<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended August 29, 1998 Commission File Number 0-6365
APOGEE ENTERPRISES, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Minnesota 41-0919654
------------------------ ---------------------
(State of Incorporation) (IRS Employer ID No.)
7900 Xerxes Avenue South, Suite 1800, Minneapolis, Minnesota 55431
------------------------------------------------------------------
(Address of Principal Executive Offices)
Registrant's Telephone Number (612) 835-1874
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the latest practicable date.
Class Outstanding at September 30, 1998
-------------------------------- ---------------------------------
Common Stock, $.33-1/3 Par Value 27,649,372
1
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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
FOR THE QUARTER ENDED AUGUST 29, 1998
Description Page
----------- ----
PART I
Item 1. Financial Statements
Consolidated Balance Sheets as of August 29, 1998
and February 28, 1998 3
Consolidated Results of Operations for the
Three Months and Six Months Ended
August 29, 1998 and August 30, 1997 4
Consolidated Statements of Cash Flows for
the Six Months Ended August 29, 1998 and
August 30, 1997 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
PART II Other Information
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 6. Exhibits and Reports on Form 8-K 12
Exhibit Index 14
Exhibit 27 Financial Data Schedule (EDGAR filing only)
Exhibit 27.1 Restated Financial Data Schedule (EDGAR filing
only)
2
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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<TABLE>
<CAPTION>
August 29, February 28,
1998 1998
----------------------
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,755 $ 7,853
Receivables, net of allowance for doubtful accounts 166,759 145,121
Inventories 67,424 64,183
Costs and earnings in excess of billings on uncompleted
contracts 11,483 6,796
Refundable income taxes 6,093 16,533
Deferred tax assets 11,854 14,218
Other current assets 5,730 7,540
--------- ---------
Total current assets 279,098 262,244
--------- ---------
Property, plant and equipment, net 150,487 129,937
Marketable securities - available for sale 19,143 18,706
Investments 536 709
Intangible assets, at cost less accumulated amortization 55,231 50,500
Other assets 2,249 2,025
--------- ---------
Total assets $ 506,744 $ 464,121
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 52,016 $ 44,055
Accrued expenses 95,700 108,893
Billings in excess of costs and earnings on uncompleted
contracts 43,859 23,141
Current installments of long-term debt 1,279 1,679
--------- ---------
Total current liabilities 192,854 177,768
--------- ---------
Long-term debt 162,024 151,967
Other long-term liabilities 29,825 24,785
Minority interest 210
Shareholders' equity
Common stock, $.33 1/3 par value; authorized 50,000,000
shares; issued and outstanding 27,608,000 and 27,453,000
shares, respectively 9,203 9,151
Additional paid-in capital 41,874 38,983
Retained earnings 71,439 61,899
Unearned compensation (961) (686)
Net unrealized gain on marketable securities 276 254
--------- ---------
Total shareholders' equity 121,831 109,601
--------- ---------
Total liabilities and shareholders' equity $ 506,744 $ 464,121
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
AUGUST 29, 1998 AND AUGUST 30, 1997
(Thousands of Dollars Except Share and Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
----------------------- ----------------------
August 29, August 30, August 29, August 30,
1998 1997 1998 1997
--------- --------- --------- ----------
<S> <C> <C> <C> <C>
Net Sales $ 250,903 $ 246,015 $ 484,030 $ 469,866
Cost of sales 196,448 185,580 384,252 362,542
--------- --------- --------- ---------
Gross profit 54,455 60,435 99,778 107,324
Selling, general and
administrative expenses 36,814 32,221 72,859 64,574
Unusual items -- 11,583 -- 12,791
--------- --------- --------- ---------
Operating income 17,641 16,631 26,919 29,959
Interest expense, net 2,499 1,755 5,145 4,059
--------- --------- --------- ---------
