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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-K
(Mark one)
[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1998
         OR
[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
          THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to _____________
Commission File No.:  1-8467

                              BMC INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

                MINNESOTA                                  41-0169210
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)

ONE MERIDIAN CROSSINGS, SUITE 850, MINNEAPOLIS, MN                 55423
(Address of principal executive offices)                        (Zip Code)
Registrant's telephone number, including area code: (612) 851-6000


           Securities registered pursuant to Section 12(b) of the Act:

Title of each class                    Name of each exchange on which registered
COMMON STOCK                                     NEW YORK STOCK EXCHANGE

           Securities registered pursuant to Section 12(g) of the Act:
                                      NONE
                                (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
                                      ---    ---

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 the 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. [ ]

The aggregate market value of the registrant's common stock (its only voting
stock) held by non-affiliates of the registrant, based on the closing sales
price for the registrant's common stock as reported on the New York Stock
Exchange on March 24, 1999, was approximately $119.5 million. As of March 24,
1999, there were 27,226,380 shares of common stock of the registrant
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Parts I , II and IV of this report on Form 10-K incorporate by reference
information, to the extent specific pages are referred to herein, from the
registrant's annual report to stockholders for the year ended December 31, 1998.
Part III of this report on Form 10-K incorporates by reference information, to
the extent specific sections are referred to herein, from the registrant's proxy
statement for its annual meeting of stockholders to be held May 12, 1999.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<S>            <C>
PART I.
Item 1.        Business.....................................................   1
Item 2.        Properties...................................................  11
Item 3.        Legal Proceedings............................................  12
Item 4.        Submission of Matters to a Vote of Security Holders..........  12
Item 4A.       Executive Officers of the Registrant.........................  12

PART II.
Item 5.        Market for Registrant's Common Equity and Related
                   Stockholder Matters......................................  13
Item 6.        Selected Financial Data......................................  13
Item 7.        Management's Discussion and Analysis of Financial
                   Condition and Results of Operations......................  13
Item 7A.       Quantitative and Qualitative Disclosures About Market Risk...  14
Item 8.        Financial Statements and Supplementary Data..................  14
Item 9.        Changes in and Disagreements with Accountants on
                   Accounting and Financial Disclosure......................  14

PART III.
Item 10.       Directors and Executive Officers of the Registrant...........  14
Item 11.       Executive Compensation.......................................  14
Item 12.       Security Ownership of Certain Beneficial Owners
                   and Management...........................................  14
Item 13.       Certain Relationships and Related Transactions...............  15

PART IV.
Item 14.       Exhibits, Financial Statement Schedules and Reports
                   on Form 8-K..............................................  15
               Signatures...................................................  19
</TABLE>


                                     PART I

         Certain statements contained in this report are forward-looking
statements within in the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
and are subject to the Safe Harbor provisions created by the statutes. These
statements relate to non-historical information and include, without limitation,
any statement that may predict, forecast, indicate or imply future results,
performance or achievements. These statements are not guarantees of future
performance and are subject to certain risks and uncertainties - such as those
discussed in the section entitled "Factors That May Affect Future Results" below
- that could cause actual results to differ materially from those expressed or
forecasted. You should not rely on these forward-looking statements, which
reflect only our opinion as of the date of this 10-K. These factors also should
not be considered an exhaustive list. We do not undertake the responsibility to
update any forward-looking statement that may be made from time to time by us or
on our behalf.

ITEM 1.  BUSINESS

(a)      GENERAL DEVELOPMENT OF BUSINESS.

BMC Industries, Inc., a Minnesota corporation ("BMC", "we" "our", or "us"), has
two operating segments that manufacture and sell a variety of products: 
Precision Imaged Products ("PIP") and Optical Products. PIP is comprised of two 
units, Mask Operations and Buckbee-Mears St. Paul ("BMSP"), which 


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share process manufacturing technology and one manufacturing facility. Mask 
Operations, the segment's principal business, produces aperture masks, an 
integral component of color televisions and computer monitors. BMSP is the 
leading domestic producer of precision photo-etched metal and electroformed 
parts. Optical Products, through our Vision-Ease subsidiaries, designs, 
manufactures and distributes polycarbonate, glass and hard-resin plastic 
ophthalmic lenses.

