Operating Groups. CCD operates through three groups in distinct markets: new
construction, full service and detention/security.

NEW CONSTRUCTION. The new construction group operates principally under the
"Harmon Contract" name through 11 construction offices in the United States as
well as offices in France, England, Hong Kong, Malaysia and Singapore. The new
construction group typically assembles and installs a building's exterior
enclosure. This enclosure typically consists of a metal framing system which is
glazed (filled) with glass in the vision areas and with opaque glass or panels
in the non-vision (spandrel) areas. Panels for the non-vision areas are usually
made from aluminum, precast concrete or natural stone. The division obtains its
materials from a number of independent fabricators, including the Company's
Window Fabrication and Glass

17
<PAGE>

Fabrication Divisions. The division also is a leading stone subcontractor for
setting stone on both the exterior and interior of buildings. Currently, the
new construction group has approximately 35 major projects (usually $3 million
or more) out of a total of approximately 128 projects.

FULL SERVICE. The full service group differentiates its services by offering
complete replacement or remodeling glass services for residential and
commercial buildings. In addition, the full service group offers 24-hour
replacement service for storm or vandalism damage. This group operates through
two sales offices and five glazing centers in the United States. It focuses on
replacement glazing and relatively smaller commercial and residential projects,
typically $250,000 or less. On remodeling projects, the group uses its
engineering capabilities to duplicate the original glass design or create a
completely new appearance for renovated buildings.

DETENTION/SECURITY. The detention/security group manufactures and installs
windows, doors, guard booths and monitoring systems, primarily for prisons and
jails. The group's products are also sold to convenience stores, hospitals,
schools and other governmental facilities. This group competes in the
detention/security market primarily through its Norment operating unit, which
is a leading firm in the design, manufacture and installation of institutional
and governmental security and detention systems. This group also operates two
other detention related companies, Airteq, which holds patents on the
manufacture of pneumatic locks used in Norment's and other detention/security
systems, and EMSS, a detention equipment contractor in the prison/security
industry, which operates primarily on the West Coast.

Competition. The curtainwall installation business is primarily price
competitive, although CCD's reputation for quality, design and engineering
services and performance to contract, as well as its cross-divisional
capabilities, are important factors in receiving invitations to bid on large
projects. In addition to these factors, CCD has a significant competitive
advantage in having the financial support and strength and long-term viability
of the Company, which allows CCD to be bonded on large, complex jobs. The major
project market continues to experience highly competitive pricing because of
decreased demand and the presence of excess capacity among large competitors.
The new construction group faces competition on smaller jobs primarily on price
and service.

International Operations. CCD has sales offices in Europe and Asia and is
making increased efforts to develop business in those markets. The Company
believes Asia will continue to be a strong market for new office building
construction over the next few years. In fiscal 1994, Harmon Contract won its
largest contract to date, an $80 million dollar agreement to provide
curtainwall for the world's tallest office towers: the twin Petronas Towers at
Kuala Lumpur City Centre in Malaysia. Change orders to the agreement subsequent
to August 27, 1994 have increased its value to approximately $90 million, the
majority of which will not be recognized until fiscal years 1996 and 1997. At
August 27, 1994, the backlog of work for European and Asian projects totaled
$121 million (including $76.5 million of backlog related to the Kuala Lumpur
project), approximately $56 million of which is expected to be recognized as
revenue in the next 12 months.

WINDOW FABRICATION DIVISION

General. WFD manufactures complete aluminum window systems and curtainwalls
for commercial and institutional buildings. The division's products are sold to
distributors, contractors and subcontractors, including CCD, primarily on the
basis of extensive design and technical capabilities and responsive customer
service. WFD specializes in high-end customized window products, and targets
remodeling and renovation projects, in addition to new construction projects.
WFD also produces window coverings, such as venetian blinds and shutters, for
the commercial and residential markets.

Industry Conditions. Demand for WFD's window system products depends on the
level of new institutional and commercial construction, as well as the
renovation of existing buildings. The institutional component of the demand for
WFD's window system products tends to make these markets less cyclical than the
Company's other markets. WFD's markets have experienced increased price
competition in recent years as manufacturers of windows for the new commercial
construction market have expanded into the institutional market. Demand for
WFD's window covering products derives primarily from new residential
construction and residential remodeling.

18
<PAGE>

Operating Groups. WFD is organized into two operating groups: architectural
products and window coverings.

ARCHITECTURAL PRODUCTS. WFD manufactures and markets aluminum windows and
curtainwall systems under the "Wausau Metals" name. These products meet high
standards of wind load capacity and resistance to air and moisture seepage. WFD
aluminum window frame designs are engineered to be thermally efficient, using
high-strength polyurethane to limit the transfer of heat or cold through the
window frame. Wausau Metals' products are marketed through a nationwide network
of distributors and a direct sales staff. Sales are made to building
contractors and subcontractors, including Harmon Contract, for new construction
and to building owners for retrofitting older buildings. Wausau Metals
maintains design and product engineering staffs to prepare aluminum window and
curtainwall system designs to fit customers' needs and to originate new product
designs. Wausau Metals in certain circumstances joins Harmon Contract in
pursuing projects, as many architects and general contractors prefer to work
with an experienced curtainwall subcontractor and manufacturer team. In
addition, Wausau Metals glazes some of its window systems with materials
purchased from the Company's Glass Fabrication Division.

Operating under the "Linetec" name, WFD also operates a metal coating
facility which provides anodized and fluoropolymer coatings to metal. Anodizing
is the electrolytic process of putting a protective, often colored, oxide film
on light metal, typically aluminum. Fluoropolymer coatings are high quality
paints which are sometimes preferred over anodizing because of the wide color
selection. Coatings are applied to window and curtainwall components for the
Company's, as well as other companies' architectural and industrial aluminum
products.

WINDOW COVERINGS. The division also offers several types of window coverings
for residential, commercial and institutional markets, under the "Nanik" and
"The Shuttery" names. Nanik manufactures various types of custom aluminum, wood
and polycarbonate venetian blinds, and markets them primarily to interior
designers through independent distributors. The Shuttery is a manufacturer of
custom wooden and vinyl interior shutters. Nanik Wood Products was formed in
1991 to provide a reliable source of the wood components of blinds and
shutters, such as slats, louvers, styles and wands, for both Nanik and The
Shuttery and for sale to other customers, while allowing both units to improve
inventory control and production efficiency.

Competition. WFD's architectural products group competes with a large number
of regional window fabrication companies. The architectural products group
competes primarily on the basis of its design and technical capabilities and
high quality products. The window coverings group competes with several large,
national competitors, which offer a full line of products, as well as a number
of smaller, custom wood blind manufacturers.

GLASS FABRICATION DIVISION

General. GFD is a leading fabricator in the United States of architectural
glass, including tempered, laminated and insulating glass, for the
nonresidential construction market. GFD sells architectural glass to building
contractors and subcontractors, including CCD, and emphasizes its single
source, large scale manufacturing capabilities, broad product line and
competitive pricing. Marcon, a joint venture with Marvin, provides glass
coating services for residential windows to Marvin and for architectural glass
to GFD, as well as outside customers. The division is also a leading fabricator
of replacement windshields for foreign cars, and is a major manufacturer of
picture frame glass. A substantial portion of its glass products is delivered
to customers by GFD's fleet of Company owned trucks, providing "backhaul"
capability for its raw materials, thereby reducing shipping time,
transportation costs and breakage expense.

GFD purchases flat, unprocessed glass in bulk quantities from which it
fabricates a variety of glass products, including insulating, tempered and
laminated architectural glass; security glass; laminated and tempered
automotive and industrial glass; anti-reflective and UV-light blocking picture
framing glass; and provides reflective and low-emissivity coatings on glass.
Tempered glass is a heat-processed safety glass which

19
<PAGE>

is four to five times stronger than ordinary glass, breaks into "pebbles"
rather than sharp pieces and has architectural, automotive and industrial
applications. Laminated glass consists of two or more pieces of glass fused
with a plastic interlayer and is used primarily for strength and safety in
automobile windshields and skylights and in security applications. Insulating
glass, comprised of two or more pieces of glass separated by a sealed air
space, is used in architectural and residential applications for thermal
control.

Industry Conditions. As with CCD, the decline in new nonresidential
construction in recent years has resulted in increased competition and
significant consolidation in the architectural glass market. Within the past
few years, several major competitors have exited the architectural glass
market. During this period of consolidation, GFD has invested in new equipment
and increased its capacity in order to reduce production costs, increase
customer services and enhance GFD's competitive position.

Operating Groups. GFD operates through four groups which focus on four
distinct markets: architectural glass, automotive glass, picture framing glass
and glass coating services.

VIRACON. GFD's Viracon group fabricates all types of architectural glass
(insulating, laminated, tempered and combinations of all three) at its complex
in Owatonna, Minnesota. Combined with the capabilities of GFD's glass coating
joint venture, which is also located in Owatonna, GFD is able to provide a full
range of products from a single location. The Company believes GFD's ability to
produce a broad range of products at a single location enables it to reduce
lead times to manufacture a variety of products in response to changing
customer demands and provides a quality and cost advantage as compared to
competitors with multiple locations or narrower product lines.

CURVLITE. Curvlite, the division's automotive group, primarily fabricates
replacement windshields for foreign and domestic automobiles and tempered and
laminated parts for the transportation industry. It fabricates approximately
800 different types of replacement windshields which are marketed nationally to
distributors and glass shops, including the Company's Installation and
Distribution Division. Curvlite seeks to offer a broad selection of windshields
by developing new windshields as new models are introduced.

