Back to GetFilings.com
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 2, 1996
-------------
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission File Number 0-6365
APOGEE ENTERPRISES, INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Minnesota 41-0919654
- -------------------------------- -----------------------------------
(State or other jurisdiction of IRS Employer Identification Number
incorporation or organization)
7900 Xerxes Avenue South - Suite 1800
Minneapolis, Minnesota 55431
- ---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 835-1874
-------------------------
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock $.33-1/3 Par Value
- ------------------------------------------------------------------------------
Title of Class
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 .
--- ---
The aggregate market value of voting stock held by non-affiliates of the
registrant on March 31, 1996 was $275,304,192. The number of shares outstanding
of the Registrant's Common Stock at March 31, 1996 was 13,528,942.
DOCUMENTS INCORPORATED BY REFERENCE
Part III incorporates information by reference from the Proxy Statement for
the Annual Meeting of Shareholders to be held June 18, 1996.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K .
---
APOGEE ENTERPRISES, INC.
FORM 10-K
TABLE OF CONTENTS
For the year ended March 2, 1996
Description Page
----------- ----
PART I
- ------
Item 1. Business 3
Item 2. Properties 7
Item 3. Legal Proceedings 8
Item 4. Submission of Matters to a Vote
of Security Holders 8
Executive Officers of the Registrant 8
PART II
- -------
Item 5. Market for the Registrant's
Common Equity and Related
Stockholder Matters 9
Item 6. Selected Financial Data 10
Item 7. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 12
Item 8. Financial Statements and
Supplementary Data 17
Item 9. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 18
PART III
- --------
Item 10. Directors and Executive Officers
of the Registrant 18
Item 11. Executive Compensation 18
Item 12. Security Ownership of Certain
Beneficial Owners and Management 18
Item 13. Certain Relationships and
Related Transactions 18
PART IV
- -------
Item 14. Exhibits, Financial Statement
Schedules and Reports on Form 8-K 18
Index of Financial Statements and Schedules F-1
2
PART I
------
ITEM 1. BUSINESS
--------
The Company
- -----------
Apogee Enterprises, Inc. is a holding company incorporated under the laws of
the State of Minnesota in 1949. The Company, through its operating subsidiaries,
is primarily engaged in the fabrication, distribution and installation of value-
added glass products and window and curtainwall systems. Almost two-thirds of
the Company's revenues are generated from the nonresidential construction market
with the other one-third is coming from operations serving the auto glass
market. Three business segments comprise Apogee's operations: Building Products
& Services (BPS) serves certain sectors of the commercial and institutional,
detention and security building markets. Glass Technologies (GT) serves the
construction and imaging and display markets. Automotive Glass (AG) serves the
automotive glass replacement market. Financial information about the Company's
segments can be found at Note 17 to the consolidated financial statements of
Apogee Enterprises, Inc. contained in a separate section of this report. See
"Index of Financial Statements and Schedules"
Unless the context otherwise requires, the terms "Company" and "Apogee" as used
herein refer to Apogee Enterprises, Inc. and its subsidiaries.
Building Products & Services
- ----------------------------
The Company's Building Products & Services segment operates principally in the
design, engineering and installation of custom and standard curtainwall and
window systems for commercial, institutional as well as specialized and
detention and security building products and services. BPS operating units
include our detention and security companies (Norment and affiliates), our full
service glazing units, our global new construction curtainwall contractor
(Harmon Contract) and our metal fabricating and finishing businesses (Wausau
Architectural Products).
BPS's detention and security units design, manufacture and install complex
windows, doors and monitoring systems, for high-security buildings such as
prisons, jails, convenience stores, hospitals, schools and other governmental
facilities. BPS competes in the detention and security market through its
Norment operating unit which is a leader in the design, manufacture and
installation of institutional and governmental security and detention systems.
BPS also includes Airteq, which assembles pneumatic locks used in Norment's and
other detention and security systems.
BPS also has seven Harmon full service operations located around the country.
These centers offer complete replacement or glazing services for commercial and
other buildings. In addition, the full service units offer 24-hour replacement
service for storm or vandalism damage. In-house engineering capabilities allow
the units to duplicate the original design or create a completely new appearance
for renovated buildings.
BPS's Harmon Contract unit is one of the world's largest designers and
installers of curtainwall and window systems for nonresidential construction. It
has six offices throughout the United States as well as five in Europe and Asia.
BPS acquired a majority interest in Harmon Europe S.A., in fiscal 1994, a French
company engaged in both the manufacture and installation of curtainwall. This
office, in addition to the other European and Asian offices, has given the
division a stronger presence in overseas markets. All of the offices typically
design, assemble and install a building's exterior skin. The enclosure usually
consists of a metal framing system which is glazed (filled) with glass in the
vision areas and opaque glass or panels in the non-vision (spandrel) areas.
Panels are usually made from aluminum, precast concrete or natural stone. The
segment procures its materials from a number of independent fabricators,
including the BPS's architectural metals units and Glass Technology's
architectural glass unit. Harmon Contract also serves as a stone subcontractor,
setting stone on both the exterior and interior of buildings.
BPS is subject to normal subcontractor's risks, including material and wage
increases, construction and transportation work stoppages and contractor credit
worthiness. In addition, office vacancy rates, tax laws concerning real estate
and interest rates are important factors which affect nonresidential
construction markets. Reduced competition on larger projects, custom designing
capability and a trend toward the use of more sophisticated materials for energy
conservation and design flexibility have helped BPS increase its market share
over the past several years.
The Wausau Architectural Products units of BPS designs and manufactures high-
quality, thermally-efficient aluminum window and curtainwall systems under the
"Wausau Metals and Milco" trade names. These products meet high standards of
wind load capacity and resistance to air and moisture seepage. Wausau's aluminum
window frame designs are
3
engineered to be thermally efficient, utilizing high-strength polyurethane to
limit the transfer of heat or cold through the window frame. Products are
marketed through a nationwide network of distributors and a direct sales staff.
Sales are made to building contractors, 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 occasionally joins Harmon Contract in
pursuing certain projects, as many architects and general contractors prefer to
work with an experienced curtainwall subcontractor and manufacturer team.
Operating under the "Linetec" name, the architectural products unit also has
two metal coating facilities which provide 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, as well as other companies' architectural and
industrial aluminum products.
Glass Technologies
- ------------------
The businesses of our Glass Technologies segment add value to ordinary glass
through fabrication of high-technology coatings products which provide strength,
energy efficiency in high-rise structures and optical clarity for mirrors, glare
filter screens and picture frame glass. The operating units in this segment
include Viracon our architectural glass unit, Tru Vue, our picture framing glass
unit and our two coating units, Marcon Coatings (Marcon) and Viratec Thin Films
(Viratec), which were 50%-owned joint ventures through fiscal 1996.
Viracon, our architectural glass unit, fabricates finished glass products and
provides glass coating services, primarily under the "Viracon" and "Marcon
Coatings" names. These operating units purchase flat, unprocessed glass in bulk
quantities from which a variety of glass products are fabricated, including
insulated and laminated architectural glass; security glass and laminated
industrial glass.
Laminated glass consists of two or more pieces of glass fused with a plastic
interlayer and is used primarily for strength and safety in skylights and in
security applications. Sales of laminated safety glass products have increased
with the adoption of federal and state safety glazing standards. 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.
The Viracon unit is able to fabricate all types of architectural glass
(insulating, laminated and combinations of both) at its Owatonna, Minnesota
complex. Combined with the adjacent Marcon glass coating capabilities, the
segment is able to provide a full range of products from a central location. It
markets its products nationally and overseas to glass distributors, glazing
contractors (including Harmon Contract) and industrial glass fabricators. A
substantial portion of its glass products is delivered to customers by Viracon's
fleet of company-owned trucks, providing "backhaul" capability for its raw
materials, thereby reducing shipping time, transportation costs and breakage
expense.
Marcon provides glass coating services to Viracon, as well as outside
customers. Marcon's reflective and low-emissivity coatings 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 fast-growing segment of both residential and nonresidential
glass markets.
Viratec develops advanced, optical-display and imaging coatings for glass and
other surfaces. These products are used in aftermarket anti-glare computer
screens, high-quality optical components and high performance mirror products
for the imaging industry. Viratec markets optical display and imaging products
to both domestic and overseas customers. These customers provide further
assembly, marketing and distribution to end users. Through fiscal 1996, the
Company accounted for its investment in Marcon and Viratec using the equity
method. Information about the Company's ownership and investment in Marcon and
Viratec is further described in Note 10 to the consolidated financial statements
of Apogee Enterprises, Inc. contained in a separate section of this report. See
"Index of Financial Statements and Schedules"
Tru Vue is one of the largest domestic manufacturers of picture framing glass.
Tru Vue provides its customers with a full array of picture framing glass
products, including clear, reflection control, which diminishes reflection, and
conservation glass, which blocks ultraviolet rays. Tru Vue is also a
manufacturer of conservation picture framing matboard, which complements the
unit's glass product offerings. The products are distributed primarily through
independent distributors which, in turn, supply local picture framing markets.
4
Automotive Glass
- ----------------
The Automotive Glass (AG) segment is engaged in the automotive replacement
glass business through its Harmon Glass service centers (retail), Glass Depot
wholesale distribution centers (wholesale) and Curvlite fabrication center.
Harmon Glass operates automotive glass service centers in 36 states. The
centers replace and repair auto glass on the premises and also provide mobile
installation service. Primary customers include insurance companies (on behalf
of their insured clients), fleet owners and car owners. The 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 certain service centers. Quality service is
emphasized in all service centers. The Company believes Harmon Glass is the
third-largest auto glass retailer in the United States. The unit also operates a
centralized service for handling auto glass claims under the name "National Call
Center" (Center). The Center, on behalf of its insurance company and fleet
customers, handles replacement glass claims made by policyholders or fleet
owners. Calls are placed through a toll-free number to the Center located in
Orlando, Florida. Customer service agents arrange for the prompt replacement or
repair of auto glass by either a Harmon Glass service center or an affiliated
shop member of the Center's network and begins the process of filing the claim
electronically with the applicable insurance company. The Center subcontracts
for replacement and repair services with over 3,300 auto glass stores
nationwide. The unit seeks to maximize the electronic exchange of information,
which reduces claim costs and eliminates errors. This type of service is a fast-
growing segment for the segment.
The auto glass distribution centers, known as "Glass Depot", supply the Harmon
Glass service centers with auto and flat glass and related products, as well as
selling wholesale to other glass installers. Due to the variety of makes and
models of automobiles, automotive glass service centers typically stock 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. Purchases of fabricated automotive glass are made from several
primary glass manufacturers and fabricators, including the segment's Curvlite
unit.
Curvlite fabricates replacement windshields for foreign and domestic
automobiles and laminated glass parts for the transportation industry. It
fabricates approximately 800 types of replacement windshields which are marketed
nationally to distributors and glass shops, including the Glass Depot
distribution centers. Curvlite seeks to offer a broad selection of windshields
by promptly adding new windshields as new models are introduced.
In fiscal 1996, the AG segment acquired or opened 7 new distribution centers
and 8 service centers, bringing its year-end total to 60 and 264 respectively.
The segment continues to evaluate opportunities to expand both its retail and
wholesale auto glass segments, while closely monitoring existing units'
profitability.
Under a franchise agreement with Midas International Corporation, the segment
operates eight Midas Muffler locations in Minnesota, South Dakota, North Dakota
and Wisconsin.
