FY10 SECOND QUARTER VS. PRIOR-YEAR PERIOD

Revenues of $187.4 million were down 23 percent.

Operating income was $17.9 million, down 5 percent.

Operating margin was 9.5 percent, compared to 7.7 percent.

Earnings from continuing operations were $0.46 per share versus $0.43 per share.

A lower tax rate contributed $0.03 per share.

Architectural segment revenues declined 25 percent, while operating income decreased 2 percent.

Backlog ended at $295.0 million, compared to $310.0 million at the end of the first quarter and $316.2 million at the end of fiscal 2009.

Large-scale optical segment revenues increased 3 percent, and operating income increased 11 percent.

Cash and short-term investments totaled $52.3 million, compared to $30.8 million at the end of the first quarter and $5.5 million in the prior-year period.

Net earnings were $0.47 per share, compared to $0.43 per share.

There were discontinued operations earnings of $0.01 per share in the current period from favorable resolution of an outstanding claim.

Commentary "Apogee achieved strong operating performance and exceeded prior-year earnings per share on revenues that were down consistent with the decline in the commercial construction market, which continues to be impacted by tight commercial real estate credit and decreasing employment levels," said Russell Huffer, Apogee chairman and chief executive officer. "As we executed work largely bid in stronger markets, we operated well, improved productivity, managed costs and generated cash.

"It is also positive that our architectural segment backlog was down only slightly compared to the previous two quarters," said Huffer. "In addition, our picture framing business performed well, growing revenues and operating income in the quarter as it continues to convert customers to our best value-added framing products.

"Our second-quarter performance shows our agility in adapting to the downturn as well as our ability to operate through a commercial construction cycle," he said. "Although future periods will be impacted by the construction slowdown, we are in a strong financial position -- we have a healthy balance sheet and are generating positive cash flow."

FY10 SECOND-QUARTER SEGMENT AND OPERATING HIGHLIGHTS VS. PRIOR-YEAR PERIOD

Architectural Products and Services

Revenues of $170.6 million were down 25 percent.

Architectural glass and installation revenues declined in line with the commercial construction market.

Operating income was $14.9 million, down 2 percent.

Operating margin was 8.7 percent, compared to 6.7 percent.

Higher pricing on projects bid in stronger markets, solid project execution, productivity improvements, cost reductions and some favorable material costs contributed to the operating margin improvement.

The prior-year period was impacted by operating challenges in the architectural glass business which led to high labor costs.

Backlog declined less than 5 percent to $295.0 million, compared to $310.0 million at the end of the first quarter; it was down 34 percent from $446.7 million in the prior-year period.

As work on existing backlog is completed, slower bid-to-award timing continued to impact backlog levels, despite steady bidding activity.

The institutional sector is now more than half of the backlog, office projects about a quarter, and condo and hotel/entertainment the remaining portion of future work.

Approximately $171 million, or 58 percent, of the backlog is expected to be delivered in fiscal 2010, and approximately $124 million, or 42 percent, in fiscal 2011 and 2012.

Large-Scale Optical Technologies

Revenues of $16.8 million increased 3 percent.

Operating income was $3.9 million, up 11 percent.

Operating margin was 22.9 percent, compared to 21.3 percent.

The increase in operating income was the result of a strong mix of our best value-added products.

Financial Condition

Long-term debt was $8.4 million, equal to the fiscal 2009 year-end level and down from $63.7 million in the prior-year period.

$8.4 million in low-interest industrial revenue bonds is reflected in each of these debt levels.

Non-cash working capital (current assets, excluding cash and short-term investments, less current liabilities) was $48.5million, compared to $44.3million at the end of fiscal 2009 and $72.8million in the prior-year period.

Capital expenditures year-to-date were $5.9 million, down 85 percent from the prior-year period. Key strategic investments to support future growth were completed last year.

Depreciation and amortization year-to-date were $14.8 million, up 11 percent from the prior-year period.

OUTLOOK "Our solid performance to date in these challenging economic times supports our outlook for continued profitability," Huffer said. "For fiscal 2010, we continue to expect a mid-single digit operating margin on revenues that we anticipate will be down 20 to 25 percent as project timing for new orders has shifted into fiscal 2011. We had previously anticipated fiscal 2010 revenues would decline at least 15 percent." He added that the large-scale optical segment is expected to continue converting customers to higher value-added products.

"Since Apogee is a late cycle commercial construction company and our markets have yet to show signs of a rebound, we expect that fiscal 2011 will be tougher than the current year," he said. "We are seeing some success in filling in backlog for fiscal 2011, and believe we are well positioned financially and in the marketplace, especially with our leading green, energy-efficient building products.

"We are seeing early success in pursuing work in underserved, shorter-lead time architectural glass markets, including smaller and international projects, which is benefitting fiscal 2010, and have won a few stimulus projects incorporating our energy-efficient products and services, although most of this work is scheduled for fiscal 2011," said Huffer.

"To manage through the downturn, we have reduced costs more than $45 million on an annualized basis since last October and continue to evaluate further reductions in headcount and discretionary spending; we are also working continuously on productivity improvements," he said. "Our balance sheet remains strong, and we expect to generate positive cash flow throughout fiscal 2010.

"We have good architectural businesses with strong brands and operations that are positioned to serve the growing interest in green, energy-efficient commercial buildings," he said. "Apogee will be well positioned when commercial construction markets improve -- we have people and capacities in place to profitably grow for several years."

The discussion above 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.