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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 17, 1997
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APOGEE ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
Minnesota 0-6365 41-0919654
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number Identification No.)
7900 Xerxes Avenue South, Suite 1800, Minneapolis, Minnesota 55431
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 835-1874
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
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See Exhibit 99.1 attached hereto.
Item 7. Financial Statements and Exhibits
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(c) Exhibits:
99.1 Press release, dated December 17, 1997
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Dated: December 18, 1997
APOGEE ENTERPRISES, INC.
By /s/ Terry L. Hall
______________________________________
Terry L. Hall
Chief Financial Officer
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EXHIBITS INDEX
Exhibit No. Page
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99.1 Press Release, dated December 17, 1997.......................
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FOR IMMEDIATE RELEASE
WEDNESDAY, DECEMBER 17, 1997
APOGEE ENTERPRISES, INC. REPORTS THIRD QUARTER RESULTS,
EARNS $0.20 PER SHARE BEFORE NONRECURRING CHARGE
- - Third quarter loss was caused by a previously announced nonrecurring charge
related to its curtainwall operations.
- - Third quarter charge was $26.0 million pre-tax; $16.0 million after-tax, or
$0.56 per share.
- - After restructuring, curtainwall operations will account for less than 12%
of Apogee's revenues.
- - Glass Technologies operating income rose 26% on a 23% increase in sales.
Third Quarter Fiscal 1998 Highlights
(Amounts in thousands, except per share data and percentages)
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
------------------------------ % ---------------------------------- %
11/29/97 11/30/96 Change 11/29/97 11/30/96 Change
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<S> <C> <C> <C> <C> <C> <C>
Net Sales $ 250,946 $ 228,781 10% $ 746,800 $ 710,543 5%
Net Earnings (Loss) (1) $ (10,435) $ 7,602 -237% $ 5,996 $ 20,558 -71%
Earnings (Loss) per Share (1) $ (0.37) $ 0.27 -237% $ 0.21 $ 0.74 -72%
Average Shares Outstanding 28,545 28,053 2% 28,499 27,910 2%
Operating Income (Loss) $ (16,569) $ 12,483 N/M $ 13,390 $ 37,364 (64)%
- - Building Products & Services $ (27,473) $ 677 N/M $ (28,113) $ 3,363 N/M
- - Glass Technologies $ 8,228 $ 6,535 26% $ 21,412 $ 14,462 48%
- - Auto Glass $ 2,953 $ 3,891 (24)% $ 20,715 $ 18,865 10%
- - Corporate and other $ (277) $ 1,380 N/M $ (624) $ 674 N/M
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</TABLE>
(1) Fiscal 1998 third quarter includes nonrecurring charge of $26.0 million
pre-tax; $16.0 million after-tax, or $0.56 per share, related to the
curtainwall unit of the Building Products & Services segment.
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"Glass Technologies continues to generate outstanding growth, but Apogee's
earnings decreased overall in the third quarter due to disappointments we are
addressing in our other two business segments. In Building Products &
Services, we are significantly reducing the scope of our curtainwall
operations to rebuild profitability; in Auto Glass, while sales growth is
outpacing the industry, the current market is soft and is putting continued
pressure on margins. In response to this pressure, we will be taking
significant steps to reduce our cost structure."
- Donald W. Goldfus, Chairman, Chief Executive Officer and President
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FOR IMMEDIATE RELEASE
WEDNESDAY, DECEMBER 17, 1997
APOGEE ENTERPRISES, INC. REPORTS THIRD QUARTER RESULTS
EARNS $0.20 PER SHARE BEFORE NONRECURRING CHARGE
MINNEAPOLIS, Minnesota, December 17, 1997 - Despite a 26 percent rise in Glass
Technologies operating income, Apogee Enterprises, Inc. (Nasdaq: APOG) reported
sharply lower results for the third quarter of fiscal 1998 due to a previously
announced nonrecurring charge related to curtainwall operations in the New
Construction unit of Building Products & Services, foreign currency translation
losses related to curtainwall projects in Malaysia, lessening demand and lower
margins in Auto Glass, and additional losses in one European curtainwall
project.
For the third quarter ended November 29, 1997, Apogee had a net loss of $10.4
million or $0.37 per share, compared with net earnings of $7.6 million or $0.27
per share, which reflects Apogee's 2:1 stock split effective February 14, 1997.
Excluding the after-tax charge of $16 million or $0.56 per share, Apogee had net
earnings of $5.8 million or $0.20 per share.
The nonrecurring charge, which was announced in a November 21 press release,
includes amounts for restructuring activities and other nonrecurring items
related to the New Construction unit of the Building Products & Services
segment, which is mainly involved in the curtainwall business. The restructuring
plan involves the closing of the segment's Asian offices and a rationalization
of its European operations. After the restructuring is completed, management
expects curtainwall operations to be profitable and account for less than 12
percent of the company's total revenues, with a focus on the U.S. and United
Kingdom markets.