In May 1998, Vision-Ease acquired the Orcolite polycarbonate and hard-resin
plastic lens ophthalmic manufacturing and distribution operations of Monsanto
Company. This acquisition solidified Vision-Ease's position as the leading
designer, manufacturer and distributor of ophthalmic lenses made from
polycarbonate material, which is the world's fastest growing ophthalmic lens
material. Following the acquisition, we dedicated substantial resources to the
integration of the former Orcolite operations into those of Vision-Ease. We
merged technologies, eliminated redundant distribution systems, reorganized
sales and marketing and allocated manufacturing responsibilities by product
type. We also made significant progress on new product development during the
year, particularly in the higher margin premium products category, such as the
Tegra-TM- high performance polycarbonate product line. During the fourth
quarter of 1998, we installed our new proprietary lamination system with retail
customers for testing. This system is designed to produce finished multi-focal
polycarbonate lenses on-site through a simple and quick procedure. In addition,
we completed the move of our low-cost Jakarta, Indonesia glass manufacturing
operations to a new, larger facility and began sourcing hard-resin plastic
lenses through a low-cost manufacturer in Mexico.

Our Mask Operations experienced difficulties during 1998 due to a combination 
of market forces and internal shortcomings. The 1997 start-up of two new 
lines, one for television masks and one for computer monitor masks, at our 
Cortland, New York facility caused disruptions to existing operations at the 
facility. These disruptions, which negatively impacted yields on existing 
lines, continued into 1998. At the same time, we took longer than expected to 
start up the computer monitor mask production line and we built a significant 
amount of inventory due to missed customer commitments and internal issues. 
While we were addressing these internal issues, the aperture mask market 
experienced an imbalance of mask supply and demand, which resulted in 
significant price declines in aperture masks, particularly computer monitor 
masks. The combination of lower prices and lower yields and higher expenses 
associated with product line start-ups forced us to make major expense 
reductions. The imbalance of mask supply and demand lead to the shutdown of 
three manufacturing lines at our Cortland facility, two of which remained 
idle the entire second half of 1998. We restarted one television mask line in 
the fourth quarter of 1998. We restarted the computer monitor mask line in 
the first quarter of 1999. During the shutdown in 1998, we reduced mask 
inventories by over $16 million and established systems to minimize inventory 
in the future. We also incurred a one-time charge of $26.7 million for the 
write-down of certain PIP fixed assets, primarily related to computer monitor 
masks. Finally, in February 1999, we filed an anti-dumping petition against 
Japanese and South Korean mask manufacturers for pricing certain masks at 
levels we believe are below cost.

(b)      FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS.

Financial information about our operating segments for the three most recent
fiscal years is contained on pages 32 - 34 of our annual report to stockholders
for the year ended December 31, 1998, and is incorporated herein by reference.

(c)      NARRATIVE DESCRIPTION OF BUSINESS.

PRECISION IMAGED PRODUCTS

PRODUCTS AND MARKETING. Mask Operations has manufacturing operations in
Cortland, New York and Mullheim, Germany and an inspection facility in
Tatabanya, Hungary. BMSP has a manufacturing 