Competition
- -----------
All segments of the Company's business are fairly mature and are highly
competitive. The curtainwall subcontractor business is primarily price
competitive, although Harmon Contract's reputation for quality engineering and
service is an important factor in receiving invitations to bid on large complex
projects. The Wausau Architectural Products group competes against several major
aluminum window manufacturers. Wausau Metals primarily serves the custom portion
of this market in which the primary competitive factors are product quality,
reliable service and the ability to provide technical engineering and design
services. The Glass Technologies segment competes with several large integrated
glass manufacturers and numerous smaller specialty fabricators. Product pricing
and service are the primary competitive factors in this market. The Auto Glass
units compete with other auto glass shops, glass distributor warehouses, car
dealers, body shops and fabrication facilities on the basis of pricing and
customer service. Its competition consists of national and regional chains as
well as significant local competition.
5
Markets
- -------
BPS serves the domestic and international nonresidential construction market,
which tends to be cyclical and has been on a slow recovery, both in terms of
dollars and square feet of new contract awards. This market was hard hit due to
the overbuilding in past years, tax law changes, tightening credit standards,
business restructurings and other factors. The resulting contraction in demand
for building materials and construction services has intensified competition,
squeezed profit margins and contributed to some business failures in the market
sectors served by the Company. In response to these circumstances, BPS has
consolidated manufacturing facilities, closed offices and reduced personnel and
discretionary expenses. It has also redirected its marketing focus to sectors
with relative strength, including remodeling, institutional (including detention
and security) and international markets.
GT services the architectural glass, computer, optical imaging and picture
framing glass markets in which coated glass is becoming the industry standard.
These markets are very competitive, highly responsive to new products and can be
price sensitive. GT is believed to possess the world's largest coating capacity
for glass and to be a leading global fabricator of high-performance
architectural glass. Its one location capabilities allows the segment to meet
customer needs and react quickly to market demands while improving margins and
developing new products.
AG services the automotive glass aftermarket which is influenced by a variety of
factors, including new car sales, gasoline prices, speed limits, road
conditions, the economy, weather and average number of miles driven. A
transformation of the industry's pricing structure has intensified competition.
In recent years, major purchasers of auto glass, such as insurance companies,
have increasingly requested volume pricing and awarded regions to glass
providers at significant discounts from historical levels. As a result, margins
have narrowed at the retail level and, to a lesser extent, at wholesale and
manufacturing levels.
Sources and Availability of Raw Materials
- -----------------------------------------
None of the Company's operating units are significantly dependent upon any one
supplier. The Company believes a majority of its raw materials (bulk flat glass,
aluminum extrusions, automotive glass and related materials) are available from
a variety of domestic sources.
Trademarks and Patents
- ----------------------
The Company has several nationally recognized trademarks and trade names which
it believes have significant value in the marketing of its products. Harmon
Glass(R), Harmon Contract(R), Norment(R), Airteq(R), Viratec(R), Tru Vue(R), The
Glass Depot(R), and Linetec(R) are registered trademarks of the Company. Viratec
Thin Films has obtained several patents pertaining to its glass coating methods.
However, no single patent is considered to be materially important to the
Company.
Foreign Operations and Export Sales
- -----------------------------------
BPS has sales offices in Europe and Asia. Sales for those offices were
approximately $114,305,000, $66,580,000 and $65,021,000 for the years ended
March 2, 1996, February 25, 1995 and February 26, 1994, respectively. Operating
losses for 1996, 1995 and 1994, were $1,983,000, $6,575,000 and $887,000,
respectively. At March 2, 1996, February 25, 1995 and February 26, 1994, the
identifiable assets of foreign operations totaled $58,753,000, $41,880,000 and
$31,786,000, respectively. At March 2, 1996, the backlog of work for European
and Asian projects was $133 million. In addition, during the years ended March
2, 1996, February 25, 1995 and February 26, 1994, the Company's export sales,
principally from GT operations, amounted to approximately $38,348,000,
$30,241,000 and $27,643,000, respectively.
Employees
- ---------
The Company employed 6,163 persons at March 2, 1996, of whom 1,225 were
represented by labor unions. The Company is a party to 88 collective bargaining
agreements with several different unions. Fifty-two (52) of the collective
bargaining agreements will expire during fiscal 1997. The number of collective
bargaining agreements to which the Company is a party will vary with the number
of cities with active nonresidential construction contracts. The Company
considers its employee relations to be very good and has not recently
experienced any significant loss of work days due to strike.
6
Backlog
- -------
The backlog of orders is significant in the Company's construction-related BPS
segment. At March 2, 1996, the Company's total backlog of orders considered to
be firm was $405,000,000, compared with $366,000,000 at February 25, 1995.
Approximately $73,000,000 is not expected to be reflected as revenue in fiscal
1997.
ITEM 2. PROPERTIES
----------
The following table lists, by division, the Company's major facilities, the
general use of the facility and whether it is owned or leased by the Company.
Facility Location Owned/Leased Function
- -------- -------- ------------ --------
Building Products & Services
- ----------------------------
Harmon Contract headquarters Minneapolis, MN Leased Administrative
Norment Montgomery, AL Owned Mfg./Admin.
Harmon CFEM -- Sitraco Pinon, France Owned Mfg.
Harmon CFEM -- Facalu Epernon, France Owned Mfg.
Wausau Metals Wausau, WI Owned Mfg./Admin.
Wausau Metals - Plant II Wausau, WI Owned Mfg.
Linetec (Painting) Wausau, WI Owned Mfg./Admin.
Linetec (Anodizing) Wausau, WI Owned Mfg.
Glass Technologies
- ------------------
Viracon Owatonna, MN Owned Mfg./Admin.
Tru Vue Chicago, IL Owned Mfg./Admin.
Marcon Coatings, Inc. (1) Owatonna, MN Owned Mfg./Admin.
Viratec Thin Films (1) Faribault, MN Owned Mfg./Admin.
Automotive Glass
- ----------------
Curvlite Owatonna, MN Owned Mfg./Admin.
Harmon Glass and Glass
Depot headquarters Minneapolis, MN Leased Administrative
National Call Center Orlando, FL Owned Administrative
Other
- -----
Apogee Corporate Office Minneapolis, MN Leased Administrative
(1) 50% owned joint ventures through fiscal 1996.
The Building Products & Services segment 12 sales offices, 7 glazing service
centers and 8 fabrication facilities generally located in major metropolitan
areas in the United States, Europe and Asia, virtually all of which are leased.
The Glass Technologies segment has four fabrication facilities located in the
Midwest.
The Automotive Glass segment has 324 retail service and distribution centers
located nationally and eight Midas Muffler franchises located in the Midwest,
the majority of which are leased.
The Curvlite plant, a Wausau Metals facility, the Linetec paint facility, an
addition to one of the Wausau Metals plants and the National Call Center
administrative center were constructed with the use of proceeds from industrial
revenue bonds issued by those cities. These properties are considered owned,
since at the end of the bond term, title reverts to the Company.
7
ITEM 3. LEGAL PROCEEDINGS
-----------------
Apogee has been party to joint venture agreements with a 50% partner, Marvin
Lumber & Cedar Company (JV partner), forming Marcon Coatings, Inc. and its
subsidiary, Viratec Thin Films, Inc. (Marcon/Viratec). Marcon/Viratec operates
glass coating facilities. Our 50% ownership investment in Marcon/Viratec was
accounted for using the equity method.
In November 1995, the JV Partner commenced litigation in the Third Judicial
District Court of Rice County pursuant to Minn. Stat. (S)302A.751 against Apogee
alleging claims for damages and seeking to have the Court order Apogee to sell
its 50% interest in the joint venture to the JV Partner. Apogee filed
counterclaims seeking to have the JV Partner's 50% interest sold to Apogee, and
in March 1996, the Court ordered the JV Partner to sell the share of stock
representing its 50% interest in Marcon/Viratec to Apogee upon payment by Apogee
of fair value for these shares as determined by the Court. The JV Partner's
rights and status as shareholder and directors were terminated as of the
effective date of the order and the fair value for the share is to be determined
by the Court after further proceedings. The Court has not yet scheduled a trial
or hearing to determine fair value.
At a hearing on April 23, 1996, the Court ordered Apogee to post a bond or
letter of credit in the amount of $50 million, or to pay the JV Partner $25
million and agree to set aside an additional $25 million, as security for the
ultimate payment of the purchase price for the JV Partner's shares. The amount
of such a bond or other means is intended as security and is not intended to
reflect the Court's view on what is fair value for the shares. The JV Partner's
claims against Apogee for damages are still pending and the Court also is
considering a motion brought by the JV Partner to add a claim for punitive
damages.
In addition to the above matter, Apogee is party to various legal proceedings
incidental to our normal operating activities. In particular, like others in the
construction industry, our construction business, is routinely involved in
various disputes and claims arising out of construction projects, sometimes
involving significant monetary damages. Although it is impossible to predict the
outcome of such proceedings, we believe, based on facts currently available to
us, that none of such claims will result in losses that would have a material
adverse effect on our financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
------------------------------------
NAME AGE POSITION
---- --- --------
Donald W. Goldfus 62 Chairman of the Board of Directors,
Chief Executive Officer and President
Richard Gould 56 Senior Vice President
James L. Martineau 55 Vice President
Terry L. Hall 42 Vice President Finance and
Chief Financial Officer
William G. Gardner 50 Treasurer and Secretary
Executive officers are elected annually by the Board of Directors and serve for
a one-year period. With the exception of Richard Gould, who has an employment
contract with the Company that covers the period through 2000, no other officers
have employment contracts with the Company. None of the executive officers or
directors of the Company are related.
All of the above named executive officers have been employees of the Company
for more than the last five years with the exception of Mr. Gould who joined the
Company in May 1994 and Mr. Hall who joined the Company in April 1995. Prior to
joining the Company, Mr. Gould was president of Gould Associates, a strategic
management consulting firm to a wide
8
range of companies. Prior to joining the Company, Mr. Hall was Chief Financial
Officer of Tyco International from 1993 to 1995 and Vice President and Treasurer
of United Airlines from 1990 to 1993.
PART II
-------
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
-----------------------------------------------------------------
MATTERS
-------
Apogee common stock is traded in the National Market System of the NASDAQ over-
the-counter market, under the ticker symbol APOG. Stock price quotations are
printed daily in major newspapers. During the fiscal year ended March 2, 1996,
the average trading volume of Apogee common stock was 887,870 shares per month,
according to NASDAQ.
As of March 31, 1996, there were 13,528,942 shares of common stock outstanding,
of which about 7.0 percent were owned by officers and directors of Apogee. At
that date, there were approximately 2,039 shareholders of record and 3,270
shareholders for whom securities firms acted as nominees.
The following chart shows the quarterly range and year-end close of the
company's common stock over the past five fiscal years.
QUARTER QUARTER QUARTER QUARTER YEAR
I II III IV END
-----------------------------------------------------------------------
1992 12 3/4-18 12 3/4-14 1/2 10 3/4-14 3/8 9 1/2-14 12 1/4
1993 10 1/4-12 3/4 8 1/4-10 3/4 9 3/4-12 1/4 9 3/4-12 1/4 11 5/8
1994 10 1/4-12 1/2 11 1/2-14 1/4 11 1/4-14 1/2 13 1/2-17 3/4 14 1/2
1995 11 1/2-15 1/4 11 3/4-15 3/4 14 3/4-18 1/4 14 3/4-18 1/2 17 1/4
1996 16 1/2-18 14 1/2-18 1/4 14 1/4-15 3/4 13 -19 3/4 19 5/8
It is Apogee's policy to pay quarterly cash dividends in May, August, November
and February. Cash dividends have been paid each quarter since 1974 and have
been increased each year since then. The chart below shows quarterly cash
dividends per share for the past five years.
