Forward-Looking Statements

This discussion contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect our current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intend," "estimate," "forecast," "project," "should" and similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All forecasts and projections in this document are "forward-looking statements," and are based on management's current expectations or beliefs of the Company's near-term results, based on current information available pertaining to the Company, including the risk factors noted under Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2009. From time to time, we may also provide oral and written forward-looking statements in other materials we release to the public such as press releases, presentations to securities analysts or investors, or other communications by the Company. Any or all of our forward-looking statements in this report and in any public statements we make could be materially different from actual results.

Accordingly, we wish to caution investors that any forward-looking statements made by or on behalf of the Company are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other risk factors include, but are not limited to, the risks and uncertainties set forth under Item 1A of the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2009.

We wish to caution investors that other factors might in the future prove to be important in affecting the Company's results of operations. New factors emerge from time to time; 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. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

We are a leader in certain technologies involving the design and development of value-added glass products, services and systems. The Company is comprised of two segments: Architectural Products and Services (Architectural) and Large-Scale Optical (LSO). Our Architectural segment companies design, engineer, fabricate, install, maintain and renovate the walls of glass, windows, storefront and entrances comprising the outside skin of commercial and institutional buildings. Businesses in this segment are: Viracon, Inc., a 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; Linetec, a paint and anodizing finisher of architectural aluminum and PVC shutters; and Tubelite, Inc, a fabricator of aluminum storefront, entrance and curtainwall products for the U.S. commercial construction industry. Our LSO segment consists of Tru Vue, Inc., a manufacturer of value-added glass and acrylic for the custom picture framing and commercial optics markets.

The following selected financial data should be read in conjunction with the Company's Form 10-K for the year ended February 28, 2009 and the consolidated financial statements, including the notes to consolidated financial statements, included therein.

Sales and Earnings

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



                                           Three months ended                Six months ended
                                         Aug. 29,      Aug. 30,           Aug. 29,      Aug. 30,
(Percent of net sales)                     2009          2008               2009          2008
Net sales                                   100.0 %         100.0%           100.0 %        100.0%
Cost of sales                                74.1           80.2              75.6          79.8
Gross profit                                 25.9           19.8              24.4          20.2
Selling, general and administrative
expenses                                     16.4           12.1              16.4          12.9
Operating income                              9.5            7.7               8.0           7.3
Interest income                               0.1            0.1               0.1           0.1
Interest expense                                -            0.1                 -           0.2
Other income, net                               -              -                 -           0.1
Equity in income (loss) of affiliated
companies                                       -            0.1                 -             -
Earnings from continuing operations
before income taxes                           9.6            7.8               8.1           7.3
Income tax expense                            2.8            2.8               2.6           2.6
Earnings from continuing operations           6.8            5.0               5.5           4.7
Earnings (loss) from discontinued
operations, net of income taxes               0.1              -               0.1         (0.1)
Net earnings                                  6.9 %           5.0%             5.6 %         4.6%

Effective tax rate for continuing
operations                                   29.5 %          35.4%            32.2 %        35.7%

Highlights of Second Quarter and First Six Months of Fiscal 2010 Compared to Second Quarter and First Six Months of Fiscal 2009

• Consolidated net sales decreased $57.5 million, or 23.5 percent, during the second quarter ended August 29, 2009 compared to the prior-year period, and decreased 23.8 percent or $115.1 million during the six-month period. The architectural glass and installation businesses were the primary drivers of the decrease for both the quarter and year-to-date periods, consistent with the decline in the commercial construction market, which continues to be impacted by tight commercial real estate credit and decreasing employment levels.

• Gross profit as a percent of sales for the quarter ended August 29, 2009 increased to 25.9 percent from 19.8 percent in the prior-year period, an increase of 6.1 percentage points. For the six-month period, gross profit as a percent of sales was 24.4 percent, an increase of 4.2 percentage points over the prior-year period. The increase in gross margins for the current-year quarter was primarily due to operational improvements in the installation, architectural glass and window businesses. Improved margins were a result of execution of work that was largely bid in stronger markets with higher pricing; improved productivity; an increased level of change orders in our

• Selling, general and administrative expenses for the second quarter increased as a percent of net sales to 16.4 percent from 12.1 percent in the prior-year period and were up $0.9 million. The increase in spending primarily relates to increased bonus and incentive expenses due to our expected performance against preset targets, compared to prior-year expenses that were lower based on expected performance against higher targets that were set before the impact of the economic downturn on our businesses was fully known. The increase as a percent of sales was largely due to our inability to leverage expenses over a lower level of sales dollars.

