Apogee 3rd Quarter Revenues, Earnings Increase; Full-Year EPS Guidance Raised.

MINNEAPOLIS -- Apogee Enterprises, Inc. (Nasdaq:APOG) today announced fiscal 2007 third quarter earnings. Apogee provides distinctive value-added glass solutions for the architectural, large-scale optical and automotive industries.

THIRD QUARTER HIGHLIGHTS

--  Revenues of $209.8 million were up 18 percent versus the
    prior-year period.

--  Operating income increased 61 percent compared to a year earlier.

    --  Operating margin was 7.2 percent, compared to 5.3 percent in
        the prior-year period.

--  Earnings of $0.35 per share increased 9 percent from $0.32 per
    share a year earlier.

    --  Third quarter earnings per share increased 40 percent
        excluding the prior-year period net tax benefit of $0.07 per
        share resulting from resolution of certain tax matters.

    --  The current quarter includes $0.02 per share expense related
        to adoption of FAS123R.

--  Architectural segment revenues were up 24 percent, and operating
    income more than doubled compared to the prior-year period.

--  Large-scale optical segment revenues were flat. As expected,
    operating income decreased 25 percent compared to the prior-year
    period.

--  Fiscal year 2007 earnings outlook has been increased to a range of
    $0.98 to $1.04 per share, up from prior guidance of $0.92 to $0.98
    per share.

Commentary

"We completed a very strong quarter, thanks to strength in our architectural segment where we delivered significant improvement in operating margins," said Russell Huffer, Apogee chairman and chief executive officer. "We benefited from greater than expected product and project mix, volume and operational improvements in the architectural segment during our seasonally strongest quarter of the year. In addition, our backlog and bidding activity remain high, and the non-residential construction markets continue to grow.

"The decline in the large-scale optical segment earnings compared to last year was a result of the unfavorable framing product mix within value-added glass that we had anticipated," he said.

SEGMENT AND OPERATING HIGHLIGHTS

Architectural Products and Services

--  Revenues of $182.1 million were up 24 percent over the prior-year
    period. All segment businesses contributed to this growth.

--  Operating income was $13.4 million, up 130 percent from a year
    ago.

    --  Operating margin was 7.4 percent, compared to 4.0 percent in
        the prior-year period and 4.5 percent in the first half of
        this fiscal year.

--  Higher than expected revenue and operating income growth resulted
    from stronger pricing, the timing of job flow, and a positive mix
    of architectural glass value-added products and installation and
    window projects, as well as solid, ongoing operational
    improvements.

--  Segment backlog was $389.5 million, compared to a backlog of
    $316.6 million in the prior-year period and $391.0 million at the
    end of the second quarter. Strong orders maintained the backlog
    level.

Large-Scale Optical Technologies

--  Revenues of $21.8 million were up 1 percent from the prior-year
    period.

--  Operating income was $2.7 million, down 25 percent from the
    prior-year period.

    --  Operating margin in the third quarter was 12.3 percent,
        compared to 16.6 percent in the prior-year period.

--  The segment's performance was impacted by lower pre-framed art
    sales and the less favorable value-added product mix at national
    retail customers, even though conversion to value-added products
    continues in the broader custom framing market.

Automotive Replacement Glass and Services

--  Revenues of $6.0 million decreased 33 percent compared to the
    prior-year period as expected.

--  There was an operating loss of $0.5 million, compared to operating
    income of $0.5 million in the prior-year period.

--  Auto glass segment results continue to be impacted by lower sales
    of aftermarket auto windshields, a product line Apogee is in the
    process of exiting.

Equity in Affiliates

--  Pre-tax earnings were $1.1 million from investment in PPG Auto
    Glass, LLC, which is flat compared to the prior-year period.

Financial Condition

--  Long-term debt was $56.2 million at the end of the third quarter,
    compared to $45.2 million at the end of fiscal 2006 and $56.5 in
    the second quarter.