TRU VUE. Tru Vue is one of the largest domestic manufacturers of picture
framing glass. Tru Vue provides its customers with a broad array of picture
framing glass products, including clear, reflection control, which diminishes
reflection, and conservation glass, which blocks ultraviolet rays. Its products
are distributed primarily through independent distributors who, in turn, supply
the local picture framing market. Tru Vue also manufactures conservation
picture-framing matboard, which complements Tru Vue's glass product offerings.

MARCON COATINGS. Marcon, a 50% owned joint venture with Marvin, provides
glass coating services for residential windows to Marvin and for architectural
glass to Viracon, as well as outside customers. Marcon's reflective and low-
emissivity coatings are applied to both clear and opaque glass to reduce energy
costs and provide innovative design features for window and curtainwall
systems. Low-emissivity coatings are an invisible, metallic film deposited on
glass which selectively limits the transfer of heat through the glass. Low-
emissivity coated glass represents a growing segment of both residential and
non-residential glass markets.

Competition. GFD competes with several large integrated glass manufacturers
and numerous smaller specialty fabricators. Product pricing and service are the
primary competitive factors in this market. GFD competes on the basis of its
single source, large scale manufacturing capabilities, broad product line and
competitive pricing.

International Operations. GFD's export sales are primarily from the sale of
Viracon's high performance architectural glass products into Asia and Europe.
Export sales amounted to approximately 17% of GFD's sales in fiscal 1994. In
May 1994, GFD received the President's E Award from the U.S. Department of
Commerce recognizing its export sales.

20
<PAGE>

INSTALLATION AND DISTRIBUTION DIVISION

General. The Installation and Distribution Division is a leading installer of
replacement automotive glass through its 238 Harmon Glass service centers
located nationwide. The Company believes it is the second largest replacement
automotive glass retailer in the United States. Harmon Glass provides
automotive windshield and window replacement and repair services to insurance
companies and their policyholders, automotive leasing and fleet operators and
individual car owners. IDD also operates 51 Glass Depot automotive glass
wholesale distribution centers that provide windshields and other glass
products to Harmon Glass and other retail automotive glass service centers.

Industry Conditions. The market for automotive glass replacement is highly
fragmented with no one provider of retail or wholesale services dominating the
market. Demand for replacement automotive glass is influenced by a variety of
factors, including new car sales, gasoline prices, speed limits, road
conditions, weather and average number of miles driven. In recent years, the
industry's pricing structure has changed significantly as major purchasers of
automotive replacement glass, such as insurance companies, increasingly request
volume pricing and enter into preferred or exclusive provider arrangements with
a fewer number of glass providers at significant discounts from historical
levels. As a result, margins have narrowed at the retail level and, to a lesser
extent, at the wholesale and manufacturing levels. In response to these
conditions, the Company has invested significantly in its information
management systems to service its insurance company customers on a more cost
effective and timely basis, while closing underperforming retail centers and
expanding the number of center locations selectively in markets that provide
attractive opportunities for growth. The division opened or acquired five new
distribution centers in fiscal 1994 and six distribution centers in the first
six months of fiscal 1995. IDD opened six and closed 12 retail automotive glass
centers in fiscal 1994 and opened seven retail shops in the first six months of
fiscal 1995.

Operating Groups. IDD operates through two separate groups: Harmon Glass and
The Glass Depot.

HARMON GLASS. IDD operates 238 automotive glass service centers in 38 states,
primarily in the Midwest, Great Lakes, and Southeast regions. The service
centers replace automotive glass on the premises and also provide mobile
installation service. Primary customers include insurance companies (on behalf
of their insured clients), fleet owners and individual car owners. The glass
service centers also carry limited inventories of flat glass, which are sold at
retail for such purposes as home window repair and table tops. Some automotive
accessories are also sold and installed at the service centers. Quality service
is stressed in all service centers. IDD also operates a centralized service for
handling automotive glass claims under the name Harmon Glass Network (the
"Network"). Through the Network, Harmon Glass, on behalf of various insurance
companies, handles replacement glass claims made by their policyholders,
sometimes in a single call on a toll-free number, to an operator who schedules
the repairs through a Harmon Glass service center or a subcontractor member of
the Network and begins the process of filing the claim electronically with the
applicable insurance company. Harmon Glass service centers handle approximately
two-thirds of the claims made through the Network. The Network subcontracts for
replacement and repair services with over 3,200 automotive glass stores
nationwide for the remainder of the claims. The use of subcontractors in the
Network enables Harmon Glass to offer to insurance companies coverage in areas
which are not served by existing Harmon Glass service centers. In addition,
Harmon Glass retains a portion of the insurance payment on each replacement or
repair made by a subcontractor. The Network seeks to maximize the electronic
exchange of information with insurance companies, which reduces claim costs and
eliminates errors.

IDD is investing in information systems that enable the division to handle
more efficiently all aspects of insurance claims. IDD is implementing direct
electronic processing of insurance claims to reduce the costs to insurance
companies of processing these claims. The Company also believes that IDD's
information systems will enable it to better analyze claims experience for
insurance companies.

THE GLASS DEPOT. The automotive glass distribution centers, known as The
Glass Depot, supply the Harmon Glass service centers with automotive and flat
glass, as well as selling wholesale to other glass installers. Due to the
variety of makes and models of automobiles, automotive glass centers typically
stock

21
<PAGE>

only windshields for the most popular models. As a result, there is a demand
for distributors to maintain inventories of automotive glass and to provide
prompt delivery. The Glass Depot distribution centers maintain a broad
selection of automotive glass. The Glass Depot centers purchase fabricated
automotive glass from several primary glass manufacturers and fabricators,
including the Company's Viracon/Curvlite Group.

Competition. Harmon Glass competes with other replacement automotive glass
shops and repair/replacement chains, car dealers and body shops on the basis of
price and customer service. Increasingly in recent years, Harmon Glass has
competed in the replacement automotive glass market for nationwide or regional
arrangements with the claims departments of insurance companies which are
seeking to consolidate their claims processing with a fewer number of vendors.
For these arrangements, Harmon Glass competes on the basis of its ability to
reduce the cost of claims processing for the insurance companies and customer
satisfaction by policyholders. This trend toward national or regional
arrangements has made the market more volatile as larger amounts of business
can be shifted by the change in a single arrangement. Harmon Glass's
competition consists of national and regional chains as well as significant
local competition. The Glass Depot competes with other automotive glass
wholesale distributors, as well as fabricators for automotive original
equipment manufacturers, many of which may have greater financial resources
than The Glass Depot.

VIRATEC THIN FILMS

Viratec produces anti-reflective and highly reflective thin film, optical
grade coatings for personal computer anti-glare screens, electronic displays,
projectors, laser scanners and similar equipment. The Company has made
significant investments in Viratec's operations in recent years and is
developing commercial applications for its more advanced technologies,
including a project to develop commercially feasible manufacturing capabilities
to apply thin film anti-glare coatings directly to the curved face of CRTs used
in computer monitors, televisions and other electronic displays. Viratec's
ability to develop commercially feasible applications for its advanced
technologies will depend on its achieving further technological advancements,
the likelihood of which cannot be predicted. Viratec has several patents and
patents pending pertaining to its glass coating operations. Viratec faces
competition in all aspects of its business from domestic and foreign
competitors, many of which have substantially greater resources than Viratec.
Viratec is a 50% owned joint venture with Marvin.

22
<PAGE>

MANAGEMENT

The Directors, Executive Officers and certain Division Managers of the
Company are set forth in the following table.

<TABLE>
<CAPTION>
YEARS AS
DIRECTORS AGE DIRECTOR AFFILIATION
--------- --- -------- -----------
<C> <C> <C> <S>
Donald W. Goldfus....... 60 30 Chairman and Chief Executive Officer
of the Company
Anthony L. Andersen..... 58 6 Chair--Board of Directors and CEO of
H.B. Fuller Company
Gerald K. Anderson...... 62 13 President of the Company
Harry A. Hammerly....... 60 1 Executive Vice President of Life
Sciences Sector and International
Operations, 3M Company
O. Walter Johnson....... 69 35 Chairman and Chief Executive Officer
of Clutch &
U-Joint Inc.
Jerry W. Levin.......... 50 7 President and Chief Executive Officer
of Revlon, Inc., Executive Vice
President, MacAndrews & Forbes Group,
Inc.
James L. Martineau...... 54 25 Vice President of the Company,
President of the Glass Fabrication
Division
Laurence J. Niederhofer. 62 30 Retired Vice Chairman of the Company
and Former Chief Executive Officer of
the Window Fabrication Division of
the Company
D. Eugene Nugent........ 66 4 Retired Chairman and Chief Executive
Officer of Pentair, Inc.
<CAPTION>
YEARS
EXECUTIVE OFFICERS AND WITH
DIVISION MANAGERS AGE COMPANY TITLE
---------------------- --- -------- -----
<C> <C> <C> <S>
Donald W. Goldfus....... 60 35 Chairman and Chief Executive Officer
of the Company
Gerald K. Anderson...... 62 21 President of the Company
Thomas N. Adamson....... 45 2 Chief Executive Officer of the
Commercial Construction Division
Larry C. Anderson....... 52 25 President of the Installation and
Distribution Division
William G. Gardner...... 49 21 Treasurer, Chief Financial Officer and
Secretary of the Company
Richard Gould........... 54 1 Senior Vice President of the Company
Gary W. Haider.......... 51 23 President of the Commercial
Construction Division
James L. Martineau...... 54 25 Vice President of the Company,
President of the Glass Fabrication
Division
</TABLE>

23
<PAGE>

SELLING SHAREHOLDER

The Russell H. Baumgardner Trust of 1986 (the "Selling Shareholder") is
selling all of the shares of Common Stock offered hereby. The Selling
Shareholder owns shares of Common Stock originally owned by Russell H.
Baumgardner, the Company's founder and former Chairman and Chief Executive
Officer, who died in January 1994. The trustees of the Selling Shareholder have
recommended the sale of the shares of Common Stock to be sold in this offering
in order to obtain funds to satisfy certain of the trust's obligations and to
diversify the assets to be distributed to the trust's beneficiaries pursuant to
the terms of the trust. The trustees of the trust are Donald W. Goldfus, the
Company's Chairman and Chief Executive Officer, and Laurence J. Niederhofer and
O. Walter Johnson, who are also members of the Company's Board of Directors.
Prior to this offering, the Selling Shareholder beneficially owned 2,203,614
shares of Common Stock, of which 800,000 are offered hereby. Upon completion of
this offering the Selling Shareholder will beneficially own 1,403,614 shares of
Common Stock (assuming the over-allotment option is not exercised), or
approximately 10.5% of the outstanding shares of Common Stock.