QUARTER QUARTER QUARTER QUARTER
I II III IV YEAR
-----------------------------------------------------
1992 0.065 0.065 0.065 0.065 0.260
1993 0.065 0.065 0.070 0.070 0.270
1994 0.070 0.070 0.075 0.075 0.290
1995 0.075 0.075 0.080 0.080 0.310
1996 0.080 0.080 0.085 0.085 0.330
9
ITEM 6. SELECTED FINANCIAL DATA
-----------------------
The following information should be read in conjunction with Item 7 -
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Item 8 - Financial Statements and Supplementary Data.
1996 1995 1994* 1993 1992
---- ---- ---- ---- ----
OPERATING RESULTS
Net sales $ 871,147 756,549 688,233 572,450 596,281
Gross profit $ 118,523 105,889 83,895 78,201 101,580
Operating income $ 32,457 24,262 7,058 6,369 19,249
Net earnings $ 17,835 13,050 3,833 4,514 8,505
Earnings per share $ 1.31 0.97 0.29 0.34 0.63
Effective tax rate - % 36.9 40.2 60.9 42.3 39.6
OPERATING RATIOS
Gross margin - % 13.6 14.0 12.2 13.7 17.0
Operating margin - % 3.7 3.2 1.0 1.1 3.2
Net margin - % 2.0 1.7 0.6 0.8 1.4
Return on
Average shareholders' equity - % 13.5 10.9 3.4 4.0 7.6
Average invested capital - % 7.6 6.7 2.4 3.0 5.7
Average total assets - % 4.8 3.9 1.4 1.8 3.4
FUNDS FLOW DATA
Cash flow before changes in
operating assets and liabilities $ 31,514 27,192 20,470 19,187 31,256
Depreciation and amortization $ 16,528 15,131 15,724 15,110 16,305
Capital expenditures $ 22,615 24,957 14,046 9,166 12,974
Dividends $ 4,453 4,155 3,841 3,584 3,505
YEAR-END DATA
Total assets $ 386,136 361,928 306,188 251,456 249,509
Current assets $ 258,559 256,820 221,286 169,029 166,376
Current liabilities $ 142,477 135,719 140,846 99,787 101,011
Working capital $ 116,081 121,101 80,440 69,242 65,365
Current ratio 1.8 1.9 1.6 1.7 1.6
Long-term debt $ 79,102 80,566 35,688 28,419 25,267
% of invested capital 32.5 35.6 21.6 18.7 17
Shareholders' equity $ 138,921 124,629 114,063 112,335 113,781
% of invested capital 57.0 55.1 69.0 74.1 76.6
Backlog $ 404,737 363,751 405,223 322,323 231,949
INVESTMENT INFORMATION
Dividends per share $ 0.330 0.310 0.290 0.270 0.260
Book value per share $ 10.28 9.27 8.57 8.53 8.45
Price range during year:
High $ 19 3/4 18 1/2 17 3/4 12 3/4 18
Low $ 13 11 1/2 10 1/4 8 1/4 9 1/2
Close $ 19 5/8 17 1/4 14 1/2 11 5/8 12 1/4
Price/earnings ratio at year-end 15 18 50 34 19
Dividend yield at year-end - % 1.7 1.9 2 2.3 2.1
Shares outstanding 13,517,000 13,443,000 13,312,000 13,177,000 13,461,000
Average monthly trading volume 887,870 806,506 259,450 322,147 693,029
* Fiscal 1994 figures reflect the cumulative effect of a change in accounting
for income taxes, which increased net earnings by $525,000, or 4 cents per
share.
10
1991 1990 1989 1988 1987** 1986**
---- ---- ---- ---- ---- ----
OPERATING RESULTS
Net sales $ 599,525 589,657 433,740 312,051 279,097 249,570
Gross profit $ 100,097 93,718 72,214 57,350 48,300 42,189
Operating income $ 33,267 32,033 24,134 20,211 17,867 17,383
Net earnings $ 17,017 14,095 13,421 11,615 8,523 8,233
Earnings per share $ 1.25 1.04 1.00 0.87 0.64 0.62
Effective tax rate - % 37.1 37.1 38.2 41.8 46.6 47.5
OPERATING RATIOS
Gross margin - % 16.7 15.9 16.6 18.4 17.3 16.9
Operating margin - % 5.5 5.4 5.6 6.5 6.4 7.0
Net margin - % 2.8 2.4 3.1 3.7 3.1 3.3
Return on
Average shareholders' equity - % 17.8 15.7 17.2 17.3 14.5 15.9
Average invested capital - % 11.4 9.8 11.4 13.2 11.2 11.9
Average total assets - % 6.9 6.2 7.6 9.0 7.8 8.5
FUNDS FLOW DATA
Cash flow before changes in
operating assets and liabilities $ 34,284 31,030 23,145 18,167 13,200 17,227
Depreciation and amortization $ 13,309 12,141 8,987 6,586 4,339 3,601
Capital expenditures $ 12,798 16,985 23,680 11,311 15,773 7,905
Dividends $ 3,248 2,693 2,140 1,807 1,516 1,342
YEAR-END DATA
Total assets $ 250,343 244,103 207,686 143,487 115,738 102,580
Current assets $ 162,676 154,845 126,881 86,026 68,250 71,823
Current liabilities $ 102,492 94,948 68,921 47,652 36,199 30,253
Working capital $ 60,184 59,897 57,960 38,374 32,051 41,570
Current ratio 1.6 1.6 1.8 1.8 1.9 2.3
Long-term debt $ 29,398 41,366 46,277 17,899 12,136 14,196
% of invested capital 19.9 27.7 33.3 18.7 15.3 19.6
Shareholders' equity $ 109,050 95,754 83,871 72,062 62,561 55,381
% of invested capital 73.8 64.2 60.4 75.2 78.7 76.6
Backlog $ 245,000 299,810 333,240 228,532 124,161 108,195
INVESTMENT INFORMATION
Dividends per share $ 0.240 0.200 0.160 0.135 0.112 0.101
Book value per share $ 8.09 7.11 6.25 5.40 4.68 4.17
Price range during year:
High $ 20 1/8 18 3/4 14 1/4 12 1/4 15 1/8 10 3/4
Low $ 13 1/4 13 10 7 1/2 7 5/8 6 1/8
Close $ 18 14 3/4 13 5/8 11 10 3/8 10 13/32
Price/earnings ratio at year-end 14 14 14 13 16 17
Dividend yield at year-end - % 1.3 1.4 1.2 1.2 1.1 1.0
Shares outstanding 13,477,000 13,467,000 13,414,000 13,349,000 13,362,000 13,268,000
Average monthly trading volume 606,341 861,486 720,041 633,493 880,458 473,599
** The per share data for fiscal 1987 and 1986 has been adjusted for the fiscal
1987 stock dividend.
11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
-----------------------------------------------------------
AND RESULTS OF OPERATIONS
-------------------------
FINANCIAL GOALS
Prior to fiscal year 1992, a significant portion of Apogee's operating income
was generated by units serving the nonresidential construction market.
Specifically, when office building construction activity dropped precipitously
in the early 1990's, Apogee's history of steadily growing sales and earnings
came to an abrupt halt. In an effort to return to historical earnings growth, we
have reexamined the manner in which we direct assets and how we operate our
businesses. The results of these efforts have been to begin to reallocate our
capital to our more profitable businesses, to set higher return requirements for
capital investments, to reduce working capital levels and to raise productivity
of our enterprises.
A year ago we stated that our primary goal was to exceed the record earnings
achieved in fiscal 1991. We were able to fulfill that goal in fiscal 1996. Going
forward, assuming reasonably stable competitive and economic conditions, it is
our goal to increase earnings per share at a compounded annual rate of 15% or
greater.
In support of the above goal, we have now divided our businesses into three
segments that reflect how we view our company while providing a clearer picture
of our operations. Our new segmentation is defined as: Building Products &
Services (BPS), Glass Technologies (GT) and Auto Glass (AG). Our commitment to
the efforts described above is further outlined in the following segment
analysis.
PERFORMANCE
FISCAL 1996 COMPARED TO FISCAL 1995
The following table illustrates the relationship between various components of
operations, stated as a percent of net sales, for the three years ended March 2,
1996.
Percent of Net Sales
===================================
1996 1995 1994
---- ---- ----
Net sales......................................... 100.0 100.0 100.0
Cost of sales..................................... 86.4 86.0 87.8
Gross profit.................................... 13.6 14.0 12.2
Selling, general and administrative expenses...... 9.9 10.8 10.4
Provision for business restructuring and.......... - - 0.8
asset valuation
Operating income................................ 3.7 3.2 1.0
Interest and other expense, net................... 0.7 0.5 0.4
Earnings before income taxes and other items... 3.1 2.7 0.6
Income taxes...................................... 1.1 1.1 0.4
Equity in net earnings of affiliated companies.... (0.1) (0.1) (0.3)
Minority interest................................. (0.1) - 0.1
Net earnings before cumulative effect of
change in accounting for income taxes........ 2.0 1.7 0.5
Cumulative effect of change in accounting
for income taxes............................. - - 0.1
Net earnings................................... 2.0 1.7 0.6
Consolidated net sales grew 15% to $871 million in fiscal 1996 as all three
segments reported double-digit gains. Our GT segment benefitted from improved
volume and firm pricing for its fabricated architectural glass products while
our AG segment experienced higher unit volumes at a greater number of locations.
AG's sales improvement was somewhat dampened by the continuation of industry
pricing pressure. Apogee's BPS segment's sales grew mainly due to higher
12
overseas building activity. Approximately 2% of the consolidated net sales came
from an additional week in the 53-week fiscal 1996 compared to a 52-week fiscal
1995.
Overall, cost of sales, as a percent of sales, grew slightly as productivity
gains at GT were offset by narrowing margins at our AG segment.
Selling, general and administrative expenses (SG&A) grew 5%, reflecting
increased information systems and marketing costs at our AG segment as it worked
to expand market coverage and develop new services to meet customers' needs.
However, SG&A costs fell sharply as a percentage of sales, due to strong sales
gains and cost cutting measures undertaken by all of our operating segments.
Net interest expense rose 38% due to a combination of higher interest rates and
higher borrowing levels in the first half of the year necessitated by our
working capital needs.
Our effective tax rate dropped to 36.9% from 40.2% in fiscal 1995. The decrease
was primarily due to the tax benefits related to higher export sales levels and
a decrease in our deferred tax asset valuation allowance.
Equity in net earnings of affiliates dropped slightly as pricing for certain
coated products became more competitive in the latter half of the year, and
continuing development costs at Viratec Thin Films offset solid earnings from
its main product line. Minority interest rose due to a larger loss at Harmon
Europe S.A., our 70%-owned French unit.
Consolidated net earnings advanced 37% in fiscal 1996 to $17.8 million or $1.31
a share, from $13.1 million, or $0.97 a share, a year ago. Return on
shareholders' equity rose to 13.5% from 10.9% a year earlier.
SEGMENT ANALYSIS
The following information provides a more detailed look at each of our three
segments. For a concise five year look at each segment, see "Index of Financial
Statements and Schedules" Note 17 Business Segment Information.
