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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 or 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended November 29, 2003

Commission File Number 0-6365

APOGEE ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

(952) 835-1874

(Registrant’s telephone number, including area code)

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  ¨

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).    Yes  x    No  ¨

As of December 31, 2003, 27,525,867 shares of the Registrant’s common stock, par value $0.33 ¹/3 per share, were outstanding.

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APOGEE ENTERPRISES, INC. AND SUBSIDIARIES

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

See accompanying notes to consolidated financial statements.

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CONSOLIDATED RESULTS OF OPERATIONS

(unaudited)

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The consolidated financial statements of Apogee Enterprises, Inc. (the Company) included herein have been prepared in accordance with accounting principles generally accepted in the United States. The consolidated financial statements and notes are presented as permitted by the regulations of the Securities and Exchange Commission (Form 10-Q) and do not contain certain information included in the Company’s annual financial statements and notes. The information included in this Form 10-Q should be read in conjunction with Management’s Discussion and Analysis and financial statements and notes thereto included in the Company’s Form 10-K for the year ended March 1, 2003. The results of operations for the nine-month periods ended November 29, 2003 and November 30, 2002 are not necessarily indicative of the results to be expected for the full year.

In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the financial position as of November 29, 2003 and March 1, 2003, and the results of operations and cash flows for the three-month and nine-month periods ended November 29, 2003 and November 30, 2002. As explained in Note 9, during the second quarter of fiscal 2004, the Company announced its intention to sell its retail auto glass business. Accordingly it is now reported as a discontinued operation, along with the Company’s previously discontinued curtainwall business and detention/security business. Certain prior-year amounts have been reclassified to conform to the current period presentation.

The Company’s fiscal year ends on the Saturday closest to February 28. Each interim quarter ends on the Saturday closest to the end of the months of May, August and November.

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, Consolidation of Variable Interest Entities (VIE), an interpretation of ARB No. 51, which requires all VIEs to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the VIE. In addition, the interpretation expands disclosure requirements for both VIEs that are consolidated as well as VIEs from which the entity is the holder of a significant amount of the beneficial interests, but not the majority. The disclosure requirements of this interpretation are effective for all financial statements issued after January 31, 2003. The consolidation requirements of this interpretation have recently been deferred and are now effective for all periods ending no later than March 15, 2004. Because the Company believes it has no variable interest entities, it does not expect that the adoption of this new standard will have an effect on the consolidated financial position or results of operations.

Pursuant to SFAS No. 123, Accounting for Stock-Based Compensation, the Company accounts for activity within its stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees. Accordingly, the Company does not recognize compensation expense in connection with employee stock option grants because it grants stock options at exercise prices not less than the fair value of its common stock on the date of grant.

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The following table shows the effect of net (loss) earnings and per share data had the Company applied the fair value expense recognition provisions of SFAS No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.

The weighted average fair value per option at the date of grant for options granted in fiscal 2004 and fiscal 2003 was $4.05 and $6.55, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants through the third quarter of fiscal 2004 and 2003.

The following table presents a reconciliation of the denominators used in the computation of basic and diluted earnings per share.

There were approximately 1,464,000 and 1,685,000 stock options excluded in the third quarter of fiscal 2004 and 2003, respectively, from the computation of diluted earnings per share due to their anti-dilutive effect.

In fiscal 2001, the Company and PPG Industries, Inc. (PPG) combined their U.S. automotive replacement glass distribution businesses into a joint venture, PPG Auto Glass, LLC (PPG Auto Glass), of which the Company has a 34 percent interest. The Company’s investment in PPG Auto Glass was $18.6 million and $19.4 million at November 29,

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2003 and March 1, 2003, respectively. At November 29, 2003 and March 1, 2003, the excess of the cost of the investment over the value of the underlying net tangible assets when the joint venture was formed was $7.3 million. This excess is reported as goodwill.

In connection with the formation of PPG Auto Glass, the Company agreed to supply the joint venture, through PPG, with most of the Company’s windshield fabrication capacity on market-based terms and conditions. The Company and PPG agreed to amend the agreements during fiscal 2002 to better reflect market pricing at the time. During the fourth quarter of fiscal 2004, the Company and PPG agreed that the amendments no longer provided for market-based pricing and agreed to terminate them and revert to the original market-based terms and conditions. This will have a negative impact on the earnings of the Company during the fourth quarter of fiscal 2004. Beginning with fiscal 2005, this will negatively impact the Automotive Replacement Glass and Services segment’s result with an offsetting benefit to equity in income of affiliated companies. The agreement expires any time after June 2005 with a one-year notification, which may be delivered by either party at any time from and after June 2004. Neither party has delivered a termination notice with respect to this agreement.