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facility in St. Paul, Minnesota and shares manufacturing operations with Mask 
Operations at the Mullheim facility. The Cortland and Mullheim facilities 
primarily manufacture aperture masks. The St. Paul facility primarily 
manufactures precision photo-etched metal parts, specialty printed circuits, 
precision electroformed components and precision etched and filled glass 
products. BMSP uses a continuous precision parts etching line at our Mullheim 
facility to supply semi-finished precision photo-etched parts, including 
those used in lead frames. Four customers each accounted for more than 10% of 
PIP's 1998 total revenues, three of which also contributed more than 10% of 
our total consolidated revenues for 1998. Thomson, S.A. of France, including 
its U.S. based operations, accounted for approximately 17% of our 1998 total 
revenues. Thomson produces televisions in North America and Europe under 
various trademarks, including RCA and GE. Samsung Display Devices Co., Ltd., 
of South Korea, accounted for approximately 15% of our 1998 total revenues. 
Philips Components B.V. of the Netherlands accounted for approximately 10% of 
our 1998 total revenues. Matsushita of Japan accounted for less than 10% of 
our 1998 total revenues, but did account for approximately 11% of PIP's 1998 
total revenues.

Aperture masks are photo-chemically etched fine screen grids found in color
televisions and computer monitors and consist of thousands of precise, conically
shaped holes designed to focus the electron beam on the proper phosphor color
stripe to produce a crisp image. Aperture masks are made from steel or invar, a
nickel and iron alloy, and range in size from 6-inch to 40-inch diagonal
dimensions. We manufacture aperture masks ranging from 14-inch to 36-inch
diagonal dimensions. Our facilities employ an automated continuous photochemical
etching process that we originally developed. We sell aperture masks directly to
color television and computer monitor tube manufacturers in North America,
Europe, India and Asia through an in-house sales staff. Sales of aperture masks
comprised 54%, 61% and 60% of our consolidated total revenues in 1998, 1997 and
1996, respectively.

In 1997, we established a dedicated, low-cost inspection facility in Tatabanya
to inspect computer monitor masks manufactured in Mullheim. This
facility allows us to provide quick response to the Mullheim facility's Asian
and European customers. During 1998, we began transferring an additional portion
of our mask inspection from the Mullheim and Cortland facilities to Tatabanya.
We believe these transfers will result in increased cost savings in 1999 and 
beyond.

Since the start-up of our first monitor mask manufacturing line at Mullheim in
1995, we have dedicated significant resources to increasing monitor mask sales
and obtaining customer qualifications. Despite the shut-down of our monitor mask
line at Cortland during the second half of 1998, our concentrated efforts
resulted in monitor masks sales of $36.7 million during 1998, a 79.2% increase
over 1997 sales. In addition, we were qualified on several additional 14 inch 
to 19 inch monitor masks in 1998. We restarted our monitor mask line at Cortland
during the first quarter of 1999 and we currently expect to fill this line over 
the course of 1999 through growth in the monitor mask market and additional 
product qualifications.

We continue to dedicate significant resources to the development of automation
systems for the back end of our manufacturing process. We added automated
material handling systems to two of Mask Operations' eight production lines
during 1998, which followed the implementation of three systems in 1997. We also
made substantial progress in developing an automatic inspection system, which we
tested in concept during 1998 and have scheduled for implementation in 1999.

We are engaged in ongoing efforts to develop the manufacturing and technical
expertise to produce a variety of new products, including high definition
television ("HDTV"), multimedia and pure flat mask products. We have delivered
limited quantities of these masks to customers engaged in these segments. We
believe these efforts position us well to realize the future sales and product
opportunities that are expected to develop in these segments.


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BMSP manufactures precision photo-etched metal and electroformed components. We
sell these components through in-house sales personnel and manufacturer
representatives for use in the electrical, automotive, filtration, medical and
semiconductor industries. BMSP's products currently include switch contacts,
ignition components, medical device components, reusable filtration devices,
precision sorting sieves and etched lead frames. We sell our precision
photo-etched metal and electroformed parts to approximately 200 industrial
users.

During 1998, BMSP continued our strategy of leveraging BMSP's high-volume
precision capabilities to attract large end-product manufacturers for joint
research and product development projects. We continued to make progress with
partners in the automotive and medical industries in 1998. BMSP also achieved
ISO 9002 certification in 1998, which is a critical prerequisite for supplying a
broad base of customers.