BUILDING PRODUCTS & SERVICES (BPS) made substantial progress in fiscal 1996.
Revenues grew 16%, primarily due to progress on the Kuala Lumpur City Centre
project in Malaysia and higher European revenues. The segment's operating loss
fell from prior year's $6.1 million to $2.1 million. Harmon Contract, BPS's
domestic and international curtainwall construction unit reduced its loss
approximately 60% while the segment's Wausau Architectural Products group
reported modest operating income compared to a loss a year earlier, and 17%
revenue growth. Both units' improvements were achieved through overhead and
operating cost reductions and by newly implemented monitoring systems which
allow money-saving decisions to be made earlier in a project's completion cycle.
BPS believes the new project management systems and cost saving efforts will
allow it to make further improvements in profitability.
The segment's full service glazing group had another solid year generating
strong revenues and healthy operating income. BPS's detention and security unit
reported lower revenues, but produced a small profit, though notably less than a
year ago. However, the unit's year-end backlog was up 53% over a year ago.
In July 1995, BPS sold the Nanik Window Coverings group for $17.6 million. A
$4.2 million gain on the sale was included under the caption, "Other expense,
net" in the Consolidated Results of Operations. In fiscal 1996, the window
coverings group contributed 3% of segment sales and a small operating profit
compared to 7% of sales and a $1.4 million operating profit in fiscal 1995.
Apogee ended the fiscal year with a $405 million backlog, up 11% from $364
million at the end of fiscal 1995. BPS's backlog is almost 98% of the total.
Based upon analysis of its backlog, BPS anticipates nominal sales growth in
fiscal 1997 due to the increased selectivity of projects taken over the past
year. However, better margins are expected as the segment completes its
remaining older, lower-margin projects and progresses further with healthier
margin projects. Approximately $73 million of the February 1996 backlog will not
be reflected as revenue in fiscal 1997.
GLASS TECHNOLOGIES (GT) includes Viracon, our architectural glass fabricator,
and Tru Vue, our picture framing glass manufacturer, both previously part of
BPS. Marcon Coatings (Marcon), which applies coatings to architectural and
13
residential building glass, and Viratec Thin Films (Viratec), which applies
optical-grade coatings to glass and other substrates, are also part of GT.
Through fiscal 1996, Apogee's equity in Marcon's and Viratec's net earnings was
included in the Consolidated Results of Operations under the caption "Equity in
net earnings of affiliated companies."
GT had outstanding results in fiscal 1996, increasing revenues and operating
income by 24% and 57%, respectively. Both operations experienced strong demand
for products and benefitted from firmer pricing environments. While the segment
contributed just 17% of consolidated revenues, it provided 51% of consolidated
operating income.
Much of the segment's success was due to our Viracon operation, which ran at
near or full capacity for most of the year. In fiscal 1996, Viracon grew
revenues and operating income by 27% and 67%, respectively. Additional capacity
is planned to be on-line in summer 1996. Viracon's cost structure, along with
the expansion, will allow the unit to begin to penetrate the mid-performance
architectural glass market, a market which is approximately two times the size
of the high-performance architectural glass market, a market Viracon
traditionally serves. Tru Vue had similar results, increasing revenue and
earnings by 12% and 27%, respectively. The unit was able to achieve the growth
through efforts to streamline operations and integrate the two-year old matboard
acquisition.
Both Marcon and Viratec increased revenues over the prior year. Marcon had a
decline in operating income, as start-up expenses related to a new coater
negatively affected earnings. Viratec was able to grow operating income despite
pricing pressures for its flat glass operations and developmental costs related
to the CaRT line. At March 2, 1996, Viratec's backlog of $8 million was down 43%
from the prior year-end.
In November 1995, Apogee's 50% joint venture partner (JV Partner) in
Marcon/Viratec commenced litigation against us, alleging claims for damages and
seeking to have the Court order Apogee to sell its 50% interest to the JV
Partner. Apogee filed counterclaims seeking to have the JV Partner's 50%
interest sold to Apogee, and in March 1996, the Court ordered the JV Partner to
sell the shares of stock representing its 50% interest in Marcon/Viratec to
Apogee upon payment by Apogee of fair value for those shares as determined by
the Court. The JV Partner's rights and status as shareholder and directors were
terminated as of the effective date of the order and the fair value for the
shares is to be determined by the Court after further proceedings. The Court has
not yet scheduled a trial or hearing to determine fair value.
At a hearing on April 23, 1996, the Court ordered Apogee to post a bond or
letter of credit in the amount of $50 million, or to pay the JV Partner $25
million and agree to set aside an additional $25 million, as security for the
ultimate payment of the purchase price for the JV Partner's shares. The amount
of such a bond or other means is intended as security and is not intended to
reflect the Court's view on what is the fair value for the shares. The JV
Partner's claims against Apogee for damages are still pending and the Court also
is considering a motion brought by the JV Partner to add a claim for punitive
damages.
Apogee anticipates GT will report sales and earnings gains in fiscal 1997
through expanded production capacity and streamlined operations for Viracon and
Tru Vue. The Company believes full control of Marcon and Viratec will allow
Apogee more strategic and operating flexibility.
AUTO GLASS (AG) had mixed results in fiscal 1996. The segment grew sales 10%
during the year despite pricing pressures and lower unit movement in the auto
glass industry. Operating income declined 5% due to lower margins and expenses
related to investment in improved information systems and marketing programs.
AG, which operates retail stores under the Harmon Glass (Harmon) name and
distribution centers under the Glass Depot name, possesses the third-largest
share in the auto glass repair and replacement industry.
The segment increased market penetration in fiscal 1996 as Harmon grew by 8
retail locations while Glass Depot added 7 distribution centers. At March 2,
1996, AG had 264 Harmon retail glass stores, 60 Glass Depot locations and 8
Midas Muffler franchises in 36 states.
Insurance companies increasingly rely on auto glass vendors with information
systems to expedite claims processing and other administrative efforts related
to auto glass replacement and repair. This outsourcing allowed insurance
companies to improve customer satisfaction and lower costs. The segment's
significant investment in information systems provides Harmon the means to offer
comprehensive claims processing and management services to these customers on a
nationwide basis. Harmon was able to use this competitive edge to gain market
share in fiscal 1996. This market share gain is
14
reflected in Harmon's 7.5% jump in retail same-store sales as contrasted with a
10% drop in overall industry unit movement.
Curvlite, AG's auto glass fabricator, reported increased sales and unit volume
in a declining sales price market. However, weaker pricing and costs related to
setting up its new product and delivery systems negatively affected operating
income. Through the unit's National Distribution Center, a mega-distribution
center offering other manufacturers' products as well as its own for both
domestic and foreign vehicles, Curvlite was able to offer a more complete
product line to its customers. Another new program was AutoGlass Express, a
delivery system which allows Curvlite to fill customer's orders on an individual
basis more completely and faster than many of its competitors. The unit believes
the two new initiatives will give it a competitive edge and help to gain market
share.
AG anticipates sales growth to continue as it starts to leverage its information
and delivery systems in fiscal 1997. Even with higher sales, it is difficult to
project if operating earnings will improve as the full costs of the information
systems begin to be realized in fiscal 1997 and industry pricing pressures
continue.
FISCAL 1995 COMPARED TO FISCAL 1994
Consolidated net sales rose 10% to $757 million in fiscal 1995, primarily due to
strong replacement auto glass markets, robust demand for architectural glass
products, and higher detention and security contracting revenues. Our gross
margin increased nearly two percentage points as pricing improved slightly for
replacement auto glass and architectural glass products. Productivity gains
outpaced moderate increases in wages and benefits, including lower medical plan
costs. In addition, the margin gains reflected operating improvements by our
nonresidential construction and architectural products operations, despite the
continuation of depressed margins for those units' markets.
As a percentage of net sales, selling, general and administrative expenses
(SG&A) crept slightly higher, but grew substantially in absolute dollars. The
majority of the increase resulted from expenditures by our auto glass retail and
wholesale businesses for the development of improved information systems to
better meet customer needs, as well as for expanded marketing programs related
to windshield repair.
Net interest expense rose 51%, due to the combination of higher interest rates
and increased borrowing levels required to meet working capital and capital
investment needs.
Our effective income tax rate fell substantially, from 60.9% in fiscal 1994, to
40.2% in 1995, as increased domestic earnings were taxed at essentially the
statutory rate. The fiscal 1994 rate was unusually high due to an increase in
our deferred tax asset valuation.
Equity in net earnings of affiliated companies dropped 67%, to $0.8 million, in
fiscal 1995. New product and process development costs at Viratec Thin Films
substantially offset strong earnings of the unit's anti-glare screen business.
Minority interest differed from a year ago as Harmon Europe S.A. reported a loss
in fiscal 1995 compared to net earnings in the prior year.
Fiscal 1995 consolidated net earnings grew 240%, to $13.1 million, or $.97 per
share, up from $3.8 million or 29 cents per share a year ago, which included the
$525,000, or 4 cents per share, cumulative effect of the change in accounting
for income taxes reported in fiscal 1994. Return on average shareholders' equity
grew to 10.9%, up from 3.4% a year earlier.
At February 25, 1995, our consolidated backlog was $364 million, down 10% from
$405 million twelve months earlier. Decreases in our domestic and Asian
construction backlogs exceeded the combined increases in other areas. While our
backlog declined, it was expected that recently recorded orders would provide
margin improvement. At February 25, 1995, approximately $84 million of the
February 1995 backlog was not expected to be reflected as revenue in fiscal
1996.
BUILDING PRODUCTS & SERVICES (BPS) increased revenues 6% in fiscal 1995, to $400
million, and reported a $6.1 million operating loss, a $16.4 million reduction
from its loss a year earlier. Within the segment, 24% revenue growth was
achieved at the detention and security unit, largely due to fast-track projects
entered into early in the year. Harmon Contract reported a 2% decline in
domestic revenues, but slashed its operating loss by 85%. With a lower cost
structure and improved project management, Harmon worked through much of its
narrow-margin backlog, obtained in the intensely competitive pricing environment
of 1991-1993.
15
Harmon Contract's overseas operations recorded flat revenues compared to a year
ago, with higher Asian revenues offset by less activity in Europe. Operating
results suffered from low-margin projects and overhead growth related to brisk
bidding activity in both Europe and Asia. The segment's architectural products
group also rebounded sharply. Sales grew 9%, with firmer pricing, beefed-up
engineering and better factory utilization, nearly eliminating the prior year's
significant operating loss.
Overall, BPS made progress in controlling its costs, with a $2 million reduction
in SG&A expenses, the result of restructuring measures taken in fiscal 1994, as
well as ongoing cost control measures.
GLASS TECHNOLOGIES (GT) had a 19% gain in revenues and a 32% increase in
operating income year over year. High demand and firmer pricing for Viracon's
architectural glass products boosted its sales 22%, which led to margin gains
and strong profit growth for the unit. Viracon ran at near capacity for most of
the year as demand for its products remained strong. GT's picture framing
products unit recorded steady sales gains and solid earnings, although behind
historical levels.
Marcon Coatings reported healthy sales and earnings growth, as that unit
benefitted from rapidly growing Viracon sales. Viratec reported an 8% gain in
revenues, while pre-tax earnings were down 74% from last year. Demand for
Viratec's coated glass for anti-glare computer screens remained strong,
especially in overseas markets, as the European Community adopted stricter
safety regulations for limiting computer emissions. Viratec invested heavily in
research and development costs during fiscal 1995 to begin limited direct-
coating of cathode ray tubes (CRTs), accounting for the reduction in bottom-line
results. At February 25, 1995, Viratec's backlog stood at $14.5 million, up 11%
from a year earlier.