• Selling, general and administrative expenses for the six-month period increased to 16.4 percent of net sales compared to 12.9 percent in the prior-year period, but were down $1.7 million. The decrease in spending relates to lower sales and marketing expenses, and reduced salaries and employee-related expenses as a result of headcount reductions, partially offset by the bonus and incentive increases noted above. The increase as a percent of sales was largely due to our inability to leverage expenses over a lower level of sales dollars.

• Interest expense decreased $0.2 million in the second quarter of fiscal 2010 from the prior-year period and $0.5 million in the six-month period due to reduced debt levels and lower interest rates.

• During the third quarter of fiscal 2009 and in connection with PPG's sale of its automotive replacement glass businesses, we exercised our right to sell our minority interest in the PPG Auto Glass joint venture; therefore we had no impact from the joint venture in the current-year quarter or year-to-date period. During fiscal 2009, the joint venture reported income of $0.3 million in the second quarter and a loss of $0.1 million in the six-month period.

• The effective tax rate for continuing operations for the second quarter was 29.5 percent compared to 35.4 percent in the prior-year period, and was 32.2 percent for the year-to-date period compared to 35.7 percent in the prior year. The decrease in the effective tax rate for both the three and six-month periods was primarily due to a reduction of reserves as a result of a change in estimate for previous tax positions taken.

Segment Analysis

The following table presents sales and operating income data for our two
segments and on a consolidated basis for the three and six-month periods ended
August 29, 2009, when compared to the corresponding periods a year ago.



                                        Three months ended                               Six months ended
                               Aug. 29,       Aug. 30,         %              Aug. 29,       Aug. 30,          %
(In thousands)                   2009           2008         Change             2009           2008          Change
Net Sales from Continuing
Operations
Architectural                  $ 170,593      $ 228,631       (25.4 )%        $ 337,294      $ 449,351       (24.9)%
Large-Scale Optical               16,849         16,340         3.1              31,004         34,089       (9.0)
Intersegment eliminations              -             (1 )        NM                  (6 )           (1 )        NM
Net sales                      $ 187,442      $ 244,970       (23.5 )%        $ 368,292      $ 483,439       (23.8)%

Operating Income (Loss) from Continuing Operations
Architectural                  $  14,879      $  15,246        (2.4 )%        $  25,635      $  30,089       (14.8)%
Large-Scale Optical                3,864          3,475        11.2               5,847          6,746      (13.3)
Corporate and other                 (877 )           76          NM              (1,926 )       (1,404 )    (37.2)
Operating income               $  17,866      $  18,797        (5.0 )%        $  29,556      $  35,431       (16.6)%

NM = not meaningful

Due to the varying combinations of individual window systems and curtainwall, the Company has determined that it is impractical to report product and service revenues generated by the Architectural segment by class of product, beyond the segment revenues currently reported.

Architectural Products and Services (Architectural)

• Second-quarter net sales of $170.6 million decreased 25.4 percent from the prior-year period, and net sales of $337.3 million for the six-month period decreased 24.9 percent from the prior-year period. Both the quarter and year-to-date periods were impacted by difficult market conditions with continued tight commercial real estate credit. The architectural glass and installation businesses both saw decreases in revenue year-over-year consistent with the decline in the commercial construction market, which continues to be impacted by tight commercial real estate credit and decreasing employment levels.

• Architectural backlog at August 29, 2009 decreased to $295.0 million from $446.7 million in the prior-year period, and was relatively flat compared to the $310.0 million reported at the end of first quarter. Slow bid-to-award timing is impacting backlog, despite steady bidding activity. We expect approximately $170.9 million of this backlog to flow during the remainder of fiscal 2010.

Large-Scale Optical Technologies (LSO)

• Second quarter revenues were $16.8 million, up 3.1 percent over the prior-year period. For the six months ended August 29, 2009, revenues were $31.0 million, down 9.0 percent from the prior-year. The increase in the quarter was due to converting customers to our best value-added picture framing products as total square feet decreased slightly. Although we continue to convert customers to our value-added picture framing products, the six-month period was negatively impacted by weak custom picture framing market conditions.

• Operating income of $3.9 million in the quarter was up 11.2 percent from the prior-year period and operating margins increased to 22.9 percent compared to 21.3 percent in the prior year. For the six-month period, operating income of $5.8 million was down 13.3 percent from the prior year and operating margins decreased to 18.9 percent compared to 19.8 percent in the prior year. The increase in operating income and margins during the quarter was due to a strong mix of our best value-added products. The decrease in the six-month period was due to the impact of lower volume, which was partially offset by a strong mix of better value-added picture framing products as our efforts to convert this market continued.