INTELLECTUAL PROPERTY. We have a number of patents which are important to the
success of our PIP operations. These patents range in their expiration dates
from 1999 to 2014. We believe the loss of any single patent would not have a
material adverse effect on our business as a whole. We believe that improvement
of existing products and processes and a reliance on trade secrets and
unpatented proprietary know-how are as important as patent protection in
establishing and maintaining our competitive position. At the same time, we
continue to seek patent protection for our products and processes on a selective
basis. There can be no assurance, however, that any issued patents will provide
substantial protection or commercial value. We require our consultants and
employees to agree in writing to maintain the confidentiality of our information
and, within certain limits, to assign to us any inventions, and any patent or
other intellectual property rights, relating to our business.

COMPETITION. The aperture mask and precision etched metal and electroformed
parts industries are intensely competitive, with no one competitor dominating
the market. We compete principally on the basis of price, product quality and
product availability. We also attempt to build preferred supplier and research
and development arrangements with customers to best meet their current and new
product requirements. In order to remain competitive on pricing, we implemented
substantial cost reduction measures in 1998. There can be no assurance, however,
that these efforts will be successful or that our competitors will not attract
our customer base through new products or processes that are more effective or
less expensive than our products and processes. In addition, there can be no
assurance that customers will not vertically integrate to meet their component
requirements through captive supply.

We are one of only five independent mask manufacturers in the world and the 
only independent mask manufacturer with production facilities in the United 
States. Our primary mask competitors operate in Japan. In addition, several 
color picture tube manufacturers operate captive mask production facilities 
and two state directed ventures operate in China. Independent mask 
manufacturers supply approximately 85% of the global mask market, with BMC 
among the largest at an estimated 16% of the combined television and monitor 
mask market share. We supplied approximately 21% of the worldwide demand for 
television masks and 6% of the demand for monitor masks in 1998. Many 
producers compete in the market for precision photo-etched and electroformed 
metal parts. There is no clear market share leader, however, in this 
fragmented industry. With respect to etched lead frames, we compete against 
established producers mostly located in Asia. Some of the manufacturers also 
produce aperture masks. We are working to improve our volume manufacturing 
capability and to reduce costs further in order to compete against these lead 
frame manufacturers, many of whom have established customer bases and greater 
financial resources. There can be no assurance, however, that we will achieve 
the manufacturing capabilities and cost reductions necessary to compete in 
this market.

SUPPLIES. Each of our PIP operations has available multiple sources of raw 
materials needed to manufacture our products. Our Cortland facility imports 
all of its steel and invar requirements from Japan and Germany. Our Mullheim 
facility obtains a majority of its steel and invar requirements from

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Germany, but obtains a portion of its requirements from Japan. Importation of 
steel into the United States is subject to certain restrictions imposed by 
U.S. federal trade legislation and regulations, but we have successfully 
challenged these restrictions in the past, including obtaining a separate 
harmonized tariff classification for the steel used in aperture masks. We do 
not anticipate difficulty in obtaining steel or any other raw materials. Our 
inability to obtain these materials, however, could have a material adverse 
effect on production at certain of our manufacturing locations.

BACKLOG. As of December 31, 1998, the firm backlog of PIP sales orders was $20.0
million, compared with $22.4 million as of December 31, 1997. We expect that all
of the December 31, 1998 backlog orders will be filled within the current fiscal
year.

ENVIRONMENTAL. The chemical etching of metals, which is performed by all PIP 
operations, requires the utilization of chemical substances that must be 
handled in accordance with federal, state, local and foreign environmental 
and safety laws and regulations. The etching processes also generate 
wastewater and wastes, some of which are classified as hazardous under 
applicable environmental laws and regulations. The wastewater is treated 
using on-site wastewater treatment systems. We employ systems for either 
disposing of wastes in accordance with applicable laws or regulations or 
recycling the chemicals we use through the manufacturing process. 
Environmental and other government agencies monitor the wastes and the 
wastewater treatment systems to ensure compliance with applicable standards. 
Environmental regulations place responsibility for waste on the generator 
even after proper disposal. There can be no assurance, therefore, that we 
will not incur future liability for waste disposal despite our best efforts 
to dispose of all wastes properly. As of March 24, 1999, we were involved in 
a total of eight (8) sites where environmental investigations were occurring 
and final settlement had not been reached, of which two (2) relate to 
discontinued operations, four (4) relate to PIP operations and two (2) relate 
to Optical Products operations.