AUTO GLASS (AG) segment achieved net sales of $249 million, up 12% over a year
ago, while reporting operating income of $19.1 million, modestly ahead of fiscal
1994's strong performance. High demand for replacement auto glass, along with
share gains in selected markets, helped to boost revenues. Price increases early
in the year were somewhat eroded by volume discounts to major customers. Despite
the sales increase, operating income for the segment was flat with the prior
year, as costs to expand marketing programs and develop state-of-the-art
information systems offset gross profit gains.
Both Harmon Glass (retail) and Glass Depot (wholesale) advanced same-location
sales by 7%, reflecting overall market growth. The higher volume contributed to
gross margin growth, but higher SG&A costs limited the units' operating income
gain to 4%. Viracon/Curvlite maintained high factory utilization throughout the
year, producing record sales and strong earnings. Windshield unit shipments grew
8%. Also, Curvlite invested in equipment to expand capacity and lower production
costs.
During the year, the AG segment acquired or started up 33 retail stores and nine
wholesale depots, including a chain of 13 retail stores and one warehouse in the
Washington, D.C. area, acquired in January, 1995. This acquisition gave AG a
significant position in that attractive East Coast market. The group closed
seven retail and one distribution locations during the year, to end the year
with 256 retail stores, 53 wholesale depots and 7 Midas Muffler locations.
LIQUIDITY AND CAPITAL RESOURCES
FINANCIAL CONDITION Major balance sheet items as a percentage of total assets
at March 2, 1996 and February 25, 1995 are presented below:
Percent of Total Assets
1996 1995
---- ----
Current assets........... 67 71
Current liabilities...... 37 37
Long-term debt........... 20 22
Other liabilities........ 7 5
Shareholders' equity..... 36 34
Net receivables decreased 4% due in part to strong efforts by all segments to
keep accounts current and reduce working capital. The sale of our window
coverings group also reduced both receivables and inventories by almost $5
million each. Inventories and costs in excess of billings grew by approximately
$3 million and $7 million, respectively. The increases
16
occurred with rising production levels and changes in contract billing
agreements, which extended billing cycles for the nonresidential construction
units.
Total long-term and short-term debt stood at $84.4 million at March 2, 1996,
down $8.8 million from a year earlier. The Company made working capital
reduction one of its priorities in fiscal 1996 as can be evidenced by the
reduction in debt. In May 1996, Apogee expanded its revolving credit facilities
to $150 million; as a result, $73.4 million of short-term borrowings at March 2,
1996 were classified as long-term debt. For fiscal 1997, we believe our
continued efforts to reduce working capital plus our credit facilities will
enable us to maintain liquidity while achieving improved results.
CAPITAL INVESTMENT New capital investment in fiscal 1996 totaled $29.0 million,
versus $39.6 million and $19.4 million in fiscal 1995 and 1994, respectively.
Expenditures for new property, plant and equipment totaled $22.5 million, and
consisted of information systems, facility additions and manufacturing equipment
additions and upgrades. We also invested $3.8 million to fund AG's acquisition
of retail stores and wholesale depots.
Capital investment for fiscal 1997 is estimated at $30 million. Further
upgrading of information and communication systems and construction of a major
distribution center are the primary components of AG's plan. GT's plans
primarily consist of expenditures for capacity expansion and productivity
improvements and BPS plans include information systems upgrades and productivity
improvements.
SHAREHOLDERS' EQUITY Apogee's book value rose 10% in fiscal 1996 from $9.27 to
$10.28 per share, with outstanding common shares increasing by one percent. Net
earnings less dividends, along with common stock issued in connection with long-
term compensation plans, essentially accounted for the increase. During fiscal
1996, we increased our quarterly dividend by 6%, to 8.5 cents per share, our
21st consecutive year of increase.
IMPACT OF INFLATION Apogee's financial statements are prepared on a historical
cost basis, which does not completely account for the effects of inflation.
However, since the cost of most of our inventories is determined using the last-
in, first-out (LIFO) method of accounting, cost of sales, except for
depreciation expense included therein, generally reflects current costs.
Although year-end prices were essentially unchanged from a year ago, the cost of
glass, one of Apogee's primary raw materials, fluctuated during fiscal 1996
reflecting varying demand from the U.S. construction and auto industries. We
expect the cost of glass to rise moderately in fiscal 1997. Aluminum prices were
volatile during the fiscal year and ended on a slight decline from fiscal 1995
year-end pricing. While our construction and supply contracts are at fixed
prices, the material components are usually based on firm quotes obtained from
suppliers. Labor cost increases, including taxes and fringe benefits, can be
reasonably anticipated. Through new efficiencies and cost containment programs
set up at most operating units, selling, general and administrative expenses
were reduced or held relatively constant during fiscal 1996.
OUTLOOK
We believe that improving market conditions for nonresidential construction,
flat demand for automotive replacement glass and continued strong demand for
architectural glass and coated glass products will allow Apogee to improve
earnings in fiscal 1997. Better project selection and management, continued cost
containment programs and efficiencies, and competitive advantages from
information management technology should contribute to earnings growth.
CAUTIONARY STATEMENT
A number of factors should be considered in conjunction with any discussion of
operations or results by the Company or its representatives, including 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 Exhibit 99 to this Form 10-K.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
-------------------------------------------
The information called for by this Item is contained in a separate section of
this report. See "Index of Financial Statements and Schedules".
17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
---------------------------------------------------------------
FINANCIAL DISCLOSURE
--------------------
None.
PART III
--------
ITEMS 10, 11, 12 and 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
---------------------------------------------------
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN
-----------------------------------------------------
BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN
---------------------------------------------
RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------
The information required by these Items, other than the information set forth
above in "Executive Officers of the Registrant," is included on pages 1 to 10 of
the Proxy Statement for the Annual Meeting of Shareholders to be held June 18,
1996, which is incorporated herein by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
----------------------------------------------------------------
(a) and (d) Financial Statements and Financial Statement Schedules -
The consolidated financial statements and schedules of the Registrant listed
in the accompanying "Index of Financial Statements and Schedules" together with
the report of KPMG Peat Marwick LLP, independent auditors, are filed as part of
this report.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March 2, 1996.
(c) Exhibits -
The information called for by this Item is contained in a separate
section of this report. See "Exhibit Index".
18
- SIGNATURES -
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: May 28, 1996
APOGEE ENTERPRISES, INC.
By: /s/ Donald W. Goldfus
---------------------------------------
Donald W. Goldfus
Chairman of the Board of Directors,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ----------------------------------------------------------------------------
Chairman of the Board of
Directors and Chief Executive
/s/ Donald W. Goldfus Officer and President May 28, 1996
- --------------------------- ----------------------------- ------------
Donald W. Goldfus
/s/ Gerald K. Anderson Director May 28, 1996
- --------------------------- ----------------------------- ------------
Gerald K. Anderson
/s/ Laurence J. Niederhofer Director May 28, 1996
- --------------------------- ----------------------------- ------------
Laurence J. Niederhofer
/s/ James L. Martineau Vice President and Director May 28, 1996
- --------------------------- ----------------------------- ------------
James L. Martineau
/s/ D. Eugene Nugent Director May 28, 1996
- --------------------------- ----------------------------- ------------
D. Eugene Nugent
/s/ Richard Gould Senior Vice President May 28, 1996
- --------------------------- ----------------------------- ------------
Richard Gould
/s/ William G. Gardner Treasurer and Secretary May 28, 1996
- --------------------------- ----------------------------- ------------
William G. Gardner
/s/ Terry L. Hall Chief Financial Officer May 28, 1996
- --------------------------- ----------------------------- ------------
Terry L. Hall
19
APOGEE ENTERPRISES, INC.
FORM 10-K
ITEMS 8, 14(a) AND 14(d)
INDEX OF FINANCIAL STATEMENTS AND SCHEDULES
Financial Statements
Independent Auditors' Report....................................... F-2
Consolidated Balance Sheets........................................ F-3
Consolidated Results of Operations and Quarterly Data (Unaudited).. F-4
Consolidated Statements of Cash Flows.............................. F-5
Notes to Consolidated Financial Statement.......................... F-6
Financial Statements Schedules
Schedule II -- Valuation and Qualifying Accounts................... F-15
All other schedules are omitted because they are not required, or because
the required information is included in the consolidated financial
statements or noted thereto.
F-1
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. In
connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility or the company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule 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 March 2, 1996 and February 25, 1995 and
the results of their operations and their cash flows for each of the years in
the three-year period ended March 2, 1996 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
As discussed in note 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 12, 1996
F-2
CONSOLIDATED BALANCE SHEETS
APOGEE ENTERPRISES, INC.
March 2, February 25,
(Dollar amounts in thousands) 1996 1995
----------------------------- ---------- ------------
ASSETS
Current assets
Cash and cash equivalents (including restricted
funds of $208 and $885, respectively) $ 7,389 $ 2,894
Receivables, net of allowance for doubtful
accounts 158,368 165,099
Inventories 54,484 54,559
Costs and earnings in excess of billings on
uncompleted contracts 26,276 19,606
Deferred tax assets 6,689 10,384
Other current assets 5,353 4,278
-------- --------
Total current assets $258,559 $256,820
-------- --------
Property, plant and equipment, net 78,485 75,028
Other assets
Marketable securities - insurance subsidiary 12,231 -
Investments in and advances to affiliated
companies 16,433 15,016
Intangible assets, at cost less accumulated
amortization of $8,044 and $8,681, respectively 10,332 8,383
Deferred tax assets 6,970 5,082
Other 3,126 1,599
-------- --------
49,092 30,080
-------- --------
Total assets $386,136 $361,928
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 57,678 $ 53,793
Accrued expenses 52,430 41,168
Billings in excess of costs and earnings on
uncompleted contracts 19,470 17,717
Accrued income taxes 7,634 10,454
Notes payable - 7,065
Current installments of long-term debt 5,265 5,522
-------- --------
Total current liabilities $142,477 $135,719
-------- --------
Long-term debt, less current installments 79,102 80,566
Other long-term liabilities 24,180 19,587
Minority interest 1,456 1,427
Commitments and contingent liabilities (Notes 10, 14 and 15)
Shareholders' equity
Common stock of $.33-1/3 par value;
authorized 50,000,000 shares; issued and
outstanding, 13,517,000 and 13,443,000,
respectively 4,506 4,481
Additional paid-in capital 20,445 19,345
Retained earnings 113,970 100,803
-------- --------
Total shareholders' equity 138,921 124,629
-------- --------
Total liabilities and shareholders' equity $386,136 $361,928
======== ========
See accompanying notes to consolidated financial statements.
F-3
CONSOLIDATED RESULTS OF OPERATIONS
APOGEE ENTERPRISES, INC.