In addition, the Company’s automobile windshield repair and replacement business, reported as a discontinued operation, agreed to purchase at least 75 percent of its windshield needs from PPG Auto Glass on market-based terms and conditions. This agreement expires anytime after June 2005 with a two-year notification, which may be delivered by either party at any time from and after June 2003. Neither party has delivered a termination notice with respect to this agreement. Purchases from PPG Auto Glass were $12.3 million for the third quarter in each of fiscal 2004 and 2003. For the nine months of fiscal 2004 and 2003, respectively, purchases from PPG Auto Glass were $38.2 and $33.6 million. Amounts owed to PPG Auto Glass were $6.0 million and $6.9 million at November 29, 2003 and March 1, 2003, respectively, and are recorded within current liabilities of discontinued operations.

The Company’s goodwill represents the excess of the cost over the net tangible and identified intangible assets of acquired businesses. We adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, March 3, 2002. Under SFAS No. 142, goodwill and intangible assets with indefinite useful lives are not amortized, but are tested at least annually for impairment.

The change in the carrying amount of goodwill, net of accumulated amortization, attributable to each business segment for the nine months ended November 29, 2003 was as follows:

All previously recorded goodwill for the Auto Glass segment has been reclassified to assets of discontinued operations.

The Company’s identifiable intangible assets with finite lives are being amortized over their estimated useful lives and are detailed below.

Amortization expense on these identifiable intangible assets was $0.4 million and $0.3 million for the nine months ended November 29, 2003 and November 30, 2002, respectively. At November 29, 2003, the estimated future amortization expense for identifiable intangible assets for the remainder of fiscal 2004 and all of the following four fiscal years is as follows:

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During fiscal 2003, the Company entered into a four-year, unsecured, revolving credit facility in the amount of $125.0 million. This credit facility requires the Company to maintain levels of net worth and certain financial ratios. These ratios include maintaining an interest coverage ratio of more than 3.0 and a debt-to-cash flow ratio of less than 3.0. At November 29, 2003, these ratios were 11.3 and 1.0, respectively. If the Company is not in compliance with these ratios at the end of any quarter (with respect to interest coverage) or at the end of any day (with respect to the debt-to-cash flow ratio), the lender may terminate the commitment and/or declare any loan then outstanding to be due. At November 29, 2003, the Company was in compliance with all of the financial covenants of the credit facility.

The Company announced on September 10, 2003, that it intended to sell its retail auto glass business, Harmon AutoGlass. During the second quarter of fiscal 2004, the Company recorded an $8.0 million, pre-tax, charge representing a reduction in the carrying value of this business unit to its estimated fair value, less cost to sell. This charge was recorded as a reduction of goodwill. On November 4, 2003 the Company announced that it had entered into a definitive agreement to sell the stock of Harmon AutoGlass to Synergistic International, Inc., doing business as Glass Doctor, a subsidiary of The Dwyer Group. On January 2, 2004, the Company completed the cash sale of Harmon AutoGlass. During the third quarter of fiscal 2004, additional pretax charges of $2.0 million were recorded as a result of additional costs related to the sale of Harmon AutoGlass. Net assets totaling $8.1 million and $18.3 million represented the estimated carrying value of Harmon AutoGlass at November 29, 2003 and March 1, 2003, respectively.

In several transactions in fiscal years 1998 through 2000, the Company completed the sale of its large-scale domestic curtainwall business, the sale of the Company’s detention/security business and its exit from international curtainwall operations. Related to these discontinued operations, accruals totaling $11.8 million ($9.5 million classified as long-term liabilities) and $11.8 million ($9.2 million classified as long-term liabilities) represented the remaining estimated future cash outflows associated with the exit from discontinued operations at November 29, 2003 and March 1, 2003, respectively. The majority of these cash expenditures are expected to be made within the next three years. The long-term elements within the reserve relate to the international curtainwall operations, including bonds outstanding, of which the precise degree of liability related to these matters will not be known until they are settled within the U.K. and French courts. Additionally, the reserve covers certain potential long-term product liability issues, consisting of warranty and rework issues, relating to these international construction projects.