Earnings before income taxes
and other items below 15,142 14,876 21,774 25,900
Income taxes 5,602 5,065 8,056 9,065
Equity in net loss of affiliated
companies 448 154 748 404
Minority interest (63) -- (63) --
--------- --------- --------- ---------
Net earnings $ 9,155 $ 9,657 $ 13,033 $ 16,431
========= ========= ========= =========
Earnings per share-Basic $ 0.33 $ 0.35 $ 0.47 $ 0.59
========= ========= ========= =========
Earnings per share-Diluted $ 0.33 $ 0.34 $ 0.47 $ 0.58
========= ========= ========= =========
Cash dividends per common share $ 0.050 $ 0.045 $ 0.100 $ .090
========= ========= ========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED AUGUST 29, 1998 AND AUGUST 30, 1997
(Thousands of Dollars)
<TABLE>
<CAPTION>
1998 1997
-------- --------
OPERATING ACTIVITIES
<S> <C> <C>
Net earnings $ 13,033 $ 16,431
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 13,452 11,890
Provision for losses on accounts receivable 1,074 353
Deferred income tax (benefit) expense 6,864 (551)
Equity in net loss of affiliated companies 748 404
Minority interest (63) --
Other, net 105 1,595
-------- --------
Cash flow before changes in operating assets and
liabilities 35,213 30,122
Changes in operating assets and liabilities, net of effect of
acquisitions
Receivables (22,173) 17,353
Inventories (3,200) (5,102)
Costs and earnings in excess of billings on uncompleted
contracts (4,687) 6,377
Other current assets 1,865 2,512
Accounts payable and accrued expenses (6,556) (10,514)
Billings in excess of costs and earnings on uncompleted
contracts 20,718 (3,971)
Refundable income taxes and accrued income taxes 11,152 --
Accrued income taxes -- 7,451
Other long-term liabilities 265 (2,663)
-------- --------
Net cash provided by operating activities 32,597 41,565
-------- --------
INVESTING ACTIVITIES
Capital expenditures (32,906) (18,218)
Acquisition of businesses, net of cash acquired (3,335) (500)
Increase in marketable securities (403) (8,405)
Investments in and advance to affiliated companies (575) --
Proceeds from sale of property and equipment 192 108
Other, net 34 (1,578)
-------- --------
Net cash used in investing activities (36,993) (28,593)
-------- --------
FINANCING ACTIVITIES
Payments on long-term debt (840) (2,493)
Proceeds from issuance of long-term debt 10,497 --
Repurchase and retirement of common stock (830) (7,017)
Proceeds from issuance of common stock 2,332 3,517
Dividends paid (2,763) (2,497)
Increase in deferred debt expenses (2,098) --
-------- --------
Net cash provided by (used in) financing activities 6,298 (8,490)
-------- --------
Increase in cash 1,902 4,482
Cash at beginning of period 7,853 4,065
-------- --------
Cash at end of period $ 9,755 $ 8,547
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
------------------------------------------
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as
of August 29, 1998 and August 30, 1997, the results of operations for the
three months and six months ended August 29, 1998 and August 30, 1997 and
cash flows for the six months ended August 29, 1998 and August 30, 1997.
Certain prior year amounts have been reclassified to conform to the current
period presentation.
The financial statements and notes are presented as permitted by Form 10-Q
and do not contain certain information included in the Company's annual
consolidated financial statements and notes. The information included in
this Form 10-Q should be read in conjunction with Management's Discussion
and Analysis and financial statements and notes thereto included in the
Company's Form 10-K for the year ended February 28, 1998. The results of
operations for the three months and six months ended August 29, 1998 and
August 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
The Company's fiscal year ends on the Saturday closest to February 28. Each
interim quarter ends on the Saturday closest to the end of the months of
May, August and November.
2. Earnings per share
------------------
The following table presents a reconciliation of the denominators used in
the computation of basic and diluted earnings per share.