DESCRIPTION OF CAPITAL STOCK

The Company's Articles of Incorporation authorize the issuance of 50,000,000
shares including Common Stock and Preferred Stock.

COMMON STOCK

As of September 27, 1994, 13,417,081 shares of the Company's Common Stock are
issued and outstanding. In addition, 1,807,586 shares of Common Stock are
reserved for issuance upon exercise of outstanding options, options that may be
granted pursuant to the Company's stock option plans and shares that may be
issued pursuant to the Company's employee stock purchase plan and partnership
plan. All currently outstanding shares of Common Stock, including the shares
offered hereby, are fully paid and nonassessable.

The holders of Common Stock are entitled to one vote for each share held of
record on all matters voted upon by shareholders and may not cumulate votes for
the election of directors. Accordingly, the holders of a majority of the shares
of Common Stock outstanding will be able to elect all of the directors. The
holders of Common Stock are entitled to such dividends as may be declared by
the Board of Directors. Subject to the preferential rights, if any, of any
class or series of the undesignated shares that may be authorized and issued by
the Board of Directors, each share of outstanding Common Stock is entitled to
participate equally in any distribution of net assets made to the shareholders
in liquidation of the Company. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of Common Stock. All
shares of Common Stock have equal rights and preferences.

PREFERRED STOCK

The Company's Articles of Incorporation provide that shares of Preferred
Stock may be issued by the Board of Directors from time to time, in one or more
series, having such voting powers, full or limited, or no voting powers, and
such designations, preferences and relative, participating, optional or other
special rights, and qualifications, limitations or restrictions thereof or
other privileges as it may establish. The issuance of Preferred Stock by the
Board of Directors could affect the rights of holders of Common Stock. For
example, issuance of the Preferred Stock could result in a class of securities
outstanding that will have preferences with respect to dividends and in
liquidation over the Common Stock, and could (upon conversion or otherwise)
enjoy all of the rights appurtenant to Common Stock. The Company has no current
plans to issue any Preferred Stock, except as provided for in the Rights Plan.
See "Rights Plan" below.

24
<PAGE>

RIGHTS PLAN

Each share of Common Stock has one Preferred Stock Purchase Right ("Right")
attached. Each whole Right entitles the holder to buy one-one hundredth of the
Company's junior participating preferred stock at an initial exercise price of
$70 (subject to adjustment). The Rights will become exercisable only if, with
certain exceptions, a person or group becomes an "Acquiring Person" by
acquiring 10% or more of the outstanding Common Stock or announcing a tender
offer of 10% or more of the Common Stock. If the Rights become exercisable, a
holder generally will be entitled to purchase for the exercise price of $70 the
number of shares of Common Stock subject to the Rights at a price per share
equal to one-half of the then-current market price per share of Common Stock.
If the Company is acquired in a merger or other business combination
transaction, each Right will entitle its holder to purchase, at the Right's
exercise price, that number of shares of the acquiring company's common stock
having a then current market value of twice the Right's exercise price.

At any time after the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 10% or more of the outstanding
Common Stock and prior to the acquisition by such person or group of 50% or
more of the outstanding Common Stock, the Board of Directors may exchange the
Rights (other than Rights owned by such person or group which have become
void), in whole or in part, at an exchange ratio per Right equal to the result
obtained by dividing the exercise price of a Right by the current per share
market price of the Common Stock, subject to adjustment. In addition, the
Company will be entitled to redeem the Rights, upon approval of a majority of
the independent directors of the Company, at $.01 per Right (subject to
adjustment) at any time prior to the twentieth day after a public announcement
that a person or group has acquired beneficially 10% or more of the Common
Stock. The Rights will expire on October 19, 2000 if not previously redeemed or
exercised.

Until a Right is exercised, the holder thereof, as such, will have no rights
as a shareholder of the Company, including without limitation, the right to
vote or to receive dividends. The Rights have certain anti-takeover effects.
The Rights will cause substantial dilution to a person or group that attempts
to acquire the Company unless the offer is conditional on a substantial number
of Rights being acquired. The Rights, however, should not affect any
prospective offeror willing to make an offer at an equitable price and which is
otherwise in the best interests of the Company and its shareholders, as
determined by the Board of Directors. The Rights should not interfere with any
merger or other business combination approved by the Board of Directors since
the Board of Directors may, at its option, redeem the Rights at any time until
there is an Acquiring Person.

The foregoing summary of certain terms of the Rights is qualified in its
entirety by reference to the Rights Agreement, a copy of which is incorporated
by reference as an exhibit to the Registration Statement.

CERTAIN CHARTER AND BYLAW PROVISIONS

The Company's Articles of Incorporation and Bylaws contain certain "anti-
takeover" provisions that could have the effect of delaying or preventing
certain changes in control of the Company and thereby deprive shareholders of
an opportunity to sell their shares at a premium over prevailing market prices.

The Company's directors are elected for three year, staggered terms, such
that only a portion of the Company's directors are elected in any year. This
provision of the Bylaws, together with a provision discussed below that is
contained in the Articles of Incorporation and governs removal of directors,
could have the effect of delaying for a period of two years or more a change in
control of the Company by delaying a potential acquirer's ability to elect a
majority of the Board of Directors, depending upon the number of directors next
up for election following any such acquisition. Cumulative voting of shares in
the election of directors is prohibited.

The Company's Articles of Incorporation require that certain "Business
Combinations" (as defined in the Articles of Incorporation), including mergers,
consolidations and sales of a substantial amount of assets, between the Company
or a majority-owned subsidiary of the Company and an "Interested Stockholder"
(as

25
<PAGE>

defined in the Articles of Incorporation) or its affiliates or associates, be
approved by the affirmative vote of the holders of at least 80% of the
outstanding shares of voting stock of the Company, unless such Business
Combination shall have been approved by a majority of "Continuing Directors"
(as defined in the Articles of Incorporation) or shall satisfy certain fair
price and other conditions. In such event, a Business Combination, in order to
be approved, requires only such affirmative vote as may be required by law, any
other provision of the Articles of Incorporation or the terms of any other
securities of the Company. The Company's Articles of Incorporation also require
that any purchase by the Company of any shares of voting stock owned by any
Interested Shareholder who has beneficially owned such security for less than
two years prior to the date of such purchase shall, with certain exceptions,
require the affirmative vote of at least 80% of all votes entitled to be cast
by the holders of the voting stock.

The Company's Articles of Incorporation generally provide that, except as
otherwise prohibited by Minnesota law, no director of the Company shall be
personally liable to the Company or its shareholders for monetary damages for
any breach of fiduciary duty by such a person in the capacity of a director.
The Company's Bylaws provide for indemnification of the Company's officers,
directors, employees, and agents to the fullest extent permitted by law.

MINNESOTA BUSINESS CORPORATION ACT

Section 302A.671 of the Minnesota Business Corporation Act applies, with
certain exceptions, to any acquisition of voting stock of the Company (from any
person other than the Company and other than in connection with certain mergers
and exchanges to which the Company is a party) resulting in the beneficial
ownership of 20% or more of the voting stock then outstanding. Section 302A.671
requires approval of any such acquisition by a majority of the shareholders of
the Company prior to its consummation. In general, shares acquired in the
absence of such approval are denied voting rights and are redeemable at their
then fair market value by the Company within 30 days after the acquiring person
has failed to give a timely information statement to the Company or the date
the shareholders voted not to grant voting rights to the acquiring person's
shares.

Section 302A.673 of the Minnesota Business Corporation Act generally
prohibits any business combination by the Company, or any subsidiary of the
Company, with any shareholder that purchases 10% or more of the Company's
voting shares (an "interested shareholder") within four years following such
interested shareholder's share acquisition date, unless the business
combination is approved by a committee of all of the disinterested members of
the Board of Directors of the Company before the interested shareholder's share
acquisition.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer Co., New York, New York.

26
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement between the
Company, the Selling Shareholder and the Underwriters, the Underwriters named
below, for which Dain Bosworth Incorporated is acting as the representative
(the "Representative"), have severally agreed to purchase from the Selling
Shareholder the shares of Common Stock offered hereby. Each Underwriter will
purchase the number of shares set forth opposite its name below, and will
purchase such shares at the price to public, less the underwriting discounts
and commissions set forth on the cover page of this Prospectus.