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Operating lease commitments

As of November 29, 2003, the Company was obligated under noncancelable operating leases for buildings and equipment. Certain leases provide for increased rentals based upon increases in real estate taxes or operating costs. Future minimum rental payments under noncancelable operating leases are:

Total obligations of $16.2 million related to the discontinued Harmon AutoGlass business have been excluded, as these operating lease commitments have been transferred to the buyer of Harmon AutoGlass on January 2, 2004.

The Company remains the general guarantor of certain property and vehicle leases, but as part of the purchase agreement, the Company has been fully indemnified by the buyer.

Bond commitments

In the ordinary course of business, predominantly in our installation business, we are required to commit to bonds that require payments to our customers for any non-performance. The outstanding face value of the bonds fluctuates with the value of installation projects that are in process and in our backlog. At November 29, 2003, these bonds totaled $112.1 million. Our installation business has never been required to pay on these performance-based bonds. However, past experience is not necessarily indicative of future results.

Purchase commitments

The Company has purchase commitments relating to its discontinued operation, Harmon AutoGlass, of $0.3 million for the remainder of fiscal 2004, $1.2 million for fiscal 2005, and $1.0 million in fiscal 2006. These purchase commitments relate to contractual obligations that expire on December 31, 2005, with a third party that provides call center operations for our Harmon AutoGlass business. The contract is structured such that there is a minimum number of units that must be processed through the third party’s facility. The contract includes a buy-out provision of $7.8 million, $4.5 million and $2.5 million for calendar years 2003, 2004 and 2005, respectively.

The Company’s discontinued business, Harmon AutoGlass, is party to an agreement that requires it to purchase at least 75 percent of its windshield needs from PPG Auto Glass on market-based terms and conditions. This agreement expires anytime after June 2005 with a two-year notification, which may be delivered by either party at any time from and after June 2003. Neither party has delivered a termination notice with respect to this agreement.

As part of the sale of Harmon AutoGlass, the purchase commitments mentioned above transferred to the buyer.

Guarantees and warranties

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires liability to be recognized at the time a company issues a guarantee for the fair value of the obligations assumed under certain guarantee agreements. Additional disclosures or liabilities associated with guarantee agreements are also required in the interim and annual financial statements. The disclosure requirements of FIN 45 are effective for the years ending after December 15, 2002. The liability recognition requirements are effective for guarantees entered into after January 1, 2003. The adoption of this new standard did not have a material effect on our consolidated financial position or results of operations for the period ended November 29, 2003.

The Company accrues for warranty and claim costs as a percentage of sales based on historical trends. Actual warranty and claim costs are deducted from the accrual when incurred. At the beginning of fiscal 2004, warranty and claim accruals were $2.4 million, with additional accruals incurred of $1.7 million, offset by warranty claims paid of $1.2 million for the nine-month period ended November 29, 2003. The accrual related to warranties and claims at the end of the third quarter was $2.9 million.

Letters of credit

At November 29, 2003, the Company had ongoing letters of credit related to its 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 November 29, 2003 was approximately $15.9 million, of which $8.4 million is issued and has reduced our total availability of funds under our $125.0 million credit facility.

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Non-compete agreements

The Company has entered into a number of non-compete and consulting agreements associated with former employees. As of November 29, 2003, future payments of $0.1 million were committed under such agreements.

Litigation

The Company has been a party to various legal proceedings incidental to its normal operating activities. In particular, like others in the construction supply industry, the Company’s construction supply businesses are routinely involved in various disputes and claims arising out of construction projects, sometimes involving significant monetary damages or product replacement. The Company has also been subject to litigation arising out of employment practice, workers compensation, general liability and automobile claims. Although it is very difficult to accurately predict the outcome of such proceedings, facts currently available indicate that no such claims will result in losses that would have a material adverse effect on the financial condition of the Company.

The following table presents sales and operating income data for our three segments, and consolidated, for the three and nine months, when compared to the corresponding period a year ago. As previously noted, the Auto Glass segment excludes results of the Company’s retail auto glass business, which has been reclassified as a discontinued operation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following selected financial data should be read in conjunction with the Company’s Form 10-K for the year ended March 1, 2003 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

During fiscal 2004, the Company announced its intention to sell Harmon AutoGlass and therefore began reporting its retail auto glass business as a discontinued operation. The transaction closed January 2, 2004. Accordingly, certain prior-year amounts have been reclassified to conform to the current period presentation.

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Sales and Earnings

The relationship between various components of operations, stated as a percent of net sales, is illustrated below for the three and nine months of the current and past fiscal year.