Three Months Ended Six Months Ended
----------------------- ----------------------
August 29, August 30, August 29, August 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
Basic earnings per
share-weighted common
shares outstanding 27,594,620 27,764,591 27,565,531 27,834,265
Weighted common share
assumed upon exercise
of stock options 217,551 676,527 231,813 640,998
---------- ---------- ---------- ----------
Diluted earnings per
share-weighted common
shares and common
shares equivalent
outstanding 27,812,171 28,441,118 27,797,344 28,475,263
========== ========== ========== ==========
3. Inventories
-----------
Inventories consist of the following:
August 29, 1998 February 28, 1998
--------------- -----------------
Raw materials and supplies $19,678 $20,017
In process 3,915 4,749
Finished goods 43,831 39,417
------------- ---------------
$67,424 $64,183
============= ===============
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SALES AND EARNINGS
------------------
Second quarter net earnings of $9.2 million, or 33 cents per share diluted,
were 5% lower than last year's $9.7 million, or 34 cents per share diluted.
Revenues for the quarter were 2% higher than a year ago at $250.9 million.
Operating income increased 6% to $17.6 million from $16.6 million in last
year's second quarter, which included $11.6 million in operating losses
related to Building Products & Services' exited European curtainwall
operations. Overall, the increase in Apogee's operating income was led by
an improvement in Building Products & Services, which more than offset
decreases in Glass Technologies and Auto Glass.
Year-to-date net earnings fell 21% to $13.0 million, or 47 cents per share
diluted, from $16.4 million, or 58 cents per share diluted, in the prior
year. Revenues for the first six months increased 3%, to $484.0 million,
compared to $469.9 million a year ago.
The following table presents the percentage change in net sales and
operating income for the Company's three segments and on a consolidated
basis, for three and six months when compared to the corresponding periods
a year ago.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------------- --------------------------------
August 29, August 30, % August 29, August 30, %
(Dollars in thousands) 1998 1997 Chg 1998 1997 Chg
-------------------------------- --------------------------------
NET SALES
<S> <C> <C> <C> <C> <C> <C>
Glass Technologies $ 50,326 $ 58,005 (13) $ 104,865 $ 110,050 (5)
Auto Glass 109,047 97,296 12 205,803 187,553 10
Building Products & Services 94,592 93,407 1 178,776 177,199 1
Intersegment Eliminations (3,062) (2,693) 14 (5,414) (4,936) 10
--------- --------- ----- --------- --------- -----
Total $ 250,903 $ 246,015 2 $ 484,030 $ 469,866 3
========= ========= ===== ========= ========= =====
OPERATING INCOME
Glass Technologies $ 2,767 $ 7,907 (65) $ 5,860 $ 13,184 (56)
Auto Glass 9,825 11,417 (14) 14,738 17,762 (17)
Building Products & Services 5,630 (2,374) NM 6,721 (640) NM
Corporate and Other (581) (319) 82 (400) (347) 15
--------- --------- ----- --------- --------- -----
Total $ 17,641 $ 16,631 6 $ 26,919 $ 29,959 (10)
========= ========= ===== ========= ========= =====
</TABLE>
Glass Technologies (GT)
-----------------------
Sales at Glass Technologies decreased 13% to $50.3 million in the second
quarter, while operating income fell 65% to $2.8 million from last year's
strong $7.9 million. The segment's results were primarily affected by the
suspension of Viratec's Optium CRT coating line, which has been relocated
to Southern California and is presently going through testing and limited
production runs; and temporary issues related to capacity limitations at
Viracon that slowed production and caused additional costs during June and
July. The segment's results were also affected by lower demand for
Viratec's anti-glare filter and front-surface mirror products due to the
economic slowdown in Asia.
Viracon, the segment's largest operating unit, reported lower net sales and
earnings for the period compared to last year's strong second quarter.
These results were due primarily to the factors noted above. By the end of
the quarter, Viracon was running more efficiently than earlier in the
period despite its continuing capacity limitations. Construction of
Viracon's new Statesboro, Georgia facility remained on schedule. Modest
production from temporary operations used in the training of employees for
the new
7
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facility is expected to help relieve capacity constraints at Viracon in
future months. Customer demand for Viracon's high-performance architectural
glass products remained strong.