    --  Long-term debt-to-total-capital ratio was 20.1 percent, up
        slightly from the fiscal 2006 year-end.

--  Non-cash working capital (current assets, excluding cash, less
    current liabilities) was $94.0 million, compared to $88.8 million
    at the end of the second quarter and $70.6 million at the end of
    fiscal 2006. The increase was driven by working capital
    requirements related to growth in the architectural segment
    businesses.

--  Depreciation and amortization were $15.0 million year to date, up
    11 percent from the prior year.

--  Capital expenditures were $26.3 million year to date, including
    investments in architectural glass fabrication capacity
    expansions. This compares to capital expenditures of $22.5 million
    in the prior-year period.

OUTLOOK

"The performance of our architectural segment continues to improve. We finished the quarter stronger than anticipated due to a higher value-added mix and better operating performance in glass fabrication, installation and finishing," said Huffer. "As a result, we have again raised our earnings guidance for fiscal 2007. We are now expecting earnings per share of $0.98 to $1.04 for the current year, up from our guidance of $0.92 to $0.98 per share provided on November 13.

"The increase in our earnings guidance on the existing revenue base reflects our outlook for higher architectural segment operating margins resulting from better than expected productivity and mix. Our fiscal 2007 architectural operating margins are now anticipated to range from 5.6 to 5.8 percent, a significant increase from 3.2 percent in fiscal 2006.

"Regarding our other businesses, our outlook for the large-scale optical and auto glass segments remains unchanged," he said, adding, "Our auto glass segment has begun the process of transitioning its auto replacement windshield manufacturing capacity to support architectural glass fabrication.

"We expect a strong finish to fiscal 2007 and anticipate another quarter of year-on-year growth in the fourth quarter compared to the prior year," Huffer said. He noted that the fourth quarter is generally a seasonally lower quarter than the third quarter in terms of revenues and margins for both the architectural and large-scale optical segments.

He concluded, "We continue to be optimistic about the commercial construction market and Apogee's future performance based on our architectural segment backlog and bidding activity. We are pleased to be progressing more quickly than we had expected toward our goal of reaching our prior peak architectural operating margin of 7.0 percent in two years."

The company plans to issue guidance for fiscal 2008 during the fourth quarter of fiscal 2007.

The following statements are based on current expectations for fiscal 2007. These statements are forward-looking, and actual results may differ materially.

--  Overall fiscal 2007 revenues for the year are expected to increase
    12 to 15 percent.

    --  Architectural segment revenues are expected to increase 16 to
        19 percent, consistent with prior guidance.

        --  Growth is supported by the strong architectural backlog of
            $389.5 million at the end of the third quarter.

    --  Large-scale optical segment revenues are expected to be down
        slightly, consistent with prior guidance.

    --  Auto glass segment revenues are expected to be down
        approximately 15 percent (prior guidance was down 10 percent).

--  Annual gross margins are expected to be nearly 19.0 percent as
    higher costs for wages, health care, energy, materials and freight
    are somewhat offset by pricing, operational improvements and cost
    reductions (prior guidance was 18.5 to 19.0 percent).

--  Selling, general and administrative expenses as a percent of sales
    are projected to be slightly less than 13.5 percent, including the
    impact of expensing options.

--  Expected annual operating margins by segment are: architectural,
    5.6 to 5.8 percent (prior guidance was 5.2 to 5.3 percent);
    large-scale optical, 11 to 12 percent; and auto glass, negative 5
    to 6 percent.

--  Equity in affiliates, which reflects Apogee's portion of the
    results of the PPG Auto Glass joint venture, is expected to report
    pre-tax earnings of just over $2 million.

--  Capital expenditures are projected to be approximately $45
    million, including an estimated $25 million related to building
    the new architectural glass fabrication plant (prior guidance was
    $40 to $45 million).

--  Depreciation and amortization are estimated at $20 million for the
    year.

--  Debt is expected to be approximately $50 to $60 million at year
    end, reflecting borrowings for the new architectural glass
    facility.