Consolidated Backlog

• At August 29, 2009, our consolidated backlog was $299.3 million, down 33.3 percent from the prior-year period and down 3.8 percent compared to the $311.2 million reported at the end of the first quarter.

• The backlog of the Architectural segment represented more than 98 percent of consolidated backlog.

• We view backlog as an important statistic in evaluating the level of sales activity and short-term sales trends in our business. However, as backlog is only one indicator, and is not an effective indicator, of the ultimate profitability of our sales, we do not believe that backlog should be used as the sole indicator of future earnings of the Company.

Discontinued Operations

In several transactions in fiscal years 1998 through 2000, we completed the sale of our large-scale domestic curtainwall business, the sale of our detention/security business and the exit from international curtainwall operations. The remaining estimated cash expenditures related to these discontinued operations are recorded as liabilities of discontinued operations, and a majority of the remaining cash expenditures related to discontinued operations is expected to be paid within the next three years. The majority of these liabilities 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. courts. The reserve for discontinued operations also covers other liability issues, consisting of warranty issues relating to these and other international construction projects.

During the second quarter of fiscal 2010, a favorable resolution of an outstanding lease claim resulted in income from discontinued operations of $0.3 million.

Liquidity and Capital Resources

                                                                 Six months ended
                                                           August 29,         August 30,
(Cash effect, in thousands)                                   2009               2008
Net cash provided by continuing operating activities      $     33,348       $     39,481
Capital expenditures                                            (5,923 )          (39,235 )
Net change in borrowings                                             -              5,500

Operating activities. Cash provided by operating activities of continuing operations was $33.3 million for the first six months of fiscal 2010, compared to $39.5 million in the prior-year period, on lower current-year earnings.

Non-cash working capital (current assets, excluding cash and short-term investments, less current liabilities) was $48.5 million at August 29, 2009, or 6.0 percent of last 12-month sales, our key metric. This compares to 4.8 percent at February 28, 2009 and 7.8 percent at August 30, 2008. The deterioration from year-end was due to the seasonally high cash outflow experienced in the first half of the year to fund annual incentive compensation and retirement plan contributions. We believe this metric will continue to be negatively impacted by current commercial construction market conditions. The improvement over the prior-year period is largely the result of initiatives to expedite billings and collections.

Investing Activities. Through the first six months of fiscal 2010, investing activities used $10.6 million of cash, compared to $38.0 million in the same period last year. New capital investments through the first six months of fiscal 2010 totaled $5.9 million, compared to $39.2 million in the prior-year period. Prior-year spending was primarily for productivity improvements and capacity expansions in both operating segments, while in the current year our expenditures have been focused on safety and maintenance projects as well as some productivity improvements. The net position of our investments resulted in $4.7 million in net purchases versus $1.1 million in net proceeds in the prior year.

We expect fiscal 2010 capital expenditures to be less than $20 million for productivity improvements, new green products, maintenance and safety. Our factories are modern and have excess capacity given current market conditions; accordingly we are also focusing on productivity improvements and product enhancements, including "green" product offerings, with minimal use of capital.

We continue to review our portfolio of businesses and their assets in comparison to our internal strategic and performance objectives. As part of this review, we may acquire other businesses, further invest in, fully divest and/or sell parts of our current businesses.

Financing Activities. Total outstanding borrowings remained consistent at $8.4 million as of August 29, 2009, compared to the February 28, 2009 levels, and consisted solely of industrial development bonds. Total outstanding borrowings at August 30, 2008 were $63.7 million. Through cash generated from operations and the sale of our interest in PPG Auto Glass, we have reduced outstanding debt compared to the prior-year period. Our debt-to-total-capital ratio was 2.5 percent at August 29, 2009, compared to 2.6 percent at February 28, 2009.

We paid dividends of $4.6 million and $4.2 million in the first half of fiscal 2010 and 2009, respectively. We expect to continue to make quarterly dividend payments and spend approximately $9.1 million on dividends for the year.

During fiscal 2004, the Board of Directors authorized a share repurchase program of 1,500,000 shares of common stock. The Board of Directors increased this authorization by 750,000 shares in January 2008 and by 1,000,000 in October 2008. We repurchased 535,324 shares in the open market under this program, for a total of $7.2 million, through February 25, 2006. No share repurchases were made under this plan during fiscal 2007. We repurchased 338,569 shares in the open market during fiscal 2008 for $5.4 million. During fiscal 2009, we repurchased 1,130,230 shares in the open market for $14.6 million under the program. There have been no share repurchases during the first six months of fiscal 2010. Therefore, we have purchased a total of 2,004,123 shares, at a total cost of $27.3 million, since the inception of this program. We have remaining authority to repurchase 1,245,877 shares under this program, which has no expiration date; we do not expect to repurchase any shares during the remainder of fiscal 2010.