The combination of the suspension of the Optium line and the lower demand
for Viratec's anti-glare filter and front-surface mirror products caused
Viratec to report an operating loss for the quarter compared to solid
operating earnings a year earlier. The Viratec unit's Optium CRT coating
line went online in September and is expected to be fully operational by
calendar year-end.
Based on its backlog, strong demand for most of its products and the return
to operation of Viratec's Optium CRT ray tube coating line, GT expects to
report higher operating earnings over the last six months compared to the
first half of fiscal 1999. However, for the fiscal year, GT will not match
last year's record operating earnings.
Auto Glass (AG)
---------------
Sales increased 12% to $109.0 million at Auto Glass due to improved pricing
and an increased store count at Harmon AutoGlass, as well as solid results
at both Glass Depot and Curvlite. However, operating income decreased 14%
to $9.8 million, compared to a year ago, due partly to investments in
information technology systems and the continuation of the segment's retail
advertising campaign.
During the quarter, AG continued to obtain additional sales as insurance
companies adjusted their allocations of business in response to the merger
of AG's top two competitors. The segment also continued to proceed with
efforts to improve productivity for its auto glass repair and replacement
operations. For the first six months of fiscal 1999, same-location retail
unit sales rose marginally. At the close of the second quarter, AG had 340
retail locations, 75 wholesale depots and 8 Midas Muffler franchises.
On May 29, 1998, the segment acquired an 80% interest in VIS'N Service
Corporation (VIS'N), an insurance claims and policy processing outsource
company headquartered in Red Wing, Minnesota. This acquisition expanded the
segment's capabilities to outsource insurance claims and policy processing
beyond its traditional auto glass market.
The segment expects to report year-over-year operating income improvement
over the last half of fiscal 1999.
Building Products & Services (BPS)
----------------------------------
Second quarter operating income at Building Products & Services climbed to
$5.6 million compared with an operating loss of $2.4 million in last year's
second quarter. Sales were up slightly to $94.6 million from the year-ago
quarter, which was restated to reflect the deconsolidation of the segment's
European curtainwall operations. The quarter's results benefited from the
impact of strategies employed last year in Building Products & Services
-downsizing, exiting from the segment's international curtainwall
operations, and adherence to profit disciplines.
For the quarter, domestic curtainwall operations reported a solid operating
profit on an anticipated net sales decline of 13%. The Detention/Security
and Full Service groups both reported improved net sales and operating
earnings for the period. The segment's Architectural Products reported
slightly higher net sales, but its operating profit for the period fell
short of last year's comparatively strong results.
As of the end of the second fiscal quarter, the activities associated with
the exit from European curtainwall operations remained on schedule, and the
Asian curtainwall unit had substantially completed the remaining projects
in its backlog. The segment expects each of its four remaining business
units to be profitable for the fiscal year.
Backlog
-------
On August 29, 1998, Apogee's consolidated backlog stood at $320 million,
down 3% from the $328 million reported a year ago. The backlogs of BPS's
operations represented 80% of Apogee's consolidated
8
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backlog. The most notable variances were the anticipated declines in BPS's
New Construction unit's international backlogs, which were essentially
offset by backlog increases at Viratec and BPS's domestic New Construction
unit.
Consolidated
------------
The following table compares quarterly results with year-ago results, as a
percentage of sales, for each caption.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------ ----------------
Aug. 29, Aug. 30, Aug. 29, Aug. 30,
1998 1997 1998 1997
------ ------- ------ -----
<S> <C> <C> <C> <C>
Net sales 100.0 100.0 100.0 100.0
Cost of sales 78.3 75.4 79.4 77.2
----- ----- ----- -----
Gross profit 21.7 24.6 20.6 22.8
Selling, general and administrative expenses 14.7 13.0 15.1 13.7
Unusual items -- 4.7 -- 2.7
----- ----- ----- -----
Operating income 7.0 6.8 5.6 6.4
Interest expense, net 0.9 0.7 1.1 0.9
----- ----- ----- -----
Earnings before income taxes
and other items below 6.0 6.0 4.5 5.5
Income taxes 2.2 2.0 1.7 1.9
Equity in net earnings of affiliated companies 0.2 -- 0.2 0.1
Minority interest -- -- -- --
----- ----- ----- -----
Net earnings 3.6 3.9 2.7 3.5
===== ===== ===== =====
Income tax rate 37.0% 34.0% 37.0% 35.0%
</TABLE>
On a consolidated basis for the three-month and six-month periods, gross
profit fell as a percentage of net sales. The primary factors underlying
this decline were the effect of the suspension of the Optium CRT coating
line, temporary productivity issues at Viracon early in the second quarter
and the absence of significant margin recognized upon the completion of one
large curtainwall project included in last year's first quarter results.