--  The effective tax rate for the full year is anticipated to be
    approximately 36 percent, compared to the prior-year rate of 24
    percent which included extraordinary items in the third and fourth
    quarters of last year.

--  Earnings per share from continuing operations are expected to
    range from $0.98 to $1.04 (prior guidance was $0.92 to $0.98);
    this includes the $0.05 per share expense related to adoption of
    FAS123R and the $0.04 per share benefit from the flat glass class
    action settlement.

The discussion above, including all statements in the Outlook section, contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect Apogee management's expectations or beliefs as of the date of this release. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements are qualified by factors that may affect the operating results of the company, including the following: operational risks within (A) the architectural segment: i) competitive, price-sensitive and changing market conditions, including unforeseen delays in project timing and work flow; ii) economic conditions and the cyclical nature of the North American commercial construction industry; iii) product performance, reliability or quality problems that could delay payments, increase costs, impact orders or lead to litigation; iv) the segment's ability to fully utilize production capacity; and v) construction and ramp-up to full production of the announced third Viracon plant in a timely and cost-efficient manner; (B) the large-scale optical segment: i) markets that are impacted by consumer confidence and trends; ii) dependence on a relatively small number of customers; iii) changing market conditions, including unfavorable shift in product mix; and iv) ability to utilize manufacturing facilities; and (C) the auto glass segment: i) transition of markets served by Viracon/Curvlite; ii) changes in market dynamics; iii) market seasonality; iv) highly competitive, fairly mature industry; and v) performance of the PPG Auto Glass, LLC joint venture. Additional factors include: i) revenue and operating results that are volatile; ii) self-insurance risk related to a material product liability event and to health insurance programs; iii) the costs of compliance with governmental regulations relating to hazardous substances; iv) management of discontinued operations exiting activities; and v) foreign currency risk related to discontinued operations. The company cautions readers that actual future results could differ materially from those described in the forward-looking statements. The company wishes to caution investors that other factors may in the future prove to be important in affecting the company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor, or a combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. For a more detailed explanation of the foregoing and other risks and uncertainties, see Item 1A of the company's Annual Report on Form 10-K for the fiscal year ended February 25, 2006.

TELECONFERENCE AND SIMULTANEOUS WEBCAST

Analysts, investors and media are invited to listen to Apogee's live teleconference or webcast at 10 a.m. Central Time tomorrow, December 21. To participate in the teleconference, call 1-866-700-7477 toll free or 617-213-8840 international, access code 89919728. The replay will be available from noon Central Time on Thursday, December 21, through midnight Central Time on Thursday, January 4, 2007, by calling 1-888-286-8010 toll free, access code 14117998. To listen to the live conference call over the internet, go to the Apogee web site at http://www.apog.com and click on "investor relations" and then the webcast link at the top of that page. The webcast also will be archived on the company's web site.

Apogee Enterprises, Inc., headquartered in Minneapolis, is a world leader in technologies involving the design and development of value-added glass products and services. The company is organized in three segments:

--  Architectural products and services companies design, engineer,
    fabricate, install, maintain and renovate the walls of glass and
    windows comprising the outside skin of commercial and
    institutional buildings. Businesses in this segment are: Viracon,
    the leading fabricator of coated, high-performance architectural
    glass for global markets; Harmon, Inc., one of the largest U.S.
    full-service building glass installation, maintenance and
    renovation companies; Wausau Window and Wall Systems, a
    manufacturer of custom aluminum window systems and curtainwall;
    and Linetec, a paint and anodizing finisher of window frames and
    PVC shutters.

--  Large-scale optical segment consists of Tru Vue, a value-added
    glass and acrylic manufacturer for the custom framing and
    pre-framed art markets, and a producer of optical thin film
    coatings for consumer electronics displays.

--  Automotive replacement glass and services segment consists of
    Viracon/Curvlite, a U.S. fabricator of aftermarket foreign and
    domestic car windshields.
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