<TABLE>
<CAPTION>
NUMBER
OF
UNDERWRITER SHARES
----------- -------
<S> <C>
Dain Bosworth Incorporated........................................ 455,000
Robert W. Baird & Co. Incorporated................................ 35,000
McDonald & Company Securities, Inc................................ 35,000
Piper Jaffray Inc................................................. 35,000
Principal Financial Securities, Inc............................... 35,000
Rauscher Pierce Refsnes, Inc...................................... 35,000
Tucker Anthony Incorporated....................................... 35,000
Wessels, Arnold & Henderson, L.P. ................................ 35,000
Fahnestock & Co. Inc.............................................. 20,000
Hanifen, Imhoff Inc. ............................................. 20,000
John G. Kinnard and Company, Incorporated......................... 20,000
Kirkpatrick, Pettis, Smith, Polian, Inc........................... 20,000
Punk, Ziegel & Knoell............................................. 20,000
-------
Total......................................................... 800,000
=======
</TABLE>

The Underwriting Agreement provides that the Underwriters' obligations are
subject to conditions precedent and that the Underwriters are committed to
purchase all shares of Common Stock offered hereby (other than those covered by
the over-allotment option described below) if the Underwriters purchase any
shares. The Representative has advised the Company and the Selling Shareholder
that the several Underwriters may offer the shares of Common Stock directly to
the public at the price to public set forth on the cover page of this
Prospectus and to certain dealers at the price to public less a concession not
exceeding $0.51 per share. The Underwriters may allow, and such dealers may
reallow, a concession not exceeding $0.10 per share to other dealers. After the
shares of Common Stock are released for sale to the public, the Representative
may change the initial price to public and other selling terms.

The Selling Shareholder has granted to the Underwriters an option,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 120,000 additional shares of the Common Stock, at the same price
per share as the initial shares. The Underwriters may purchase these shares
solely to cover over-allotments, if any, in connection with the sale of Common
Stock offered hereby. If the Underwriters exercise the over-allotment option,
the Underwriters will purchase additional shares in approximately the same
proportion as those in the above table.

The Underwriting Agreement provides that the Company, the Selling Shareholder
and the Underwriters will indemnify each other against certain liabilities,
including liabilities under the Securities Act.

The Company and its directors and executive officers have agreed that for a
period of 90 days after the date of this Prospectus, and the Selling
Shareholder has agreed that for a period of 180 days after the date of this
Prospectus, they will not offer, sell or otherwise dispose of any shares of
Common Stock without the prior written consent of the Representative, except in
the case of the Company, solely in connection with the exercise of options
granted pursuant to the Company's stock option plans, and shares to be issued
or sold pursuant to the employee stock purchase plan and partnership plan.

27
<PAGE>

In connection with this offering, certain Underwriters and selling group
members (if any) of their respective affiliates who are qualifying registered
market makers on Nasdaq may engage in passive market making transactions in the
Common Stock on Nasdaq in accordance with Rule 10b-6A under the Exchange Act,
during the two business day period before commencement of offers or sales of
the Common Stock offered hereby. The passive market making transactions must
comply with applicable volume and price limits and be identified as such. In
general, a passive market maker may display its bid at a price not in excess of
the highest independent bid for the security; if all independent bids are
lowered below the passive market maker's bid, however, such bid must then be
lowered when certain purchase limits are exceeded.

LEGAL MATTERS

The legality of the Common Stock offered hereby will be passed upon for the
Company by Dorsey & Whitney, Minneapolis, Minnesota. Certain legal matters
regarding this offering will be passed upon for the Underwriters by Lindquist &
Vennum PLLP, Minneapolis, Minnesota and for the Selling Shareholder by Briggs &
Morgan, P.A., Minneapolis, Minnesota.

EXPERTS

The consolidated financial statements of the Company as of February 26, 1994
and February 27, 1993 and for each of the years in the three-year period ended
February 26, 1994, included and incorporated by reference in this Prospectus,
and the financial statement schedules incorporated by reference herein from the
Company's Annual Report on Form 10-K, have been audited by KPMG Peat Marwick
LLP independent certified public accountants, as stated in their reports
included and incorporated herein by reference, and have been included and
incorporated herein in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.

28
<PAGE>

APOGEE ENTERPRISES, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report.............................................. F-2
Consolidated Balance Sheets at February 27, 1993, February 26, 1994 and
August 27, 1994 (unaudited).............................................. F-3
Consolidated Results of Operations for the fiscal years ended February 29,
1992, February 27, 1993 and February 26, 1994 and six months ended August
28, 1993 and August 27, 1994 (unaudited)................................. F-4
Consolidated Statements of Cash Flows for the fiscal years ended February
29, 1992, February 27, 1993 and February 26, 1994 and six months ended
August 28, 1993 and August 27, 1994 (unaudited).......................... F-5
Notes to the Consolidated Financial Statements............................ F-6
</TABLE>

F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Shareholders
Apogee Enterprises, Inc.:

We have audited the consolidated financial statements of Apogee Enterprises,
Inc. and subsidiaries as listed in the accompanying index. These consolidated
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Apogee
Enterprises, Inc. and subsidiaries as of February 26, 1994 and February 27,
1993 and the results of their operations and their cash flows for each of the
years in the three-year period ended February 26, 1994 in conformity with
generally accepted accounting principles.

As discussed in notes 1 and 9, the company changed its method of accounting
for income taxes in fiscal 1994 to adopt the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."

KPMG Peat Marwick LLP

Minneapolis, Minnesota
April 22, 1994

F-2
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(DOLLAR AMOUNTS IN THOUSANDS)

ASSETS

<TABLE>
<CAPTION>
FEBRUARY 27, FEBRUARY 26, AUGUST 27,
1993 1994 1994
------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
Current assets
Cash and cash equivalents............... $ 8,908 $ 10,824 $ 9,992
Receivables, net of allowance for
doubtful accounts...................... 106,421 144,597 142,198
Inventories............................. 40,189 52,732 59,989
Deferred income taxes................... 8,481 8,454 9,054
Other current assets.................... 5,030 4,679 4,199
-------- -------- --------
Total current assets................. 169,029 221,286 225,432
-------- -------- --------
Property, plant and equipment, net....... 66,128 64,917 69,518
Other assets
Intangible assets, at cost less
accumulated amortization of $8,101,
$10,999 and $11,509, respectively...... 4,917 1,972 1,954
Investments in and advances to
affiliated companies................... 10,179 11,826 11,681
Deferred income taxes.................... -- 3,526 4,126
Other.................................... 1,203 2,661 2,396
-------- -------- --------
16,299 19,985 20,157
-------- -------- --------
Total assets......................... $251,456 $306,188 $315,107
======== ======== ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable........................ $ 37,200 $ 51,488 $ 36,933
Accrued expenses........................ 36,414 40,916 44,370
Billings in excess of costs and earnings
on uncompleted contracts............... 17,440 15,911 18,238
Accrued income taxes.................... 4,556 4,524 6,362
Notes payable........................... -- 23,850 18,500
Current installments of long-term debt.. 4,177 4,157 4,081
-------- -------- --------
Total current liabilities............ 99,787 140,846 128,484
-------- -------- --------
Long-term debt........................... 28,419 35,688 50,341
Other long-term liabilities.............. 10,915 14,260 14,772
Minority interest........................ -- 1,331 1,203
Commitments and contingent liabilities
(Notes 14 and 15)....................... -- -- --
Shareholders' equity (Note 7)
Common stock of $.33 1/3 par value;
authorized 50,000,000 shares; issued
and outstanding, 13,177,000, 13,312,000
and 13,417,000 shares, respectively.... 4,392 4,437 4,472
Additional paid-in capital.............. 15,845 17,718 19,039
Retained earnings....................... 92,098 91,908 96,796
-------- -------- --------
Total shareholders' equity........... 112,335 114,063 120,307
-------- -------- --------
Total liabilities and shareholders'
equity.............................. $251,456 $306,188 $315,107
======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-3
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED RESULTS OF OPERATIONS
(DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEARS ENDED, SIX MONTHS ENDED,
-------------------------------------- ------------------
FEBRUARY 29, FEBRUARY 27, FEBRUARY 26, AUGUST AUGUST
1992 1993 1994 28, 1993 27, 1994
------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales............... $596,281 $572,450 $688,233 $324,320 $364,898
Cost of sales........... 494,701 494,249 604,338 282,280 310,270
-------- -------- -------- -------- --------
Gross profit........ 101,580 78,201 83,895 42,040 54,628
Selling, general and
administrative
expenses............... 76,531 71,832 71,659 36,539 42,435
Equity in net (earnings)
loss of affiliated
companies.............. 2,529 (1,875) (2,294) (1,194) (471)
Provisions for business
restructuring and asset
valuation.............. 5,800 -- 5,178 -- --
-------- -------- -------- -------- --------
Operating income.... 16,720 8,244 9,352 6,695 12,664
Interest expense, net... 970 1,794 2,735 1,320 1,383
-------- -------- -------- -------- --------
Earnings before
income taxes and
other items below.. 15,750 6,450 6,617 5,375 11,281
Income taxes............ 7,245 1,936 2,634 2,016 4,512
Minority interest....... -- -- 675 -- (125)
-------- -------- -------- -------- --------
Net earnings before
cumulative effect
of change in
accounting for
income taxes....... 8,505 4,514 3,308 3,359 6,894
-------- -------- -------- -------- --------
Cumulative effect of
change in accounting
for income taxes....... -- -- 525 525 --
-------- -------- -------- -------- --------
Net earnings........ $ 8,505 $ 4,514 $ 3,833 $ 3,884 $ 6,894
======== ======== ======== ======== ========
Earnings per share
before cumulative
effect of change in
accounting for income
taxes.................. $ .63 $ .34 $ .25 $ .25 $ .51
Cumulative effect per
share of change in
accounting for income
taxes.................. -- -- .04 .04 --
-------- -------- -------- -------- --------
Earnings per share.. $ .63 $ .34 $ .29 $ .29 $ .51
======== ======== ======== ======== ========
</TABLE>

See accompanying notes to consolidated financial statements.