These items were partly offset by improved pricing at AG, solid
productivity gains at BPS's noncurtainwall units, and the continuation of a
change in sales mix reflecting lower curtainwall revenues. In addition,
last year's gross margin benefited from notably lower insurance costs.
Selling, general and administrative (SG&A) expenses rose by $4.6 million,
or 14%, for the quarter, and by $8.3 million, or 13%, for six months. The
increases included increased investment in information systems technology
at several businesses, and higher employee and advertising costs. Interest
expense rose over last year for both the three-month and six-month periods,
due to higher borrowing levels and interest rates. The six-month effective
income tax rate of 37.0% was up slightly from 35.0% a year ago. The
effective income tax rate increased due to changes in the domestic and
international mix of the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Financial Condition
-------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES
Cash provided by operating activities for the six months ended August 29,
1998 totaled $32.6 million. That figure primarily reflected the combination
of net earnings and noncash charges, such as depreciation and amortization.
At quarter end, the Company's working capital stood at $86.2 million.
Working capital, excluding cash, remained essentially unchanged from the
beginning of the year. Major variances within the working capital accounts
included growth in receivables, inventories and costs in excess of billings
on uncompleted contracts as well as a reduction in payables and accruals.
Offsetting these increases in
9
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working capital were the receipt of approximately $10 million in refundable
income taxes and an increase in billings in excess of costs and earnings on
uncompleted contracts.
NET CASH PROVIDED BY FINANCING ACTIVITIES
Bank borrowings stood at $161.0 million at August 29, 1998, 6.5% higher
than the $150.5 million outstanding at February 28, 1998. The additional
borrowings were primarily attributable to the excess of capital spending
and cash dividends over cash generated from operating activities. At August
29, 1998, long-term debt stood at 57% of total capitalization.
In May 1998, the Company obtained a five-year, committed secured credit
facility in the amount of $275 million. This new credit facility requires
Apogee to maintain minimum levels of net worth and certain financial
ratios, and is collateralized by the Company's receivables, inventory,
equipment and intangibles. This facility replaced a $150 million five-year,
multi-currency committed credit facility which had been obtained in May
1996.
The Company anticipates bank borrowings to increase over the remainder of
the fiscal year as capital spending, working capital and dividend
requirements are expected to exceed the Company's cash provided by
operating activities.
NET CASH USED IN INVESTING ACTIVITIES
Additions to property, plant and equipment during the six months ended
August 29, 1998 totaled approximately $32.9 million. Major items included
expenditures for the GT expansion activities noted above as well as
expenditures on information systems projects throughout the Company.
Capital expenditures in the latter half of the year are expected to be
significant primarily due to the completion of the Company's new
Statesboro, Georgia architectural glass fabrication facility and other
planned capacity expansions in GT.
Cash increased $1.9 million for the six months ended August 29, 1998.
Shareholders' Equity
--------------------
At August 29, 1998, Apogee's shareholders' equity stood at $121.8 million.
Book value per share was $4.41, up from $3.99 per share at February 28,
1998, with outstanding common shares increasing nominally during the
period. Net earnings and proceeds from common stock issued in connection
with the Company's stock-based compensation plans accounted for the
increase, slightly offset by dividends paid.