Year Ended Year Ended Year Ended
March 2, February 25, February 26,
(Dollar amounts in thousands, except per share data) 1996 1995 1994
- ---------------------------------------------------- ---------- ------------ ------------
Net sales $871,147 $756,549 $688,233
Cost of sales 752,624 650,660 604,338
-------- -------- --------
Gross profit 118,523 105,889 83,895
Selling, general and administrative expenses 86,066 81,627 71,659
Provision for business restructuring and asset
valuation - - 5,178
-------- -------- --------
Operating income 32,457 24,262 7,058
Interest expense, net 5,697 4,135 2,735
Other expense, net 149 - -
-------- -------- --------
Earnings before income taxes and
other items below 26,611 20,127 4,323
Income taxes 9,820 8,101 2,634
Equity in net earnings of affiliated companies (528) (762) (2,294)
Minority interest (516) (262) 675
-------- -------- --------
Net earnings before cumulative effect of change
in accounting for income taxes 17,835 13,050 3,308
Cumulative effect of change in accounting for income
taxes - - 525
-------- -------- --------
Net earnings $ 17,835 $ 13,050 $ 3,833
======== ======== ========
Earnings per share:
Earnings per share before cumulative effect
of change in accounting for income taxes $ 1.31 $ 0.97 $ 0.25
Cumulative effect of change in accounting for income
taxes - - 0.04
-------- -------- --------
Earnings per share $ 1.31 $ 0.97 $ 0.29
======== ======== ========
See accompanying notes to consolidated financial statements.
QUARTERLY DATA (UNAUDITED)
(Dollar amounts in thousands, except per share data)
NET SALES GROSS PROFIT
Quarter 1996 1995 1994 Quarter 1996 1995 1994
- ------- -------- -------- -------- ------- -------- -------- -------
First $219,032 $178,927 $148,752 First $ 31,925 $ 25,388 $19,947
Second 222,186 185,971 175,568 Second 31,824 29,240 22,093
Third 215,487 186,253 184,529 Third 28,264 26,204 23,917
Fourth 214,442 205,398 179,384 Fourth 26,510 25,057 17,938
-------- -------- -------- -------- -------- -------
Total $871,147 $756,549 $688,233 Total $118,523 $105,889 $83,895
======== ======== ======== ======== ======== =======
NET EARNINGS (LOSS) EARNINGS (LOSS) PER SHARE
Quarter 1996 1995 1994* Quarter 1996 1995 1994*
- ------- -------- -------- -------- ------- ----- ----- -------
First $ 3,481 $ 2,600 $ 1,443 First $0.26 $0.19 $ 0.11
Second 5,646 4,294 2,441 Second 0.41 0.32 0.18
Third 5,172 3,763 2,902 Third 0.38 0.28 0.22
Fourth 3,536 2,393 (2,953) Fourth 0.26 0.18 (0.22)
------- ------- ------- ----- ----- ------
Total $17,835 $13,050 $ 3,833 Total $1.31 $0.97 $ 0.29
======= ======= ======= ===== ===== ======
*During the first quarter of 1994, Apogee adopted Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes. The cumulative
effect of the change in accounting for income taxes increased net earnings by
$525,000, or 4 cents per share, and is included in fiscal 1994 figures.
F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS
Apogee Enterprises, Inc. Year Ended Year Ended Year Ended
(Dollar amounts in thousands) March 2, 1996 February 25, 1995 February 26, 1994
- ----------------------------- ------------- ----------------- ------------------
OPERATING ACTIVITIES
Net earnings $ 17,835 $ 13,050 $ 3,833
Adjustments to reconcile net earnings to net
cash provided by (used by) operating activities:
Cumulative effect of change in
accounting for income taxes - - (525)
Depreciation and amortization 16,528 15,131 15,724
Provision for losses on accounts receivable 1,983 3,871 2,388
Deferred income tax expense 1,807 (3,486) (2,929)
Provision for business restructuring and
asset valuation - 5,178
Gain on sale of Nanik Window Coverings Group (4,166) - -
Equity in net earnings of affiliated companies (528) (762) (2,294)
Minority interest (516) (262) 675
Other, net (1,429) (296) (1,580)
-------- -------- --------
Cash flow before changes in operating assets and
liabilities 31,514 27,192 20,470
Changes in operating assets and liabilities,
net of effect of acquisitions:
Receivable 2,134 (23,080) (40,205)
Inventories (3,286) (11,356) (6,402)
Cost and earnings in excess of billings on
uncompleted contracts (6,670) (9,846) (3,853)
Other current assets (1,220) 483 351
Accounts payable and accrued expenses 14,494 2,557 17,003
Billings in excess of costs and earnings
on uncompleted contracts 1,753 1,806 (1,529)
Accrued income taxes (2,820) 5,930 (31)
Other long-term liabilities 4,593 5,327 3,299
-------- -------- --------
Net cash provided by (used by)
operating activities 40,492 (987) (10,897)
-------- -------- --------
INVESTING ACTIVITIES
Capital expenditures (22,615) (24,957) (14,046)
Acquisition of businesses, net of cash acquired (3,793) (8,823) (3,154)
Increase in marketable securities (12,231) - -
Investment in and advances to affiliated companies (889) (2,070) 1,527
Proceeds from sale of property, plant and equipment 301 1,004 832
Proceeds from sale of Nanik Window Coverings Group 17,550 - -
Other, net (1,991) 929 (1,340)
-------- -------- --------
Net cash used by investing activities (23,668) (33,917) (16,181)
-------- -------- --------
FINANCING ACTIVITIES
(Decrease) increase in notes payable (7,065) (16,785) 23,850
Payments on long-term debt (5,576) (4,182) (6,851)
Proceeds from issuance of long-term debt 3,855 50,425 14,100
Proceeds from issuance of common stock 1,150 1,671 1,945
Repurchase and retirement of common stock (240) (209) -
Dividends paid (4,453) (4,155) (3,841)
-------- -------- --------
Net cash (used by) provided by financing activities (12,329) 26,974 28,994
-------- -------- --------
Increase (decrease) in cash and cash equivalents 4,495 (7,930) 1,916
Cash and cash equivalents at beginning of year 2,894 10,824 8,908
-------- -------- --------
Cash and cash equivalents at end of year $ 7,389 $ 2,894 $ 10,824
======== ======== ========
See accompanying notes to consolidated financial statements.
F-5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Apogee Enterprises, Inc.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED DATA
PRINCIPLES OF CONSOLIDATION Our consolidated financial statements include the
accounts of Apogee and all majority-owned subsidiaries. We use the equity
method to account for our 50%-owned joint ventures. Intercompany transactions
have been eliminated. Certain amounts from prior-years' financial statements
have been reclassified to conform with this year's presentation.
CASH AND CASH EQUIVALENTS Investments with an original maturity of three
months or less are included in cash and cash equivalents. Restricted funds
represent collateral required by certain construction contracts' terms.
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, our inventories would have been $2,550,000 and $2,700,000 higher
than reported at March 2, 1996 and February 25, 1995, respectively.
PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at
cost. Significant improvements and renewals are capitalized. 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.
INTANGIBLE ASSETS AND AMORTIZATION Intangible assets consist principally of
the excess of cost over the fair value of net assets acquired (goodwill) and
non-compete agreements. We review the ongoing value of intangibles annually.
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 amortized on a straight-line basis over periods ranging from 10 to
40 years, except for $923,000, which is not being amortized.
Non-compete agreements related to purchased businesses are amortized
ratably over the term of the agreements. Amortization expense amounted to
$665,000, $288,000 and $2,328,000 in 1996, 1995 and 1994, respectively.
MARKETABLE SECURITIES - INSURANCE SUBSIDIARY We established a wholly owned
insurance subsidiary, Prism Assurance, Inc. (Prism) in 1996 to insure our
workers compensation general liability and automobile liability risks. Prism
invests in fixed maturity investments which we classify as available-for-sale
and are carried at market value as prescribed by Statement of Financial
Accounting Standards No. 115. Reserve requirements are established based on
actuarial projections of ultimate losses. Apogee also has accruals for losses
incurred prior to Prism's formation. Losses estimated to be paid within twelve
months are classified as accrued expenses, while losses expected to be payable
in later periods are included in other long-term liabilities.
REVENUE RECOGNITION We recognize 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, project management and other direct costs related to contract
performance. We establish 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.
INCOME TAXES We account for income taxes as prescribed by Statement of
Financial Accounting Standards No. 109, which requires use of the asset and
liability method. This method recognizes deferred tax assets and liabilities
based upon the future tax consequences of temporary differences between
financial and tax reporting.
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. Our average common shares and common share
equivalents outstanding during 1996, 1995 and 1994 were 13,629,000, 13,501,000
and 13,289,000, respectively.
FOREIGN OPERATIONS The financial statements of foreign operations have been
translated to U.S. dollars, using the rules of Statement of Financial Accounting
Standard No. 52. Balance sheet accounts are stated in U.S. dollars, at
generally the year-end exchange rate. Results of operations are translated at
average exchange rates for the respective period.
We periodically enter into forward currency exchange contracts to manage
specific foreign currency exposures related to foreign construction contracts
and receivables denominated in foreign currencies. As of March 2, 1996 we had
forward contracts maturing in 1997 with a value of approximately $32 million.
Gains and losses on forward contracts related to receivables are recognized
currently, while gains and losses related to construction projects are deferred
and accounted for as part of the related transaction.
ACCOUNTING PERIOD Apogee's fiscal year ends on the Saturday closest to
February 28. Fiscal year 1996 consisted of fifty-three weeks, while 1995 and
1994 were each fifty-two weeks.
F-6
ACCOUNTING ESTIMATES The preparation of Apogee's consolidated financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Amounts subject to significant
estimates and assumptions include, but are not limited to, insurance reserves
and revenue recognition for construction contracts, including the status of
outstanding disputes and claims. Actual results could differ from those
estimates.
FUTURE CHANGES IN ACCOUNTING PRINCIPLES Apogee believes that neither Statement
of Financial Accounting Standards No. 121, which deals with accounting for
impairment of the value of long-lived assets, nor No. 123, dealing with
accounting for stock-based compensation, will have a material effect on its
consolidated financial statements when they become effective for fiscal year
1997. With regard to No. 123, Apogee has elected to adopt only the disclosure
requirements.
2. RECEIVABLES
(In thousands) 1996 1995
-------------- --------- ---------
Trade accounts $ 67,839 $ 68,332
Construction contracts 59,014 67,546
Contract retainage 29,519 32,284
Other receivables 8,768 5,595
-------- --------
Total receivables 165,140 173,757
-------- --------
Less allowance for doubtful accounts (6,772) (8,658)
-------- --------
Net receivables $158,368 $165,099
======== ========
Apogee provides products and services to the commercial and institutional new
construction and remodeling markets, the automotive replacement glass market and
selected consumer markets. We do not believe a concentration of credit risk
exists, due to the diversity of our markets and channels of distribution, and
the geographic location of our customers. Allowances are maintained for
potential credit losses and such losses have been within management's
expectations. The provision for bad debt expense was $1,983,000, $3,817,000 and
$2,388,000 in 1996, 1995 and 1994, respectively.
3. INVENTORIES
(In thousands) 1996 1995
-------------- --------- ---------
Raw materials $ 10,402 $ 14,802
Work-in process 3,964 3,232
Finished 40,118 36,525
-------- --------
Total inventories $ 54,484 $ 54,559
======== ========
4. PROPERTY, PLANT AND EQUIPMENT
(In thousands) 1996 1995
-------------- -------- --------
Land $ 2,392 $ 2,430
Buildings and improvements 50,097 50,332
Machinery and equipment 77,709 74,387
Office equipment and furniture 35,383 30,418
Construction in progress 8,646 4,127
-------- --------
Total property, plant and equipment 174,227 161,694
Less accumulated for depreciation (95,742) (86,666)
-------- --------
Net property, plant and equipment $ 78,485 $ 75,028
======== ========
Depreciation expense was $15,863,000, $14,903,000 and $13,397,000 in
1996, 1995 and 1994, respectively.