During 1998, we made significant progress toward resolution of a lawsuit
relating to a site in Cortland, New York. In connection with this site, the
Environmental Protection Agency ("EPA") initially identified five potentially
responsible parties ("PRPs") at the site and ordered these PRPs to address the
site. These initial PRPs filed suit in U.S. District Court against BMC and 16
other parties seeking contribution for our alleged share of contamination at the
site. During the third quarter of 1998, we signed a Consent Decree with the EPA
and the other PRPs for remediation of the site. Upon approval from the U.S.
District Court, we anticipate that the Consent Decree will result in the
dismissal of the initial PRP's lawsuit and that we will be relieved of liability
for past PRP costs.

To the extent possible with the amount of information available at this time, 
we have evaluated our responsibility for costs and related liability with 
respect to the sites at which an investigation is ongoing or threatened, have 
recorded accruals for our estimated liability in accordance with generally 
accepted accounting principles, and are of the opinion that our liability 
with respect to these sites should not have a material adverse effect on our 
financial position or the results of our operations. In arriving at this 
conclusion, we have considered, among other things, the payments that have 
been made with respect to the sites in the past; the factors, such as volume 
and relative toxicity, ordinarily applied to allocated defense and remedial 
costs at such sites; the probable costs to be paid by the other potentially 
responsible parties; total projected remedial costs for a site, if known; 
existing technology; and the currently enacted laws and regulations. A 
portion of the costs and related liability for certain sites has been or will 
be covered by available insurance.

We estimate that PIP incurred approximately $7.2 million in 1998 and $5.8
million in 1997 on expenditures, including capital expenditures, related to
efforts to comply with applicable laws and regulations regulating the discharge
of materials into the environment or otherwise relating to the protection of the
environment. In addition, we estimate that PIP will spend approximately $6.1
million in 1999 and $5.0 million in 2000 on capital expenditures for
environmental control facilities.


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SEASONALITY. Our revenues and earnings from PIP operations are generally lower
in the first and third quarters due to maintenance shutdowns at the Cortland and
Mullheim facilities. The seasonality of end products in this segment,
televisions and computer monitors, also affects our annual earnings pattern.

EMPLOYEES. As of December 31, 1998, PIP had approximately 1,648 employees in the
United States and Europe. The majority of these employees are not represented by
labor unions. Labor relations are considered to be good and there have been no
significant labor disputes in the past ten years.

OPTICAL PRODUCTS

PRODUCTS AND MARKETING. Optical Products, operating under the Vision-Ease 
trade name, designs, manufactures and distributes ophthalmic lenses. The 
group's headquarters is located in Brooklyn Park, Minnesota. We have lens 
manufacturing operations in Azusa, California; Ramsey, Minnesota; St. Cloud, 
Minnesota; and Jakarta, Indonesia. We also have 15 lens distribution centers 
in the U.S., Canada and England. We manufacture ophthalmic lenses from three 
principal materials: polycarbonate, glass and hard-resin plastic. Within each 
of these lens materials, we offer single-vision lenses, which have a constant 
corrective power at all points; multi-focal lenses, which have two or more 
distinct areas of different corrective power; progressive lenses, which are a 
type of multi-focal lenses with a continuous gradient of different corrective 
power without the line or "jump" generally associated with other multi-focal 
lenses; and non-prescription lenses that are used primarily for sunglasses. 
We also produce these lenses with anti-reflective and scratch-resistant 
coatings to meet increasing demand for value-added products.