F-4
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(DOLLAR AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED, SIX MONTHS ENDED,
-------------------------------------- ---------------------
FEBRUARY 29, FEBRUARY 27, FEBRUARY 26, AUGUST 28, AUGUST 27,
1992 1993 1994 1993 1994
------------ ------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating Activities
Net earnings........... $ 8,505 $ 4,514 $ 3,833 $ 3,884 $ 6,894
Adjustments to
reconcile net
earnings to net cash
(used by) provided
by operating
activities
Cumulative effect of
change in accounting
for income taxes..... -- -- (525) (525) --
Depreciation and
amortization......... 16,305 15,110 15,724 7,344 7,649
Provision for losses
on accounts
receivable........... 6,261 2,061 2,388 1,175 1,037
Noncurrent deferred
income tax expense... (1,357) (1,992) (3,124) (600) (600)
Provision for business
restructuring and
asset valuation...... 5,800 -- 5,178 -- --
Equity in net
(earnings) loss of
affiliated companies. 2,529 (1,875) (2,294) (1,194) (471)
Minority interest in
net earnings......... -- -- 675 -- (125)
Other, net............ 371 176 (1,580) 70 315
Changes in operating
assets and
liabilities, net of
effect of
acquisitions
Receivables.......... 7,179 (14,692) (40,205) (32,056) 1,406
Inventories.......... 2,081 (131) (10,255) (5,514) (7,247)
Other current assets. (696) 421 351 (1,891) 480
Accounts payable and
accrued expenses.... (5,393) 2,255 17,003 5,858 (11,101)
Billings in excess of
costs and earnings
on uncompleted
contracts........... (18,826) 968 (1,529) 3,099 2,327
Accrued and current
deferred income
taxes............... (2,376) (3,333) 164 (1,761) 1,238
Other long-term
liabilities......... 1,404 3,457 3,299 228 512
-------- -------- -------- -------- --------
Net cash (used by)
provided by
operating
activities......... 21,787 6,939 (10,897) (21,883) 2,314
-------- -------- -------- -------- --------
Investing Activities
Capital expenditures... (12,974) (9,166) (14,046) (5,417) (11,909)
Acquisition of
businesses, net of
cash acquired......... (5,398) (1,696) (3,154) (3,834) (272)
Investment in and
advances to affiliated
companies............. 127 (2,502) 1,527 87 613
Proceeds from sale of
property, plant and
equipment............. 376 818 832 -- --
Other, net............. (1,234) (1,434) (1,340) (432) (156)
-------- -------- -------- -------- --------
Net cash used by
investing
activities......... (19,103) (13,980) (16,181) (9,596) (11,724)
-------- -------- -------- -------- --------
Financing Activities
Increase in notes
payable............... -- -- 23,850 14,300 (5,350)
Payments on long-term
debt.................. (636) (7,733) (6,851) (520) (423)
Proceeds from issuance
of long-term debt..... -- 10,900 14,100 14,100 15,000
Proceeds from issuance
of common stock....... 579 1,508 1,945 554 1,356
Repurchase and
retirement of common
stock................. (848) (3,884) (209) -- --
Dividends paid......... (3,505) (3,584) (3,841) (1,852) (2,005)
-------- -------- -------- -------- --------
Net cash provided by
(used by) financing
activities......... (4,410) (2,793) 28,994 26,582 8,578
-------- -------- -------- -------- --------
Increase (decrease) in
cash and cash
equivalents............ (1,726) (9,834) 1,916 (4,897) (832)
Cash and cash
equivalents at
beginning of period.... 20,468 18,742 8,908 8,908 10,824
-------- -------- -------- -------- --------
Cash and cash
equivalents at end of
period................. $ 18,742 $ 8,908 $ 10,824 $ 4,011 $ 9,992
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.

F-5
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA

Principles of Consolidation

The consolidated financial statements include the accounts of Apogee
Enterprises, Inc. and Subsidiaries (the Company or Apogee). The Company uses
the equity method to account for its 50%-owned joint ventures. All significant
intercompany transactions are eliminated. Certain amounts from prior year
financial statements have been reclassified to be consistent with the fiscal
1994 presentation.

Cash and Cash Equivalents

Investments with an original maturity of three months or less are included in
cash and cash equivalents.

Inventories

Inventories, which consist primarily of purchased glass and aluminum, are
valued at cost, principally by using the last-in, first-out (LIFO) method,
which does not exceed market. If the first-in, first-out (FIFO) method had been
used, the Company's inventories would have been $1,900,000 and $1,825,000
higher than reported at February 27, 1993 and February 26, 1994, respectively.

Property, Plant and Equipment

Property, plant and equipment, including improvements to existing facilities,
are carried at cost. Repairs and maintenance are charged to expense as
incurred. Apogee computes depreciation on a straight-line basis, based on
estimated useful lives of 20 to 40 years for buildings and 2 to 15 years for
equipment. When property is retired or otherwise disposed of, the cost and
related depreciation are removed from the accounts and any related gains or
losses are included in income.

Intangible Assets and Amortization

Intangible assets consist principally of goodwill and non-compete agreements.
The Company reviews the ongoing future value of intangibles on an annual basis.
The continuing benefit of such assets is evaluated based upon an assessment of
relevant economic and other criteria, including projections of future results.

Goodwill is the excess of cost over the fair value of acquired assets of
purchased businesses. Goodwill is amortized over periods ranging from 10 to 40
years, except for $923,000, which is not being amortized. In the Company's
opinion, there has been no diminution of its value.

Non-compete agreements are contracts with the previous management of
purchased businesses not to enter into competition with the Company for a
certain period of time. Non-compete agreements are amortized ratably over the
term of the agreements. Amortization expense amounted to $2,106,000, $2,123,000
and $2,328,000 in 1992, 1993 and 1994, respectively.

Other Long-Term Liabilities

The Company's long-term liabilities include the long-term portion of accrued
insurance costs and deferred compensation.

Revenue Recognition

The Company recognizes revenue from construction contracts on a percentage-
of-completion basis, measured by the percentage of costs incurred to date to
estimated total costs for each contract. Contract costs include materials,
labor and other direct costs related to contract performance. The Company

F-6
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
establishes provisions for estimated losses, if any, on uncompleted contracts
in the period in which such losses are determined. Revenue from the sale of
products and the related cost of sales are recorded upon shipment. All selling,
general and administrative costs are expensed in the period incurred.

Income Taxes

Apogee files a consolidated federal income tax return. Effective February 28,
1993, Apogee adopted the provisions of Statement of Financial Accounting
Standards No. 109 (SFAS 109). SFAS 109 requires the asset and liability method
be used to account for income taxes. This method recognizes deferred tax assets
and liabilities based upon the future tax consequences of temporary differences
between financial and tax reporting. Previously Apogee followed the provisions
of Accounting Principles Board Opinion No. 11. The cumulative effect of the
change in accounting for income taxes is included in the fiscal 1994
Consolidated Results of Operations.

Earnings Per Share

Apogee computes earnings per share by dividing net earnings by the weighted
average number of common shares and common share equivalents outstanding during
the year. The Company's average common shares and common share equivalents
outstanding during 1992, 1993 and 1994 were 13,512,000, 13,293,000 and
13,289,000, respectively.

Translation of Foreign Currencies

The financial statements of the Company's foreign operations have been
translated to U.S. dollars, using the rules of Statement of Financial
Accounting Standards No. 52. Balance sheet accounts are stated in U.S. dollars
at either the year-end or historical exchange rate. Results of operations
statement items are translated at average exchange rates for the period.

Accounting Period

Apogee's fiscal year ends on the Saturday closest to February 28. Interim
quarters end on the Saturday closest to the end of the months of May, August
and November.

Interim financial information (unaudited)

The financial statements and notes related thereto as of August 27, 1994 and
for the six-month periods ended August 28, 1993 and August 27, 1994, are
unaudited, but, in the opinion of management, reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the Company's financial position and results of operations. The
operating results for the interim periods are not necessarily indicative of the
operating results to be expected for a full fiscal year.

2. RECEIVABLES

<TABLE>
<CAPTION>
1993 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Trade accounts........................................ $ 43,172 $ 58,474
Construction contracts................................ 43,090 59,747
Contract retainage.................................... 23,730 30,507
Other receivables..................................... 2,768 3,748
-------- --------
Total receivables................................. 112,760 152,476
Less allowance for doubtful accounts.................. (6,339) (7,879)
-------- --------
Net receivables................................... $106,421 $144,597
======== ========
</TABLE>

F-7
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Apogee provides products and services to the commercial and institutional new
construction and remodeling markets, the automotive replacement glass market
(wholesale and retail) and selected consumer markets at the distribution level.
The Company does not believe a concentration of credit risk exists, due to the
diversity of its markets and channels of distribution, and the geographic
location of its customers. The Company performs ongoing credit evaluations of
its customers' financial condition and limit the amount of credit extended when
deemed necessary. The Company also routinely files liens to protect its
interest whenever possible. The Company generally requires no collateral.
Allowances are maintained for potential credit losses and such losses have been
within management's expectations. The provision for bad debt expense was
$6,261,000, $2,061,000 and $2,388,000 in 1992, 1993 and 1994, respectively.