5. ACCRUED EXPENSES
(In thousands) 1996 1995
-------------- -------- --------
Payroll and related benefits $17,675 $11,493
Insurance 13,983 10,771
Taxes, other than income taxes 7,120 2,182
Pension 3,598 3,319
Interest 530 804
Other 9,524 12,599
------- -------
Total accrued expenses $52,430 $41,168
======= =======
F-7
6. LONG-TERM DEBT
(In thousands) 1996 1995
-------------- -------- --------
Promissory note, 9.65%, due in annual
installments through 1998 $ 4,464 $ 8,036
Promissory notes, 7.5%, due in quarterly
installments through 2000 3,975 5,300
Borrowings under revolving credit and
other bank agreements 73,400 70,000
Other 2,528 2,752
------- -------
Total long-term debt 84,367 86,088
Less current installments (5,265) (5,522)
------- -------
Net long-term debt $79,102 $80,566
======= =======
Long-term debt maturities are as follows:
Fiscal Year (In thousands)
----------- --------------
1997 $ 5,265
1998 2,601
1999 1,725
2000 1,038
2001 188
Thereafter 73,550
-------
Total $84,367
=======
The terms of the 9.65% 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 note's terms were approximately $48 million at March 2, 1996.
At March 2, 1996, Apogee had revolving credit agreements with four banks
expiring in 1997. The agreements allow us to borrow up to $70 million at fixed
or floating rates. The agreements require us to maintain minimum levels of
tangible net worth and certain financial ratios. At March 2, 1996, there were no
borrowings outstanding under the committed credit facilities. In May 1996, a
five-year, multi-currency, committed credit facility was obtained in a the
amount of $150 million, replacing the previous credit agreements. The new
agreement requires us to maintain minimum levels of net worth and certain
financial ratios.
We also had access to short-term credit on an uncommitted basis with
several major banks. At March 2, 1996, $73.4 million in bank borrowings were
outstanding under these agreements. We may refinance these short-term
borrowings on a long-term basis under the revolving credit agreements discussed
above. Accordingly, our short-term bank borrowings, which were not expected to
be paid within one year, were classified as long-term debt.
Interest rates on the year-end bank under uncommitted credit facilities,
ranged from 5.89% to 5.95%.
Selected information related to bank borrowings is as follows:
(Dollar amounts in thousands) 1996 1995
- ----------------------------- --------- ---------
Average daily borrowings during the year $ 84,273 $58,027
Maximum borrowings outstanding during the year $106,650 78,865
Weighted average interest rate during the year 6.7% 5.5%
In 1996, we entered into an interest rate swap agreement that effectively
converted $20 million of our variable rate borrowings into a fixed rate
obligation. Under this agreement, which expires in fiscal 1999, we receive
payments at variable rates while we make payments at 6.3%. The net interest
paid or received is included in interest expenses.
In 1992, we entered into three interest rate swap agreements that
effectively converted $250 million of our fixed rate, long-term borrowings into
variable rate obligations. During 1993, we sold two of the swap agreements at
net gains. The gains are being recognized as reductions in interest expense
through 1997. The third agreement expired in 1995.
The net book value of property and plant pledged as collateral under
industrial development bonds was $1.2 million at March 2, 1996.
F-8
7. SHAREHOLDERS' EQUITY
Common Additional
Shares Common Paid-in Retained
(In thousands) Outstanding Stock Capital Earnings
-------------- ----------- ------ ---------- --------
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
Net earnings - - - 13,050
Common stock issued 131 44 1,627 -
Cash dividends - - - (4,155)
------ ------ ------- --------
Balance at February 25, 1995 13,443 4,481 19,345 100,803
Net earnings - - - 17,835
Common stock issued 88 30 1,120 -
Common stock repurchased or retired (14) (5) (20) (215)
Cash dividends - - - (4,453)
------ ------ ------- --------
Balance at March 2, 1996 13,517 $4,506 $20,445 $113,970
====== ====== ======= ========
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 our
outstanding common stock has an associated preferred share purchase right. The
rights are exercisable only under certain circumstances, including the
acquisition by a person or group of 10% of the outstanding shares of the
Company's common stock. Upon exercise, the rights would 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 AND OTHER EXPENSE, NET
(In thousands) 1996 1995 1994
-------------- ------- ------- ------
Interest on debt $ 6,747 $4,381 $3,008
Other interest 273 595 620
------- ------ ------
Total interest expense 7,020 4,976 3,628
Less interest income (1,323) (841) (893)
------- ------ ------
Interest expense, net $ 5,697 $4,135 $2,735
======= ====== ======
Interest payments were $7,095,000, $4,778,000 and $3,714,000 in 1996, 1995
and 1994, respectively.
Other expense, net, consisted of charges totaling $4.3 million primarily
related to write-off of a minority investment in a research and development
venture and an adjustment to our insurance reserves, offset by the $4.2 million
gain from the sale of the Nanik Window Coverings Group discussed in Note 12.
F-9
9. INCOME TAXES
Effective February 28, 1993, we adopted the provisions of Statement of
Financial Accounting Standards No. 109. The cumulative effect of this change in
accounting for income taxes is included in the 1994 Consolidated Results of
Operations.
The components of income tax expense (benefit) for each of the last three
fiscal years are as follows:
(In thousands) 1996 1995 1994
-------------- ------ ------- -------
CURRENT:
Federal $6,559 $ 9,663 $ 3,342
State and local 910 1,608 701
Foreign 544 316 1,520
------ ------- -------
Total current 8,013 11,587 5,563
DEFERRED:
Federal 1,503 (3,233) (2,794)
State and local 304 (653) (485)
Foreign - 400 350
------ ------- -------
Total deferred 1,807 (3,486) (2,929)
------ ------- -------
Total income tax expense $9,820 $ 8,101 $ 2,634
====== ======= =======
Income tax payments, net of refunds, were $10,878,000, $5,790,000 and
$5,934,000 in 1996, 1995 and 1994, respectively.
The differences between statutory federal tax rates and our consolidated
effective tax rates are as follows:
1996 1995 1994
----- ----- -----
Statutory federal tax rate 35.0% 35.0% 35.0%
State and local income taxes, net
of federal tax benefit 3.0 3.0 3.2
Tax credits (0.5) (1.1) (3.3)
Foreign items with no tax benefit 0.8 2.1 18.6
Valuation allowance (0.6) 1.6 13.9
Other, net (0.8) (0.4) (6.5)
----- ----- -----
Consolidated effective tax rate 36.9% 40.2% 60.9%
===== ===== =====
Deferred tax assets and deferred tax liabilities at March 2, 1996 and
February 25, 1995 are as follows:
(In thousands) 1996 1995
-------------- ---------------------- ----------------------
Current Noncurrent Current Noncurrent
------- ---------- ------- ----------
Accounts Receivable $ 2,304 $ - $ 3,478 $ -
Accrued insurance 2,575 8,054 4,123 6,522
Deferred compensation - 3,492 - 3,556
Restructuring reserve - 631 - 1,286
Inventory 1,569 - 2,311 -
Depreciation 226 (4,722) 216 (4,841)
Employee benefit plans (1,434) - (1,218) -
Other 1,449 703 1,474 (88)
------- ------- ------- -------
6,689 8,158 10,384 6,435
Less valuation allowance - (1,188) - (1,353)
------- ------- ------- -------
Deferred tax assets $ 6,689 $ 6,970 $10,384 $ 5,082
======= ======= ======= =======
Apogee's valuation allowance decreased by $165,000 in 1996 and related
primarily to foreign tax credits. The valuation allowance at March 2, 1996 and
February 25, 1995 reflect amounts for foreign tax credits and capital loss
carryforward.
10. INVESTMENT IN AFFILIATED COMPANIES
Apogee is party to joint venture agreements with a 50% partner (JV
partner), forming Marcon Coatings, Inc. and its subsidiary, Viratec Thin Films,
Inc. (Marcon/Viratec). Marcon/Viratec operates glass coating facilities. Our 50%
ownership investment in Marcon/Viratec is accounted for using the equity method.
In November 1995, the JV Partner commenced litigation against Apogee
alleging claims for damages and seeking to have the Court order Apogee to sell
its 50% interest in the joint venture to the JV Partner. Apogee filed
counterclaims seeking to have the JV
F-10
Partner's 50% interest sold to Apogee, and in March 1996, the Court ordered the
JV Partner to sell the share of stock representing its 50% interest in
Marcon/Viratec to Apogee upon payment by Apogee of fair value for these shares
as determined by the Court. The JV Partner's rights and status as shareholder
and directors were terminated as of the effective date of the order and the fair
value for the share is to be determined by the Court after further proceedings.
The Court has not yet scheduled a trial or hearing to determine fair value.
At a hearing on April 23, 1996, the Court ordered Apogee to post a bond or
letter of credit in the amount of $50 million, or to pay the JV Partner $25
million, as security for the ultimate payment of the purchase price for the JV
Partner's shares. The amount of such a bond or other means is intended as
security and is not intended to reflect the Court's view on what is fair value
for the shares. The JV Partner's claims against Apogee for damages are still
pending and the Court also is considering a motion brought by the JV Partner to
add a claim for punitive damages.
Apogee and the JV Partner have leased certain glass coating equipment and
made cash advances to Marcon. Our net investment in Marcon/Viratec as of March
2, 1996 and February 25, 1995 was $15,821,000, $14,278,000, respectively. Our
equity in Marcon/Viratec's net earnings is included in the accompanying
Consolidated Results of Operations. Marcon/Viratec's net earnings for 1994
included a $437,000 tax benefit from net operating loss carryforward A summary
of assets, liabilities and results of operations for Marcon/Viratec is presented
below:
(In thousands) 1996 1995 1994
-------------- -------- ------- --------
Current assets $11,950 $ 8,620 $10,248
Noncurrent assets 23,444 16,716 15,704
Current liabilities 19,098 6,153 7,214
Noncurrent liabilities 8,602 12,673 14,066
Net sales 46,297 38,299 34,497
Gross profit 8,981 9,205 11,717
Net earnings 1,183 1,838 4,566
11. EMPLOYEE BENEFIT AND STOCK OPTION PLANS
We maintain 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. We deposit pension costs with
the trustee annually. All pension costs were fully funded or accrued as of year
end. Contributions to the plan were $3,687,000, $3,394,000 and $3,014,000 in
1996, 1995 and 1994, respectively.
We also maintain a 401(k) Savings Plan, which allows employees to
contribute 1% to 13% of their compensation. Apogee matches 30% of the first 6%
of the employee contributions. Our contributions to the plan were $1,495,000,
$1,242,000 and $1,206,000 in 1996, 1995 and 1994, respectively.