We sell semi-finished lenses to independent wholesale optical laboratories or
retail outlets with on-site laboratories, which then finish the lens by grinding
and polishing the inside surface of the lens according to the prescription
provided by the optometrist or ophthalmologist. After processing, the lens is
edged and inserted into a frame by either the wholesale laboratory or a retail
optical dispenser. We sell finished single-vision lenses to wholesale and retail
laboratories. These finished lenses are ready to be edged and inserted into the
frame without laboratory surfacing.

Polycarbonate is the world's fastest growing lens material. Polycarbonate lenses
account for the majority of our lens sales. The polycarbonate lens market in the
United States grew at a rate in excess of 20% in 1998 and in excess of 15% on a
compound basis for the last 15 years. With the acquisition of the Orcolite
division of Monsanto Company in May 1998, we solidified our position as the
leading supplier of polycarbonate lenses. During 1998, we also completed the
move from our former polycarbonate manufacturing operation in Brooklyn Center,
Minnesota to our new $10 million manufacturing facility in Ramsey. We divide
manufacturing responsibility for finished and semi-finished single-vision and
semi-finished multi-focal polycarbonate lenses, including progressives, between
the former Orcolite facility in Azusa and our new Ramsey facility. We also use
the Ramsey facility for centralized distribution and research and development.

We continue to experience diminishing sales of lenses made from glass as the 
lens market continues to move toward polycarbonate and hard-resin plastic 
lenses. We produce semi-finished glass multi-focal and finished and 
semi-finished single-vision lenses at our St. Cloud and Jakarta operations. 
During 1998, we completed the move of the Jakarta operations to a new 
facility outside Jakarta. This facility is operated through a majority-owned 
joint venture and provides a captive supply of low-cost glass lenses.

We manufacture hard-resin plastic lenses in both standard plastic lenses and
high-index plastic lenses. We produce a portion of our hard-resin plastic lens
requirements at our St. Cloud and Azusa facilities. We obtain the remainder of
our hard-resin plastic lens requirements through supply agreements with low cost
manufacturers in Mexico and Southeast Asia. We have commitments to buy
approximately $17.0 


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million of lenses from the Southeast Asian manufacturer from January 1999 
through June 2000. Under our supply agreement with the Mexican manufacturer, 
we supply the equipment and materials needed to produce our ongoing product 
requirements. Our Mexican partner supplies the facility and employees. These 
sourcing arrangements allow us to focus manufacturing capabilities on 
higher-margin products while offering a complete line of lens products at 
cost competitive prices.

We invest significant resources in process and product research and 
development, particularly in polycarbonate lens development and other higher 
margin products. These investments have resulted in the successful 
introduction of several new products. In 1996 and 1997, we introduced a broad 
line of VersaLite-Registered Trademark- thin and light lenses; 
VersaLite-Registered Trademark- SunRx-Registered Trademark-, a premium glare 
reducing sun lens; a durable, abrasion-resistant OnGuard-Registered 
Trademark- coating; progressive SunRx-Registered Trademark- lenses; and a 
premium line of polycarbonate lenses bearing the Tegra-TM- trade name. 
Tegra-TM- lenses have an advanced aspheric design, super hard 
scratch-resistant coating and other distinctive features. During 1998, we 
expanded the Tegra-TM- product line into single-vision products and launched 
a new progressive bifocal lens, under the Outlook-TM- trade name, which was 
designed specifically for polycarbonate material. This lens was designed to 
accommodate a broader range of frame types than any other lens on the market. 
After several years of development, we also initiated customer testing of our 
new lamination system during the fourth quarter of 1998. This system uses 
proprietary technology to produce quality, thin, multi-focal lenses 
equivalent to those produced by a laboratory. We intend to offer the 
lamination system to retailers and dispensers who want to produce finished 
multi-focal polycarbonate lenses on a rapid service and on-site basis. We 
also acquired in-process research and development through the Orcolite 
acquisition. We intend to continue making significant investments in product 
and process design and development for all lens materials.