3. INVENTORIES

<TABLE>
<CAPTION>
AUGUST 27,
1993 1994 1994
------- ------- -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C> <C>
Raw materials................................. $ 8,819 $ 9,994 $11,405
In process.................................... 2,315 3,413 4,106
Finished...................................... 23,148 29,565 30,267
Costs in excess of billings................... 5,907 9,760 14,211
------- ------- -------
Total inventories......................... $40,189 $52,732 $59,989
======= ======= =======
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
1993 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land.................................................. $ 2,202 $ 2,308
Buildings............................................. 35,454 37,283
Machinery and equipment............................... 55,960 60,117
Office furniture and equipment........................ 20,694 23,232
Leasehold improvements................................ 8,216 6,682
Construction in progress.............................. 2,031 4,019
Other................................................. 7,704 7,769
-------- --------
Total property, plant and equipment............... 132,261 141,410
Less allowance for depreciation....................... (66,133) (76,493)
-------- --------
Net property, plant and equipment................. $ 66,128 $ 64,917
======== ========
</TABLE>

Depreciation expense was $14,199,000, $12,987,000 and $13,397,000 in 1992,
1993 and 1994, respectively.

5. ACCRUED EXPENSES

<TABLE>
<CAPTION>
1993 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Payroll and related benefits.............................. $ 9,823 $15,331
Insurance................................................. 12,419 10,023
Taxes, other than income taxes............................ 2,656 1,888
Pension................................................... 2,804 2,929
Interest.................................................. 806 994
Other..................................................... 7,906 9,751
------- -------
Total accrued expenses................................ $36,414 $40,916
======= =======
</TABLE>

F-8
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

6. LONG-TERM DEBT

<TABLE>
<CAPTION>
1993 1994
------- -------
(IN THOUSANDS)
<S> <C> <C>
Promissory note, 9.65%, due in annual installments
through 1998.......................................... $17,857 $11,607
Borrowings under revolving credit agreements........... 10,900 25,000
Floating rate industrial development bond, 2.6% at year
end, due in annual installments through 1999.......... 2,400 2,000
Industrial development bonds, interest ranging from
3.60% to 6.30%, due in annual installments through
2003.................................................. 1,330 1,177
Other.................................................. 109 61
------- -------
Total long-term debt............................... 32,596 39,845
Less current installments.............................. (4,177) (4,157)
------- -------
Net long-term debt..................................... $28,419 $35,688
======= =======
</TABLE>

Long-term debt maturities are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR (IN THOUSANDS)
----------- -------------
<S> <C>
1995............................... $ 4,157
1996............................... 4,172
1997............................... 12,430
1998............................... 9,761
1999............................... 8,878
Thereafter......................... 447
-------
Total.......................... $39,845
=======
</TABLE>

In fiscal 1992, the Company entered into three interest rate swap agreements
with a notional amount of $25.0 million that effectively converted a portion of
our fixed rate, long-term borrowings into variable rate obligations. The swap
agreements are accounted for as hedges, with the net interest paid or received
included in interest expense. During fiscal 1993, the Company sold two of the
swap agreements at net gains. The gains are being recognized as reductions in
interest expense over the original term of the swap agreements.

The terms of the promissory note include certain dividend and debt level
restrictions and requirements to maintain minimum levels of tangible net worth
and certain financial ratios. Retained earnings available for dividends under
the terms of the promissory note were approximately $27.0 million at February
26, 1994.

The net book value of property, plant and equipment pledged as collateral,
principally under industrial development bonds, was approximately $2.0 million
at February 26, 1994.

In February 1993, the Company entered into new revolving credit agreements
with two banks. The agreements allow the Company to borrow up to $25.0 million
at various alternative rates. The revolving credit term is three years, with an
additional three-year term-loan option. At any time through the revolving
period, the Company can convert any outstanding loans into a long-term note.
The agreements require the Company to maintain minimum levels of tangible net
worth and certain financial ratios.

The Company also had access to $60.0 million via committed and uncommitted
credit facilities with several major lending institutions. The Company may
elect to have borrowings under the agreements bear interest at fixed or
floating rates. At February 26, 1994, $23.9 million in borrowings were
outstanding under these agreements. Interest rates on the year-end borrowings
ranged from 3.50% to 3.81%.

F-9
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Selected information related to bank borrowings under credit agreements is as
follows:

<TABLE>
<CAPTION>
1993 1994
------- -------
(DOLLAR AMOUNTS
IN THOUSANDS)
<S> <C> <C>
Average daily borrowings during the year................ $ 3,992 $34,203
Maximum borrowings outstanding during the year.......... $12,100 $53,800
Weighted average interest rate during the year.......... 4.00% 3.67%
</TABLE>

7. SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON ADDITIONAL
SHARES COMMON PAID-IN RETAINED
OUTSTANDING STOCK CAPITAL EARNINGS
----------- ------ ---------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Balance at March 2, 1991............ 13,477 $4,492 $14,422 $90,136
Net earnings....................... -- -- -- 8,505
Common stock issued................ 53 18 561 --
Common stock repurchased or
retired........................... (69) (23) (75) (750)
Cash dividends..................... -- -- -- (3,505)
------ ------ ------- -------
Balance at February 29, 1992........ 13,461 4,487 14,908 94,386
Net earnings....................... -- -- -- 4,514
Common stock issued................ 150 50 1,458 --
Common stock repurchased or
retired........................... (434) (145) (521) (3,218)
Cash dividends..................... -- -- -- (3,584)
------ ------ ------- -------
Balance at February 27, 1993........ 13,177 4,392 15,845 92,098
Net earnings....................... -- -- -- 3,833
Common stock issued................ 152 51 1,894 --
Common stock repurchased or
retired........................... (17) (6) (21) (182)
Cash dividends..................... -- -- -- (3,841)
------ ------ ------- -------
Balance at February 26, 1994........ 13,312 $4,437 $17,718 $91,908
====== ====== ======= =======
</TABLE>

A class of 200,000 shares of junior preferred stock with a par value of $1.00
is authorized, but unissued.

Apogee has a Shareholders' Rights Plan, under which each share of the
Company's outstanding common stock has an associated preferred share purchase
right. The rights are exercisable only under certain circumstances and allow
holders of such rights to purchase common stock of Apogee or an acquiring
company at a discounted price, which generally would be 50% of the respective
stock's current fair market value.

8. INTEREST EXPENSE, NET

<TABLE>
<CAPTION>
1992 1993 1994
------- ------- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Interest on debt................................... $ 2,832 $ 2,709 $3,008
Other interest..................................... 91 278 620
------- ------- ------
Total interest expense......................... 2,923 2,987 3,628
Less interest income............................... (1,953) (1,193) (893)
------- ------- ------
Interest expense, net.......................... $ 970 $ 1,794 $2,735
======= ======= ======
</TABLE>

Interest payments were $2,959,000, $2,556,000 and $3,714,000 in 1992, 1993
and 1994, respectively.

F-10
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. INCOME TAXES

As discussed in Note 1, the Company adopted Statement of Financial Accounting
Standards No. 109 (SFAS 109) in 1994. The cumulative effect of this change in
accounting for income taxes is reported separately in the accompanying Results
of Operations for the year ended February 26, 1994. Prior years' financial
statements have not been restated to apply the provisions of SFAS 109.

The components of income tax expense for each of the last three fiscal years
are as follows:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal............................................ $10,430 $2,525 $3,342
State and local.................................... 2,127 639 701
Foreign............................................ 3,203 (429) 1,520
------- ------ ------
Total current................................... 15,760 2,735 5,563
Deferred:
Federal............................................ (5,903) (1,494) (2,794)
State and local.................................... (1,237) (310) (485)
Foreign............................................ (1,375) 1,005 350
------- ------ ------
Total deferred.................................. (8,515) (799) (2,929)
------- ------ ------
Total income tax expense...................... $ 7,245 $1,936 $2,634
======= ====== ======
</TABLE>

Income tax payments, net of refunds, were $11,337,000, $7,371,000 and
$5,934,000 in 1992, 1993 and 1994, respectively.