The 1987 Partnership Plan, a plan 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. 1,100,000 common
shares are authorized for issuance under the plan. As of March 2, 1996, 676,000
shares have been issued under the plan. We expensed $666,000, $708,000 and
$478,000 in conjunction with the Partnership Plan in 1996, 1995 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 the date of award. Changes in
stock options outstanding for each of the last three fiscal years are as
follows:
1996 1995 1994
------------- ------------- --------------
Options outstanding at beginning
of the year 578,000 477,000 481,000
Granted 245,000 168,000 148,000
Exercised (87,000) (25,000) (4,000)
Forfeited (34,000) (42,000) (148,000)
------------ ------------ -------------
Options outstanding at end
of the year 702,000 578,000 477,000
============ ============ =============
Options exercisable at end of year 489,000 212,000 129,000
============ ============ =============
Price range of outstanding options $ 8.95-18.91 $8.95-$18.91 $ 8.95-$18.91
============ ============ =============
Price range of exercised options $10.75-16.25 $8.95-$16.25 $10.75-$12.00
============ ============ =============
F-11
12. ACQUISITIONS
In 1996, our Auto Glass segment purchased the assets of 12 retail auto
glass stores and one distribution center in five separate transactions. The
aggregate purchase price of the acquisitions was $3.8 million, including $0.7
million of cost in excess of the fair value of acquired assets. Promissory notes
of $0.5 million were issued in connection with the transactions.
In 1995, our Auto Glass segment purchased the assets of 16 retail auto
glass stores and one distribution center in four separate transactions. The
aggregate purchase price of the acquisitions was $8.8 million, including $4.6
million of cost in excess of the fair value of acquired assets. Promissory notes
of $5.3 million were issued in connection with the transactions.
In 1994, the Glass Technologies segment's Tru Vue unit purchased the assets
of a company serving another sector of the picture framing market. Also in 1994,
the Building Products & Services segment purchased certain assets of CFEM
Facades, a curtainwall company based in France. The purchase price of assets
acquired in 1994 was $3.2 million.
No liabilities were assumed in any of the transactions. 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 1996, we sold selected assets and liabilities of the Nanik Window
Coverings Group (Nanik) for $17.6 million, realizing a $4.2 million gain
included in "Other expense, net" in the accompanying Consolidated Results of
Operations. Nanik accounted for less than 4% of consolidated net sales in 1996,
1995 and 1994.
13. PROVISION FOR BUSINESS RESTRUCTURING AND ASSET VALUATION
During 1994, we recorded a business restructuring and asset valuation
provision of $5.6 million ($4.5 million after tax) in our Building Products and
Services segment. The charge was principally related to the consolidation or
closing of 10 Harmon Contract offices and facilities, the write-down of certain
assets and the reorganization of the architectural metals operations. The
provision consisted of asset writedowns of $2.5 million and projected cash
outlays of $3.1 million. At March 2, 1996, the remaining reserve for projected
expenditures was less than $100,000.
14. LEASES
As of March 2, 1996, we were 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:
Fiscal Year (In thousands)
- -------------------------------- --------------
1997 $10,619
1998 7,255
1999 5,970
2000 4,365
2001 1,823
Thereafter 1,240
-------
Total minimum payments $31,272
=======
Total rental expense was $22,155,000, $18,242,000 and $17,129,000 in
1996, 1995 and 1994, respectively.
15. COMMITMENTS AND CONTINGENT LIABILITIES
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 March 2, 1996
was approximately $54,320,000. Apogee has entered into a number of non-compete
agreements. As of March 2, 1996, we were committed to make future payments of
$3,083,000 under such agreements.
In addition to the matter discussed in Note 10, Apogee is party to various
legal proceedings incidental to our normal operating activities. In particular,
like others in the construction industry, our construction business, is
routinely involved in various disputes and claims arising out of construction
projects, sometimes involving significant monetary damages. Although it is
impossible to predict the outcome of such proceedings, we believe, based on
facts currently available to us, that none of such claims will result in losses
that would have a material adverse effect on our financial condition.
F-12
16. FAIR VALUE DISCLOSURES
Estimated fair values of our financial instruments at March 2, 1996 are as
follows:
Carrying Estimated
(In thousands) Amount Fair Value
-------------- -------- ----------
Long-term debt including
current installments $84,367 $84,429
Interest rate swap agreement
in a net payable position - $ 397
Estimated fair value amounts have been determined using available market
information and appropriate valuation methodologies. However, 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.
For cash and cash equivalents, receivables, marketable securities and
accounts payable, carrying value is a reasonable estimate of fair value. The
carrying value of long-term debt that has variable interest rates is a
reasonable estimate of fair value. For long-term debt with fixed interest
rates, fair value is based on discounted 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 our future interest
obligation at a fixed rate and the counter party's obligation at a floating
rate.
F-13
17. BUSINESS SEGMENTS
Sales, operating income, identifiable assets and other related data for our
operations in different business segments, are listed below and are an integral
part of the financial statements. Fiscal 1992 and 1993 segment data are not
covered by the Independent Auditors' Report.
(Dollar amounts 1996 1995 1994 1993 1992
in thousands) Amount % Amount % Amount % Amount % Amount %
- --------------- ----------------- ----------------- ----------------- ----------------- -----------------
SALES
Building products
& services $462,102 53.0 $399,540 52.8 $377,916 54.9 $312,311 54.6 $347,850 58.3
Glass technologies 150,457 17.3 120,890 16.0 101,166 14.7 83,893 14.7 79,345 13.3
Auto glass 273,133 31.4 248,904 32.9 223,209 32.4 187,642 32.8 177,188 29.7
Intersegment elimination (14,545) (1.7) (12,785) (1.7) (14,058) (2.0) (11,396) (2.0) (8,102) (1.4)
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Net sales $871,147 100.0 $756,549 100.0 $688,233 100.0 $572,450 100.0 $596,281 100.0
======== ===== ======== ===== ======== ===== ======== ===== ======== =====
OPERATING INCOME (LOSS)
Building products
& services $ (2,073) (6.4) $ (6,081) (25.1) $(22,443) (318.0) $ (5,598) (87.9) $ 22,702 117.9
Glass technologies 16,431 50.6 10,475 43.2 7,931 112.4 3,247 51.0 (6,185) (32.1)
Auto glass 18,069 55.7 19,067 78.6 18,961 268.6 8,869 139.3 3,528 18.3
Corporate and other 30 0.1 801 3.3 2,609 37.0 (149) (2.3) (796) (4.1)
-------- ----- -------- ----- -------- ----- -------- ----- -------- -----
Operating income 32,457 100.0 24,262 100.0 7,058 100.0 6,369 100.0 19,249 100.0
Interest expense, net (5,697) (4,135) (2,735) (1,794) (970)
Other expense, net (149) - - - -
-------- -------- -------- -------- --------
Earnings before income
taxes and other items $ 26,611 $ 20,127 $ 4,323 $ 4,575 $ 18,279
======== ======== ======== ======== ========
Identifiable Assets Capital Expenditures Depreciation & Amortization
1996 1995 1994 1996 1995 1994 1996 1995 1994
-------- -------- -------- ------- ------- ------- ------- ------- -------
Building products
& services $172,019 $182,931 $157,595 $ 5,096 $ 4,429 $ 4,802 $ 6,146 $ 6,443 $ 6,435
Glass technologies 67,606 62,643 46,702 4,171 8,286 3,286 3,700 3,425 3,257
Auto glass 108,342 92,346 74,041 12,954 12,201 5,906 6,522 5,116 5,891
Corporate and other 38,169 24,008 27,850 394 41 52 160 147 141
-------- -------- -------- ------- ------- ------- ------- ------- -------
Total $386,136 $361,928 $306,188 $22,615 $24,957 $14,046 $16,528 $15,131 $15,724
======== ======== ======== ======= ======= ======= ======= ======= =======
Apogee's Building Products & Services segment has subsidiaries in Europe and
Asia. During 1996, 1995 and 1994, such operations had net sales of $114,305,000,
$66,580,000 and $65,021,000, respectively. Operating losses for 1996, 1995 and
1994 were $1,983,000, $6,575,000 and $887,000, respectively. At March 2, 1996,
February 25, 1995 and February 26, 1994 identifiable assets of the subsidiaries
totaled $58,753,000, $41,880,000 and $31,786,000, respectively. Foreign currency
transaction gains or losses included in net earnings for 1996, 1995 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. Segment operating income (loss) is net sales less cost
of sales and operating expenses. Operating income does not include provision for
interest expense or income taxes. Corporate and other includes miscellaneous
corporate activity not allocable to business segments.
F-14
SCHEDULE II
-----------
APOGEE ENTERPRISES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In thousands)
Balance at Charged to Deductions Balance at
beginning costs and from end of
of period expenses reserves (1) period
--------- -------- ------------ --------
For the year ended
March 2, 1996:
Allowance for
doubtful receivables $8,658 $1,983 $3,869 $6,772
====== ====== ====== ======
For the year ended
February 25, 1995:
Allowance for
doubtful receivables $7,879 $3,817 $3,038 $8,658
====== ====== ======= ======
For the year ended
February 26, 1994:
Allowance for
doubtful receivables $6,339 $2,388 $ 848 $7,879
====== ====== ====== ======
(1) Net of recoveries
F-15
EXHIBIT INDEX
Exhibit (3A) Restated Articles of Incorporation
Filed in Registrant's Annual Report on Form 10-K for year
ended February 27, 1988.
Exhibit (3B) Restated By Laws of Apogee Enterprises, Inc., as amended to
date. Filed in Registrant's Annual Report on Form 10-K for
year ended February 29, 1992.
Exhibit (4A) Specimen certificate for shares of common stock of Apogee
Enterprises, Inc. Filed in Registrant's Annual Report on Form
10-K for year ended February 29, 1992.
Exhibit (10A) Deferred Incentive Compensation Plan dated February 27, 1986
between Registrant and certain executive officers. Filed in
Registrant's Annual Report on Form 10-K for year ended
March 1, 1986.
Exhibit (10B) Amended and Restated 1987 Apogee Enterprises, Inc.
Partnership Plan is incorporated by reference to Registrant's
S-8 registration statement (File No. 33-60400)
Exhibit (10C) 1987 Apogee Enterprises, Inc. Stock Option Plan is
incorporated by reference to Registrant's S-8 registration
statement (File No. 33-35944)
Exhibit (10D) Note Agreement dated June 1, 1988 between the registrant and
Teachers Insurance and Annuity Association of America
($25,000,000). Filed in Registrant's Quarterly Report on Form
10-Q for quarter ended August 27, 1988.
Exhibit (10E) Incentive Compensation Agreement between Registrant and
Gerald K. Anderson dated February 23, 1987. Filed with
Registrant's Annual Report on Form 10-K for year ended
March 2, 1991.
Exhibit (10F) Consulting Agreement between Registrant and Gerald K.
Anderson dated March 1, 1989. Filed with Registrant's Annual
Report on Form 10-K for year ended March 2, 1991.
Exhibit (10G) Rights Agreement between Registrant and American Stock
Transfer Co. dated October 19, 1990. Filed with Registrant's
Form 8-A on October 19, 1990.
Exhibit (10H) Consulting Agreement between Registrant and Laurence J.
Niederhofer dated November 1, 1993. Filed with Registrant's
Annual Report on Form 10-K for year ended February 26, 1994.
Exhibit (10I) Employment Agreement between Registrant and Richard Gould
dated May 23, 1994. Filed with Registrant's Annual Report on
Form 10-K for year ended February 25, 1995.
Exhibit (10J) $150 million Multicurrency Credit Agreement between Apogee
Enterprises, Inc. and banks party to the agreement, ABN AMRO
Bank N.V., Administrative Agent and First Bank National
Association, Co-Agent dated April 29, 1996.
Exhibit (11) Statement of Determination of Common Shares and Common Share
Equivalents
Exhibit (21) Subsidiaries of the Registrant
Exhibit (99) Litigation Reform Act of 1995 - Cautionary Statement