"Glass Technologies continues to generate outstanding growth, but Apogee's
earnings decreased overall in the third quarter due to disappointments we are
addressing in our other two business segments," said Donald W. Goldfus,
Chairman, Chief Executive Officer and President. "In Building Products &
Services, we are significantly reducing the scope of our curtainwall operations
to rebuild profitability; in Auto Glass, while sales growth is outpacing the
industry, the current market is soft and is putting continued pressure on
margins. In response to this pressure, we will be taking significant steps to
reduce our cost structure"
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Apogee Enterprises, Inc.
Add 2
Goldfus added, "Looking ahead to the fourth quarter, we expect earnings to be
down significantly from last year's $0.20 per share, primarily due to continued
weakness in the replacement auto glass market. We anticipate further strength in
Glass Technologies during the fourth quarter."
Goldfus concluded, "We are in the midst of dramatic changes at Apogee that we
believe will create exciting opportunities for our shareholders. With the
aggressive expansion of our Glass Technologies businesses and the significantly
reduced scope of our curtainwall operations, Apogee will look a lot different in
the future, with substantially greater potential for growth in earnings and
shareholder value."
Glass Technologies - Strong Growth Continues
Glass Technologies operating income rose 26 percent in the third quarter to $8.2
million, as sales increased 23 percent to $61.4 million. Most of the sales
growth was driven by Viracon, the segment's largest business, which boosted its
productivity with higher unit volumes. In addition, Tru Vue turned in a solid
quarter, bolstered by sales in advance of the retail holiday season.
Viratec had a mixed quarter. The Company generated solid orders for its coating
of curved glass surfaces for cathode ray tubes (CaRT-REG-), which continued to
operate at a modest profit. During the quarter, Viratec also added 50 percent
additional capacity to its CaRT line. However, Viratec's overall results were
diminished by its flat glass coating operation, which experienced an unusual
amount of production downtime due to an ongoing capacity expansion. Goldfus said
the coater has returned to productive operation and Viratec's 50 percent
capacity expansion is now completed.
Auto Glass - Higher Sales, But Margin Pressures Industrywide Reduce Income
Auto Glass sales rose 14 percent to $84.0 million, as the segment growth
continued to outpace the industry in a seasonally slow quarter. About half of
the sales growth was due to the fourth quarter fiscal 1997 acquisition of
Portland Glass. However, margin pressures increased industrywide, leading to a
24 percent decrease in operating income to $3.0 million. Most of the profit
weakness was at the segment's largest business, Harmon AutoGlass. Overall,
market data indicates that unit demand for replacement auto glass in the U.S.
fell significantly year over year. At the close of the third quarter, Harmon had
327 retail locations in over 40 states.
Goldfus noted that he doesn't expect Auto Glass fourth quarter operating income
to match last year's $1.3 million. The fourth quarter is seasonally the weakest
for the Auto Glass segment, and an operating loss is possible. He emphasized
that the segment is taking decisive steps to reduce its cost structure,
particularly in the retail operation.
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Apogee Enterprises, Inc.
Add 3
Building Products & Services -- Loss due to Charge for Curtainwall Operations
Due to a previously announced $26 million pre-tax charge and other costs
related to its curtainwall operations, the Building Products & Services
segment reported a loss of $27.5 million in the third quarter compared with
operating income of $677,000 in the prior year. Excluding the charge, the
segment had a loss of $5.0 million, mainly due to foreign currency translation
losses, principally in Malaysia, where the company still holds retainage
receivables related to several projects, including the already completed Kuala
Lumpur City Centre, and due to additional cost over-runs at one project in
Europe. Overall, the segment's sales increased 2 percent to $109.0 million.
Aside from the international curtainwall operations, Goldfus said the segment
had a decent quarter. U.S. Curtainwall operations were strong during the
period, aided by the completion of the Getty Museum project. The Full Service
unit continued to do well and the Architectural Products unit more than
doubled its operating income from the prior year.
Goldfus added, "Building Products & Services' fourth quarter operating income
will come in below the $2.2 million of a year ago. Primarily, one current
project in Europe is operating with no margin, which could result in operating
losses over the next one or two quarters until it is completed. In addition,
with the financial crisis in Asia, it's possible that we may experience more
foreign currency translation losses."
Nine-Month Results
For the nine-month period ended November 29, 1997, Apogee's net earnings were
$6.0 million or $0.21 per share, compared with $20.6 million or $0.74 per
share, reflecting Apogee's 2:1 stock split effective February 14, 1997.
Excluding the $16.0 million or $0.56 per share charge in the third quarter
related to the curtainwall business, nine-month net earnings were $22.0
million or $0.77 per share. Operating income was $13.4 million for the
nine-month period, compared with $37.4 million a year ago, as a strong
increase at Glass Technologies and a modest rise at Auto Glass was partially
offset by an operating loss at Building Products & Services. Consolidated
sales increased 5 percent to $748.8 million for the nine-month period.