The differences between statutory federal tax rates and the Company's
consolidated effective tax rates are as follows:

<TABLE>
<CAPTION>
1992 1993 1994
---- ----- -----
<S> <C> <C> <C>
Statutory federal tax rate.............................. 34.0% 34.0% 35.0%
State and local income taxes, net of federal tax
benefit................................................ 4.4 3.4 2.1
Equity in (earnings) affiliates......................... 8.8 (11.0) (12.3)
Tax credits............................................. -- -- (2.2)
Foreign items with no tax benefit....................... -- -- 7.7
Other, net.............................................. (1.2) 3.6 0.4
Valuation allowance..................................... -- -- 9.1
---- ----- -----
Consolidated effective tax rate......................... 46.0% 30.0% 39.8%
==== ===== =====
</TABLE>

The components of deferred income tax expense (benefit) for 1992 and 1993 are
as follows:

<TABLE>
<CAPTION>
1992 1993
------- -------
(IN THOUSANDS)
<S> <C> <C>
Completed contract accounting............................. $(2,668) $ (172)
Accelerated depreciation.................................. (1,659) 394
Allowance for doubtful accounts........................... (2,095) 1,862
Accrued insurance......................................... (601) (1,499)
Other accrued expenses.................................... 35 (170)
Deferred compensation..................................... (511) (215)
Inventory................................................. (510) 384
Business restructuring reserve............................ (464) (863)
Other, net................................................ (42) (520)
------- -------
Deferred income taxes................................. $(8,515) $ (799)
======= =======
</TABLE>

F-11
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Deferred tax assets and deferred tax liabilities at February 28, 1993 and
February 26, 1994 are as follows:

<TABLE>
<CAPTION>
1993 1994
------ -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts......................... $2,400 $ 3,035
Accrued insurance....................................... 7,358 8,701
Deferred compensation................................... 2,900 3,143
Business restructuring reserve.......................... 1,017 2,127
Inventory capitalization................................ 1,348 1,591
Other................................................... 2,191 2,260
------ -------
Gross deferred tax assets............................... 17,214 20,857
Less valuation allowance................................ (435) (1,035)
------ -------
Net deferred tax assets.............................. 16,779 19,822
------ -------
Deferred tax liabilities:
Accelerated depreciation................................ 5,100 5,006
Employee benefit plans.................................. 1,385 1,307
Other................................................... 1,243 1,529
------ -------
Net deferred tax liabilities......................... 7,728 7,842
------ -------
Net deferred tax assets.............................. $9,051 $11,980
====== =======
</TABLE>

Apogee's valuation allowance increased by $600,000, which relates primarily
to a capital loss carryforward. The valuation allowance at February 26, 1994
also included amounts for foreign tax credits.

10. INVESTMENT IN AFFILIATED COMPANIES

Apogee, through its glass fabrication division, is party to a joint venture
agreement with Marvin Windows of Warroad, Minnesota, forming Marcon Coatings,
Inc. and its subsidiary, Viratec Thin Films, Inc. (Marcon/Viratec).
Marcon/Viratec operates two glass coating facilities. The Company's 50%
ownership investment in Marcon/Viratec is accounted for using the equity
method.

Apogee and Marvin have leased certain glass coating equipment to Marcon and
made cash advances to Marcon/Viratec. The Company's net investment in
Marcon/Viratec as of February 27, 1993 and February 26, 1994 was $8,858,000 and
$10,652,000, respectively. The Company's equity in Marcon/Viratec's net
(earnings) loss is included in the accompanying Consolidated Results of
Operations. Marcon/Viratec's net earnings for 1993 and 1994 included tax
benefits from net operating loss carryforwards in the amounts of $1,200,000 and
$437,000, respectively.

A summary of assets, liabilities and results of operations for Marcon/Viratec
is presented below:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Current assets...................................... $ 3,483 $ 5,402 $10,248
Noncurrent assets................................... 14,752 11,997 15,704
Current liabilities................................. 6,842 4,577 7,214
Noncurrent liabilities.............................. 14,473 12,716 14,066
Net sales........................................... 15,944 24,150 34,497
Gross profit (loss)................................. (1,302) 6,929 10,967
Net earnings (loss)................................. (6,615) 3,188 4,566
</TABLE>

F-12
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. EMPLOYEE BENEFIT AND STOCK OPTION PLANS

The Company maintains a qualified defined contribution pension plan that
covers substantially all full-time, non-union employees. Contributions to the
plan are based on a percentage of employees' base earnings. Benefits for each
employee vary based on total contributions and earnings on invested funds. The
Company deposits pension costs with the trustee annually. All pension costs
were fully funded or accrued as of year end. Contributions to the plan were
$2,651,000, $2,848,000 and $3,014,000 in 1992, 1993 and 1994, respectively.

The Company also maintains a 401(k) Savings Plan, designed to encourage
eligible employees to develop a long-term savings program. The plan allows
employees to contribute 1% to 10% of their pretax compensation. Apogee matches
30% of the first 6% of the employee contributions. Amounts contributed by the
Company to the plan were $1,035,000, $1,069,000 and $1,206,000 in 1992, 1993
and 1994, respectively.

The 1987 Stock Option Plan provides for the issuance of up to 1,250,000
options to purchase Company stock. Options awarded under this plan, either in
the form of incentive stock options or nonstatutory options, are exercisable at
an option price equal to the fair market value at date of award. Changes in
stock options outstanding for each of the last three fiscal years are as
follows:

<TABLE>
<CAPTION>
1992 1993 1994
------------ ------------ -------------
<S> <C> <C> <C>
Options outstanding at beginning
of the year.................... 467,000 381,000 481,000
Granted......................... 25,000 165,000 148,000
Exercised....................... (54,000) (31,000) (4,000)
Forfeited....................... (57,000) (34,000) (148,000)
------------ ------------ -------------
Options outstanding at end of
year........................... 381,000 481,000 477,000
============ ============ =============
Options exercisable at end of
year........................... 167,000 150,000 129,000
============ ============ =============
Price range of outstanding
options........................ $8.38-$18.91 $8.95-$18.91 $ 8.95-$18.91
============ ============ =============
Price range of exercised
options........................ $6.75-$15.25 $ 9.38 $10.75-$12.00
============ ============ =============
</TABLE>

The 1987 Partnership Plan, a plan which is designed to increase the ownership
of Apogee stock by key employees, allows participants selected by the
Compensation Committee of the Board of Directors to use earned incentive
compensation to purchase Apogee stock. The purchased stock is then matched by
an equal award of restricted stock, which vests over a predetermined period.
There are 1,100,000 shares of common stock authorized for issuance or
repurchase under the plan. As of February 26, 1994, 500,000 shares have been
issued under the plan. The Company expensed $450,000, $287,000 and $478,000 in
conjunction with the Partnership Plan in 1992, 1993 and 1994, respectively.

12. ACQUISITIONS AND DIVESTITURES

In April 1993, the Company's Commercial Construction Division purchased
certain assets of CFEM Facades, a French curtainwall company. Also in 1994, the
Company's Glass Fabrication Division's TruVue unit purchased the assets of a
company serving another segment of the picture framing market.

During 1993 and 1992, the Company's Installation and Distribution Division
purchased the assets of several auto glass service and distribution centers. In
1992, the Company's Commercial Construction Division purchased the assets of
three companies in the detention/security sector of the nonresidential
construction market.

F-13
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

All of the above transactions were accounted for by the purchase method.
Accordingly, Apogee's consolidated financial statements include the net assets
and results of operations from the dates of acquisition. In connection with the
above acquisitions, the fair market value of assets purchased and liabilities
assumed were as follows:

<TABLE>
<CAPTION>
1992 1993 1994
------- ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Fair value of assets acquired......................... $17,392 $1,696 $3,154
Liabilities assumed................................... 11,994 -- --
------- ------ ------
Net cash paid......................................... $ 5,398 $1,696 $3,154
======= ====== ======
</TABLE>

13. PROVISION FOR BUSINESS RESTRUCTURING AND ASSET VALUATION

During 1994, the Company recorded business restructuring and asset provision
of $5.6 million. ($4.5 million pre-tax). The charge was principally related to
the consolidation or closing of 10 Commercial Construction Division offices and
facilities, the write-down of certain assets and the reorganization of the
Window Fabrication Division's architectural products operation. The provision
consisted of asset writedowns of $2.5 million and projected cash outlays of
$3.1 million, most of which will take place in fiscal 1995.

During 1992, the Company recorded a business restructuring provision of $5.8
million ($4.1 million after tax). The charge was principally related to the
consolidation of the Company's Glass Fabrication Division's fabricating and
coating capabilities, which involved the closing of its West Coast facilities
and merging them with the division's Minnesota operations. The Company settled
all outstanding matters related to the consolidation during fiscal 1994 and
recorded a $405,000 recovery of the fiscal 1992 provision.

14. LEASES

As of February 26, 1994, the Company was obligated under noncancelable
operating leases for buildings and equipment. Certain leases provide for
increased rentals based upon increases in real estate taxes or operating costs.
Future minimum rental payments under noncancelable operating leases are:

<TABLE>
<CAPTION>
FISCAL YEAR (IN THOUSANDS)
----------- --------------
<S> <C>
1995............................... $ 8,170
1996............................... 5,574
1997............................... 3,838
1998............................... 2,418
1999............................... 1,604
Thereafter......................... 1,729
-------
Total minimum payments......... $23,333
=======
</TABLE>

Total rental expense was $16,889,000, $15,653,000 and $17,129,000 in 1992,
1993 and 1994, respectively.

15. COMMITMENTS AND CONTINGENT LIABILITIES

Apogee has entered into a number of non-compete agreements. Non-compete
agreements represent contractual agreements with the previous management of
purchased businesses not to enter into competition with the Company for a
certain period of time. As of February 26, 1994, the Company was committed to
make future payments of $1,716,000 under such agreements.

F-14
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Apogee has ongoing letters of credit related to risk management programs,
construction contracts and certain industrial development bonds. The total
value of letters of credit under which the Company is obligated as of February
26, 1994 was approximately $38,932,000.

Apogee, like other participants in the construction business, is routinely
involved in disputes and claims arising out of construction projects, sometimes
involving significant monetary damages. Although it is impossible to predict
the outcome of such disputes, the Company believes, based on facts currently
available to us, that none of such claims will result in losses that would have
a material adverse effect on its financial condition.