Impact of Year 2000
-------------------
The Company has been evaluating, with the assistance of independent
software consultants, its Information Technology (IT) systems, non-IT
systems, and third-party readiness for compliance with Year 2000
requirements. For these purposes, the Company defines its "IT systems" as
those hardware and software systems which comprise its central management
information systems and its telephone systems. All other systems, including
those involved in local, on-site product design or manufacturing, are
considered "non-IT systems." "Third parties" include all the Company's key
suppliers and customers.
The assessment phase for the Company's IT systems is approximately 80%
complete. Remediation and implementation of the core operating and
application programs within the IT systems are expected to be completed by
May 1999.
The Company's businesses are currently in the assessment phase regarding
embedded operating and applications software and hardware within its non-IT
systems. The Company expects to complete that assessment by December 1998.
Although the Company is still in the assessment phase, based on currently
known data about its non-IT systems, the Company believes that the
requirements for Year 2000 remediation of its non-IT systems will be
limited in nature.
10
<PAGE>
The Company's businesses are working with their respective customers and
suppliers to assess Year 2000 compliance within their organizations to
assure no material interruption in these important third party
relationships. This dialog and process will be ongoing into early 1999.
Non-compliant customers and suppliers will be evaluated in terms of the
degree of risk posed to the Company's business, and, where necessary,
appropriate responses such as selection of Year 2000 compliant additional
or replacement suppliers will be taken. If there were significant non-
compliance by key customers and suppliers, the Company might experience a
material adverse effect on the businesses with those specific third-party
relationships.
Most of the Company's businesses will remediate or replace portions of
their software and hardware within the Company's IT systems and non-IT
systems that are identified as requiring Year 2000 remediation. The Company
is also working to develop contingency plans with respect to its IT
systems, its non-IT systems and its third-party relationships with key
customers and suppliers.
Based on the Company's assessments completed to date, the Company's total
cost of addressing Year 2000 issues is currently estimated to be in the
range of $10 to $18 million, of which approximately $3 million has already
been incurred. These costs have been and will continue to be funded through
operating cash flows.
CAUTIONARY STATEMENTS
---------------------
A number of factors should be considered in conjunction with any discussion
of operations or results by the Company or its representatives and any
forward-looking discussion, as well as comments contained in press
releases, presentations to securities analysts or investors, or other
communications by the Company.
These factors are set forth in the cautionary statements filed as Exhibit
99 to the Company's Form 10-K and include, without limitation, cautionary
statements regarding changes in economic and market conditions, factors
related to competitive pricing, commercial building market conditions,
management of growth or restructuring of business units, expected cost
savings from restructurings cannot be fully realized or realized within the
expected timeframe, net sales following restructurings are lower than
expected, costs or difficulties related to the operation of the businesses
or execution of restructurings or exit activities are greater than
expected, the impact of foreign currency markets, the integration of
acquisitions, and the realization of expected economies gained through
expansion and information systems technology. The Company 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 the Company's
business or results of operations. These cautionary statements should be
considered in connection with this Form 10-Q, including the forward looking
statements contained in the Management's discussion and analysis of the
Company's three business segments. These cautionary statements are intended
to take advantage of the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995.
11
<PAGE>
PART II
OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
Apogee Enterprises, Inc. Annual Meeting of Shareholders was held on June
23, 1998. The total number of outstanding shares on the record date for the
Annual Meeting was 27,496,124. Seventy-five percent of the total
outstanding shares were represented in person or by proxy at the meeting.
The candidates for election as Class III Directors listed in the proxy
statement were elected to serve three-year terms, expiring at the 2001
Annual Meeting of Shareholders. The proposals to approve the amendment to
the 1987 Partnership Plan and to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company for the 1998 fiscal
year were also approved. The results of these matters voted upon by the
shareholders are listed below.