We market our lenses to more than 750 wholesalers and retailers in the United
States and to more than 60 wholesalers and retailers internationally. No single
customer accounted for more than 10% of our total revenues on a consolidated 
basis in 1998, but one customer, Precision LensCrafters, accounted for 
approximately 13% of Vision-Ease's total revenues in 1998 and 10% in 1997. 
Precision LensCrafters operates retail chain outlets throughout the United
States and is headquartered in Cincinnati, Ohio.

While assimilating the former Orcolite operations into our Vision-Ease 
operations, we realigned, and added to, our sales and marketing team. This 
sales force is organized according to key accounts and market segments. 
Building on Orcolite's international polycarbonate market penetration, we 
added resources dedicated solely to international sales and marketing. We 
also significantly increased marketing efforts toward our branded products, 
as well as resources dedicated to supporting and building relationships at 
the dispenser level. We believe that positive relationships with these 
professionals are necessary to increase sales of our branded products, such 
as Tegra-TM-. We believe these focused efforts will be successful based on 
130% growth in SunRx-Registered Trademark- polarized polycarbonate lens sales.

INTELLECTUAL PROPERTY. We have several patents protecting certain of the
products and manufacturing processes of our Vision-Ease operations. These
patents have expiration dates ranging from 1999 to 2015. We believe the loss of
any single patent would not have a material adverse effect on our business as a
whole. We believe that improvement of existing products and processes, the
development of new lens products and a reliance on trade secrets and unpatented
proprietary know-how are as important as patent protection in establishing and
maintaining our competitive position. At the same time, we continue to seek
patent protection for our products and processes on a selective basis. There can
be no assurance, however, that any issued patents will provide substantial
protection or commercial value. We require our consultants and employees to
agree in writing to maintain the confidentiality of our information and, within
certain limits, to assign to us any inventions, and any patent or other
intellectual property rights, relating to our business. We also have several
trademarks, including trademarks obtained through the Orcolite acquisition. As
part of our marketing strategy to build sales of branded products, we have
increased our use of trademarks. Although there are no assurances as to the
strength or scope of our 


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trademarks, we believe that these trademarks have been and will be useful in 
developing and protecting market recognition for our products.

COMPETITION. The ophthalmic lens industry is highly competitive. We compete
principally on the basis of product offerings, pricing, product quality and
customer service. Vision-Ease is the third largest ophthalmic lens manufacturer
and distributor in the United States, with a substantially smaller share of the
global lens market. Our largest competitors are Essilor International and Sola
International Inc., who have a combined share of approximately 70% of the
ophthalmic lens market in the United States and 50% of the world-wide lens
market. Many of our competitors, particularly Essilor and Sola, have greater
financial resources than Vision-Ease to fund research, development, capital
expenditures. Some competitors also have vertically integrated wholesale
laboratories. In order to successfully compete in this market, we employ a
strategy of combined marketing, product development, customer service and cost
reduction efforts. Through the establishment of low-cost operations and sourcing
arrangements in Southeast Asia and Mexico, we have maintained competitiveness on
low-margin lens products. At the same time, we have increased the breadth of
product offerings, including value-added lenses, to meet the total lens
requirements of our customers. Building upon our leadership position in
polycarbonate lenses, we have dedicated a substantial portion of our process and
product development efforts toward product offerings in this fast growing
market. There can be no assurance, however, that we will succeed in developing
competitive new products, leveraging our polycarbonate strength into growth in
other lens materials and product offerings, maintaining our polycarbonate
leadership position or converting brand equity into increased sales.

SUPPLIES. Vision-Ease has available multiple sources of the raw materials needed
to manufacture all of its products. We obtain the majority of our hard-resin
plastic lenses, however, through sourcing arrangements in Southeast Asia and
Mexico. Although we have limited in-house manufacturing capabilities for
hard-resin plastic lenses, we do not have alternative sources for large volumes
of these lenses. In addition, the importation of raw materials and final
products into and out of these foreign territories is subject to certain trade
restrictions imposed by foreign and United States trade regulations that could
result in the disruption of supply. Although we do not anticipate any disruption
to our supply of hard-resin plastic lenses, our inability to obtain these or
other materials could have a material adverse effect on Vision-Ease's
operations.