Double-digit sales increased at Glass Technologies and Auto Glass were offset
by a 7 percent decline at Building Products & Services.
Balance Sheet Review
At the close of the third quarter, long-term debt was $136.2 million or 41
percent of the total invested capital. Working capital was $116.7 million
compared with $93.6 million in the year-ago quarter. Shareholders' equity was
$171.4 million, or $6.14 per share, compared with $156.8 million or $5.74 per
share in the same quarter last year, reflecting the 2:1 stock split.
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Apogee Enterprises, Inc.
Add 4
CAUTIONARY STATEMENT
The discussion above contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. A number of factors should
be considered in conjunction with the above forward-looking statements,
including changes in economic and market conditions, factors related to
competitive pricing, commercial building market conditions, management of growth
or restructuring of core business units, expected cost savings from the
restructuring cannot be fully realized or realized within the expected time
frame, revenues following the restructuring are lower than expected, costs or
difficulties related to the operation of the businesses or execution of the
restructuring are greater than expected, the realization of expected economies
gained through expansion and information systems technology, the impact of
foreign currency markets and other factors are set forth in the cautionary
statements included in Exhibit 99 to Apogee's Form 10-K filed with the
Securities and Exchange Commission. Apogee wishes to caution investors and
others to review the statements set forth in Exhibit 99 and that other factors
may prove to be important in affecting Apogee's business or results of
operations.
Apogee Enterprises, Inc. is a leading fabricator, distributor and installer of
value-added glass products and systems. The company is organized into three
operating segments: Building Products & Services (BPS), Glass Technologies (GT)
and Auto Glass (AG). Headquartered in Minneapolis, the company's stock is traded
on the Nasdaq Stock Market under the symbol APOG.
For more information on Apogee Enterprises, Inc. via facsimile at no cost,
simply dial 1-800-PRO-INFO and enter the company code ticker APOG.
Financial tables follow...
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Apogee Enterprises, Inc.
Add 5
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
November 29, November 30, % November 29, November 30, %
1997 1996 Change 1996 1996 Change
----------------- ------------ ------ ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Net sales $ 250,946 $ 228,781 10% $ 748,800 $ 710,543 5%
Cost of goods sold 208,924 187,356 12% 612,245 585,298 5%
--------- --------- ------ --------- -------- ----
Gross profit 42,022 41,425 1% 136,555 125,245 9%
Selling, general and administrative
expenses 32,560 28,942 13% 97,134 87,881 11%
Provision for restructuring and other
unusual items 26,031 - N/M 26,031 - N/M
--------- --------- ------ --------- -------- ----
Operating income (16,569) 12,483 -233% 13,390 37,364 -64%
Interest expense, net 1,510 1,912 -21% 5,569 6,168 -10%
--------- --------- ------ --------- -------- ----
Earnings before income taxes and
other items below (18,079) 10,571 -271% 7,821 31,196 -75%
Income taxes (7,894) 3,667 -315% 1,171 11,250 -90%
Equity in net loss of
affiliates 250 - N/M 654 60 990%
Minority interest - (698) -100% - (672) -100%
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Net earnings (loss) $ (10,435) $ 7,602 -237% $ 5,996 $ 20,558 -71%
========= ========= ====== ========= ======== ====
Earnings (loss) per share ($0.37) $0.27 -237% $0.21 $0.74 -72%
Average common and common
equivalent shares outstanding 28,545,079 28,053,494 2% 28,498,535 27,910,264 2%
Cash dividends per common share $0.050 $0.045 11% $0.140 $0.125 12%
</TABLE>
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BUSINESS SEGMENTS INFORMATION
(Unaudited)
<TABLE>
<CAPTION>
Thirteen Thirteen Thirty-nine Thirty-nine
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
November 29, November 30, % November 29, November 30, %
1997 1996 Change 1996 1996 Change
----------------- ------------ ------ ----------- ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Sales
Glass technologies $61,431 $50,133 23% $171,481 $143,876 19%
Auto glass 83,971 73,553 14% 271,524 236,400 15%
Building products & services 109,012 107,347 2% 314,198 338,549 -7%
Eliminations (3,468) (2,252) 54% (8,403) (8,282) 1%
--------- --------- ------ --------- -------- ----
Total $250,946 $228,781 10% $748,800 $710,543 5%
========= ========= ====== ========= ======== ====
Operating Income (Loss)
Glass technologies $ 8,228 $ 6,535 26% $ 21,412 $ 14,462 48%
Auto glass 2,953 3,891 -24% 20,715 18,865 10%
Building products & services (27,473) 677 N/M (28,113) 3,363 N/M
Corporate and other (277) 1,380 N/M (624) 674 N/M
--------- --------- ------ --------- -------- ----
Total ($16,569) $ 12,483 N/M $ 13,390 $ 37,364 N/M
========= ========= ====== ========= ======== ====
</TABLE>
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