Number of Shares
--------------------------------------
In Favor Withheld Abstained
--------------------------------------
Election of Class II Directors
Jerome B. Cohen 20,391,754 95,476
Donald W. Goldus 20,413,898 73,332
James L. Martineau 20,421,938 65,292
Michael E. Shannon 20,414,768 72,462
Approval of the Amendment to
the 1987 Partnership Plan 19,684,548 720,006 82,676
Ratification of the appointment
of KPMG Peat Marwick LLP
as independent auditors 20,404,407 10,987 71,836
ITEM 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit (27). Financial Data Schedule (EDGAR filing only).
Exhibit (27.1). Restated Financial Data Schedule (EDGAR filing only).
(b) The Company did not file any reports on Form 8-K during the quarter for
which this report is filed.
12
<PAGE>
CONFORMED COPY
SIGNATURES
Pursuant to the requirements 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.
APOGEE ENTERPRISES, INC.
Date: ___________________ /s/ Russell Huffer
-----------------------
Russell Huffer
President and Chief Executive Officer
Date: ___________________ /s/ Robert G. Barbieri
-----------------------
Robert G. Barbieri
Vice President Finance and
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
Exhibit
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Exhibit 27 Financial Data Schedule (EDGAR filing only)
Exhibit 27.1 Restated Data Schedule (EDGAR filing only).
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> FEB-27-1999 FEB-27-1999
<PERIOD-START> MAY-31-1998 MAR-01-1998
<PERIOD-END> AUG-29-1998 AUG-29-1998
<CASH> 9,755 9,755
<SECURITIES> 19,143 19,143
<RECEIVABLES> 174,185 174,185
<ALLOWANCES> (7,426) (7,426)
<INVENTORY> 67,424 67,424
<CURRENT-ASSETS> 279,098 279,098
<PP&E> 290,753 290,753
<DEPRECIATION> 140,266 140,266
<TOTAL-ASSETS> 506,744 506,744
<CURRENT-LIABILITIES> 192,853 192,853
<BONDS> 0 0
0 0
0 0
<COMMON> 9,203 9,203
<OTHER-SE> 112,629 112,629
<TOTAL-LIABILITY-AND-EQUITY> 506,744 506,744
<SALES> 250,903 484,030
<TOTAL-REVENUES> 250,903 484,030
<CGS> 196,448 384,252
<TOTAL-COSTS> 29,788 61,733
<OTHER-EXPENSES> 11,583 12,791
<LOSS-PROVISION> 2,433 2,841
<INTEREST-EXPENSE> 2,499 5,145
<INCOME-PRETAX> 15,142 21,774
<INCOME-TAX> 5,602 8,056
<INCOME-CONTINUING> 9,155 13,033
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,155 13,033
<EPS-PRIMARY> 0.33 0.47
<EPS-DILUTED> 0.33 0.47
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> FEB-28-1998 FEB-28-1998
<PERIOD-START> JUN-01-1997 MAR-02-1997
<PERIOD-END> AUG-30-1997 AUG-30-1997
<CASH> 8,547 8,547
<SECURITIES> 28,188 28,188
<RECEIVABLES> 191,214 191,214
<ALLOWANCES> 7,293 7,293
<INVENTORY> 63,475 63,475
<CURRENT-ASSETS> 284,642 284,642
<PP&E> 257,795 257,795
<DEPRECIATION> 131,763 131,763
<TOTAL-ASSETS> 494,927 494,927
<CURRENT-LIABILITIES> 165,018 165,018
<BONDS> 0 0
0 0
0 0
<COMMON> 9,273 9,273
<OTHER-SE> 172,628 172,628
<TOTAL-LIABILITY-AND-EQUITY> 494,927 494,927
<SALES> 246,015 469,866
<TOTAL-REVENUES> 246,015 469,866
<CGS> 185,580 362,542
<TOTAL-COSTS> 36,379 71,785
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 435 1,074
<INTEREST-EXPENSE> 1,755 4,059
<INCOME-PRETAX> 14,876 25,900
<INCOME-TAX> 5,065 9,065
<INCOME-CONTINUING> 9,657 16,431
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 9,657 16,431
<EPS-PRIMARY> 0.35 0.59
<EPS-DILUTED> 0.34 0.58
</TABLE>