Other Financing Activities. The following summarizes our significant contractual obligations that impact our liquidity as of August 29, 2009:

                                                        Future Cash Payments Due by Fiscal Period
                                      2010
(In thousands)                      Remaining      2011       2012       2013       2014       Thereafter      Total
Continuing operations
Industrial revenue bonds           $         -    $     -    $     -    $     -    $     -    $      8,400    $  8,400
Operating leases (undiscounted)          3,441      5,593      4,179      2,935      2,124           3,366      21,638
Purchase obligations                     2,746      1,039          -          -          -               -       3,785
Other obligations                          499         39          -          -          -               -         538
Total cash obligations             $     6,686    $ 6,671    $ 4,179    $ 2,935    $ 2,124    $     11,766    $ 34,361

We maintain a $100.0 million revolving credit facility, which expires in November 2011. No borrowings were outstanding as of August 29, 2009. The credit facility requires that we maintain a minimum level of net worth as defined in the credit facility based on certain quarterly financial calculations. The minimum required net worth computed in accordance with the credit agreement at August 29, 2009 was $259.2 million, whereas our net worth as defined in the credit facility was $333.4 million. The credit facility also requires that we maintain a debt-to-cash flow ratio of no more than 2.75. This ratio is computed daily, with cash flow computed on a rolling 12-month basis. Our ratio was 0.08 at August 29, 2009. If we are not in compliance with either of these covenants, the lender may terminate the commitment and/or declare any loan then outstanding to be immediately due and payable. At August 29, 2009, we were in compliance with all of the financial covenants of the credit facility. Long-term debt also includes $8.4 million of industrial development bonds that mature in fiscal years 2021 through 2023.

From time to time, we acquire the use of certain assets, such as warehouses, automobiles, forklifts, vehicles, office equipment, hardware, software and some manufacturing equipment through operating leases. Many of these operating leases have termination penalties. However, because the assets are used in the conduct of our business operations, it is unlikely that any significant portion of these operating leases would be terminated prior to the normal expiration of their lease terms. Therefore, we consider the risk related to termination penalties to be minimal.

We have purchase obligations for raw material commitments and capital expenditures. As of August 29, 2009, these obligations totaled $3.8 million.

The other obligations relate to non-compete and consulting agreements with current and former employees.

We expect to make contributions of $0.5 million to our defined benefit pension plans in fiscal 2010. The fiscal 2010 expected contributions will equal or exceed our minimum funding requirements.

As of August 29, 2009, we had $15.3 million and $2.2 million of unrecognized tax benefits and environmental liabilities, respectively. We are unable to reasonably estimate in which future periods these amounts will ultimately be settled.

At August 29, 2009, we had ongoing letters of credit related to construction contracts and certain industrial development bonds. The letters of credit by expiration period were as follows at August 29, 2009:

                                                  Amount of Commitment Expiration Per Fiscal Period
                                        2010
(In thousands)                        Remaining     2011     2012     2013     2014      Thereafter      Total
Standby letters of credit            $     1,492    $   -    $   -    $   -    $   -    $      8,653    $ 10,145

In addition to the above standby letters of credit, which were predominantly issued for our industrial development bonds, we are required, in the ordinary course of business, to provide a surety or performance bond that commits payments to our customers for any non-performance by us. At August 29, 2009, $149.6 million of our backlog was bonded by performance bonds with a face value of $424.8 million. Performance bonds do not have stated expiration dates, as we are released from the bonds upon completion of the contract. We have never been required to pay on these performance-based bonds with respect to any of our current portfolio of businesses.

We self-insure our third-party product liability coverages. As a result, a material construction project rework event would have a material adverse effect on our operating results.

For fiscal 2010, we believe that current cash on hand, cash generated from operating activities and available capacity under our committed revolving credit facility should be adequate to fund our working capital requirements, planned capital expenditures and dividend payments.

Outlook

We are facing an unprecedented level of uncertainty in fiscal 2010. The following statements are based on our current expectations for full-year fiscal 2010 results. These statements are forward-looking, and actual results may differ materially.

• Overall revenues for the year are expected to be down 20 to 25 percent compared to fiscal 2009.

. . .