16. FAIR VALUE DISCLOSURES

The following disclosure of the estimated fair value of financial instruments
is made in accordance with the requirements of Statement of Financial
Accounting Standards No. 107.

Estimated fair value amounts have been determined using available market
information and appropriate valuation methodologies. However, considerable
judgment is required in developing the estimates of fair value. Accordingly,
these estimates are not necessarily indicative of the amounts that could be
realized in a current market exchange. The use of different market assumptions
and/or estimating methodologies may have a material effect on the estimated
fair value amounts.

Estimated fair values of the Company's financial instruments at February 26,
1994 are as follows:

<TABLE>
<CAPTION>
CARRYING ESTIMATED
AMOUNT FAIR VALUE
-------- ----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt....................................... $39,845 $40,259
Interest rate swap agreement in a net payable
position............................................ -- $ 182
</TABLE>

For cash and cash equivalents, receivables, and accounts payable, carrying
value is a reasonable estimate of fair value.

The carrying values (face amounts) of the Company's long-term debt that have
variable interest rates are reasonable estimates of fair value. For borrowings
that have fixed interest rates, fair value is estimated by discounting the
projected cash flows using the rate at which similar borrowings could currently
be made.

The fair value of interest rate swaps is the difference between the present
value of the Company's future interest obligation at a fixed rate and the
counterparty's obligation at a floating rate.

F-15
<PAGE>

APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

17. BUSINESS SEGMENTS

Sales, operating income, identifiable assets and other related data for the
Company's operations in different business segments, appearing in this report,
are an integral part of these financial statements.

<TABLE>
<CAPTION>
1992 1993 1994
--------------- --------------- ----------------
AMOUNT % AMOUNT % AMOUNT %
-------- ----- -------- ----- -------- ------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Sales:
Commercial construction... $274,863 46.1 $248,532 43.4 $307,036 44.6
Window fabrication........ 89,101 14.9 75,325 13.2 83,228 12.1
Glass fabrication......... 108,530 18.2 111,933 19.6 135,208 19.6
Installation and
distribution............. 153,561 25.8 165,842 29.0 197,471 28.7
-------- ----- -------- ----- -------- ------
Total................... 626,055 105.0 601,632 105.1 722,943 105.0
Intersegment elimination.. (29,774) (5.0) (29,182) (5.1) (34,710) (5.0)
-------- ----- -------- ----- -------- ------
Net sales............... $596,281 100.0 $572,450 100.0 $688,233 100.0
======== ===== ======== ===== ======== ======
Operating Income (Loss):
Commercial construction... $ 14,972 74.6 $ (5,092) (62.9) $(18,959) (376.5)
Window fabrication........ 7,426 37.0 (506) (6.3) (3,484) (69.2)
Glass fabrication......... (2,292) (11.4) 7,845 96.9 13,560 269.3
Installation and
distribution............. (43) (0.2) 5,845 72.2 13,918 276.4
-------- ----- -------- ----- -------- ------
Total................... $ 20,063 100.0 $ 8,092 100.0 $ 5,035 100.0
-------- ===== -------- ===== -------- ======
Interest expense, net..... (970) (1,794) (2,735)
Other income (expense).... (3,343) 152 4,317
-------- -------- --------
Earnings before income
taxes and other items.. $ 15,750 $ 6,450 $ 6,617
======== ======== ========
</TABLE>

<TABLE>
<CAPTION>
DEPRECIATION &
IDENTIFIABLE ASSETS CAPITAL EXPENDITURES AMORTIZATION
---------------------------- ---------------------- -----------------------
1992 1993 1994 1992 1993 1994 1992 1993 1994
-------- -------- -------- ------- ------ ------- ------- ------- -------
(DOLLAR AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Commercial construction. $ 66,596 $ 86,911 $114,060 $ 3,131 $2,774 $ 2,600 $ 2,314 $ 2,920 $ 3,508
Window fabrication...... 41,290 39,084 43,928 2,657 3,120 2,332 2,825 2,706 2,927
Glass fabrication....... 58,567 52,976 59,470 3,753 1,360 4,611 6,411 4,701 4,452
Installation and
distribution........... 54,404 55,177 62,564 3,377 1,668 4,451 4,651 4,651 4,696
Corporate and other..... 36,096 20,679 29,413 56 244 52 104 132 141
Intersegment
elimination............ (7,444) (3,371) (3,247) -- -- -- -- -- --
-------- -------- -------- ------- ------ ------- ------- ------- -------
Total................ $249,509 $251,456 $306,188 $12,974 $9,166 $14,046 $16,305 $15,110 $15,724
======== ======== ======== ======= ====== ======= ======= ======= =======
</TABLE>

Notes: Apogee's Commercial Construction Division has subsidiaries in Europe and
Asia. In 1993 and 1992, net sales and identifiable assets of these units were
less than 10% of Apogee's consolidated figures. During 1994, such operations
had net sales and an operating loss of $65,021,000 and $887,000, respectively.
At February 26, 1994, identifiable assets of the subsidiaries totaled
$31,786,000. Foreign currency transaction gains or losses included in net
earnings for 1992, 1993 and 1994 were immaterial.

Apogee's export sales are less than 10% of consolidated net sales. No single
customer, including government agencies, accounts for 10% or more of
consolidated net sales. Intersegment sales are arms-length transactions.
Segment operating profit (loss) is net sales less cost of sales and operating
expenses. Operating income does not include provision for interest expense or
income taxes. Other income (expense) includes miscellaneous corporate activity
not allocable to business segments.

F-16
<PAGE>

APOGEE ENTERPRISES, INC.

CONSUMER PRODUCTS

Apogee's Window Fabrication Division provides custom window blinds and shutters
for the residential, commercial and institutional markets under the "Nanik" and
"The Shuttery" brand names. In addition, Tru Vue and True Vue Miller Artboard
(Glass Fabrication Division) are market leaders in conservation picture framing
products. The Company's Viratec Thin Films joint venture produces anti-
reflective and highly reflective thin film, optical grade coatings for personal
computer anti-glare screens, electronic displays, projectors, laser scanners and
similar equipment.

(Photograph--See Graphic Material Cross-Reference Page for description)
NANIK'S designer venetian blinds are made from select hardwoods and require
meticulous attention to detail throughout the production process.

(Photograph--See Graphic Material Cross-Reference Page for description)
TRU VUE is a leading supplier to professional picture framers of ultraviolet,
light-blocking glass and acid-free matboard.

(Photograph--See Graphic Material Cross-Reference Page for description)
VIRATEC is a worldwide supplier of anti-reflective, contrast enhancing coatings
on glass which improve the readability of computer monitors and other electronic
displays.

<PAGE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING SHAREHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION BY ANYONE IN ANY JURIS-
DICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES
CREATE ANY IMPLICATION THAT THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS
PROSPECTUS.

-----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
Prospectus Summary........................................................ 3
Investment Considerations................................................. 6
Use of Proceeds........................................................... 7
Capitalization............................................................ 7
Dividends and Price Range of Common Stock................................. 7
Selected Consolidated Financial Data...................................... 8
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 9
Business.................................................................. 16
Management................................................................ 23
Selling Shareholder....................................................... 24
Description of Capital Stock.............................................. 24
Underwriting.............................................................. 27
Legal Matters............................................................. 28
Experts................................................................... 28
Index to Financial Statements............................................. F-1
</TABLE>

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

800,000 SHARES

LOGO

COMMON STOCK

------------
PROSPECTUS

------------

[LOGO OF DAIN BOSWORTH INCORPORATED]

OCTOBER 19, 1994

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>

Graphic Material Cross-Reference Page

Page 2A includes a photograph of:

A photograph of Library of Congress, Washington, D.C. appears above the caption
"Library of Congress, Washington, D.C."

First Bank Place, Minneapolis, Minnesota, showing the building in the
Minneapolis skyline appears to the left of the caption "First Bank Place,
Minneapolis, Minnesota."

A photograph of Grand Slam Canyon, Las Vegas, Nevada showing the five-acre theme
park in the Las Vegas skyline appears below the caption "Grand Slam Canyon, Las
Vegas, Nevada."

A drawing of the Petronas Towers, Kuala Lumpur, Malaysia appears below the
caption "Petronas Towers, Kuala Lumpur, Malaysia."

Page 2B includes a drawing of a map of the continental United States indicating
locations of Harmon Glass and The Glass Depot Locations, the locations of which
are indicated on the map by dots for single Harmon Glass locations, triangles
for multiple Harmon Glass retail locations and stars for Glass Depot wholesale
locations. In addition, states in which Harmon Glass or Glass Depot operate are
shaded on the map. The map is located to the left of the caption "Harmon Glass
and the Glass Depot Locations."

A photograph of a Harmon Glass employee installing auto glass in an automobile
appears below the caption "Harmon Glass."

A photograph of Harmon Glass Network employees working at their computer
terminals and responding to telephone inquiries appears above the caption "The
Harmon Glass Network."

A photograph of an employee at Viracon/Curvelite's facility measuring
windshields appears above the caption "Viracon/Curvlite."

Inside Back Cover includes a photograph of Nanik blinds hung in a home appears
to the left of the caption "NANIK'S.''

A photograph of a framed artwork appears above the caption "TRU VUE."

A photograph of a computer monitor and a Viratec anti-reflective glass filter
appears above the caption "VIRATEC."