BACKLOG AND INVENTORY. Due to the importance in the ophthalmic lens industry of
rapid turnaround time from order to shipment, the backlog of sales orders is not
material. We must maintain a significant amount of inventory, however, in order
to satisfy the rapid response time and complete product offerings across glass,
hard resin plastic and polycarbonate demanded by our customers.

ENVIRONMENTAL. As part of our lens manufacturing process, we use hazardous
chemical substances that must be handled in accordance with applicable federal,
state, local and foreign environmental and safety laws and regulations. The lens
manufacturing processes also generate wastewater and wastes, some of which are
classified as hazardous under applicable environmental laws and regulations. We
employ systems for either disposing of wastes in accordance with applicable laws
and regulations or recycling the chemicals we use through the manufacturing
process. Environmental and other government agencies monitor the wastes and the
wastewater treatment systems to assure compliance with applicable standards.
Environmental regulations place responsibility for waste on the generator even
after proper disposal. There can be no assurance, therefore, that we will not
incur future liability for waste disposal despite our best efforts to dispose of
all wastes properly. As of March 24, 1999, we were involved in a total of eight
(8) sites where environmental investigations were occurring and final settlement
had not been reach, of which two (2) relate to discontinued operations, four (4)
relate to PIP operations and two (2) relate to Optical Products operations.


                                       8
<PAGE>

Included within the sites listed above is an ongoing investigation at our former
Ft. Lauderdale, Florida hard-resin plastic lens manufacturing facility. We are
conducting a soil and groundwater contamination assessment at this site under a
Consent Order with the Florida Department of Environmental Protection ("DEP").
We have submitted several rounds of test results to the DEP. The DEP has
requested additional testing to complete the assessment, but we have been unable
to perform these tests due to restricted access by the property owner. The DEP
recently issued an order to the property owner requiring his cooperation in
granting access for further testing. Although the contamination assessment is
not complete, our consultant has indicated that it is reasonably probable that
some type of remediation or containment will be required and has provided an
approximate cost range for that remediation. Based on the consultant's estimates
and in accordance with generally accepted accounting principles, we have 
accrued our best estimate of potential remediation costs. Our investigation
indicates that the source of any contamination predates our ownership and
operation of this facility. We, therefore, intend to seek indemnification for
site costs from the former owner and operator of the site.

To the extent possible with the amount of information available at this time, 
we have evaluated our responsibility for costs and related liability with 
respect to the sites at which an investigation is ongoing or threatened, have 
recorded accruals for our estimated liability in accordance with generally 
accepted accounting principles, and are of the opinion that our liability 
with respect to these sites should not have a material adverse effect on the 
financial position or the results of our operations. In arriving at this 
conclusion, we have considered, among other things, the payments that have 
been made with respect to the sites in the past; the factors, such as volume 
and relative toxicity, ordinarily applied to allocated defense and remedial 
costs at such sites; the probable costs to be paid by the other potentially 
responsible parties; total projected remedial costs for a site, if known; 
existing technology; and the currently enacted laws and regulations. A 
portion of the costs and related liability for certain sites has been or will 
be covered by available insurance.

We estimate that Vision-Ease incurred approximately $0.4 million in 1998 and
$0.2 million in 1997 on expenditures, including capital expenditures, related to
efforts to comply with applicable laws and regulations regulating the discharge
of materials into the environment or otherwise relating to the protection of the
environment. In addition, we estimate that Vision-Ease will make approximately
$0.4 million in capital expenditures for environmental control facilities during
each of 1999 and 2000.

SEASONALITY. Our Optical Products group experiences generally lower earnings in
the third quarter due to maintenance shutdowns at our lens manufacturing
facilities. Earnings are also lower in the first quarter due to the seasonality
of eyewear, the end product of our lenses.

EMPLOYEES. As of December 31, 1998, Optical Products had approximately 1,493
employees in the United States, Europe and Indonesia. None of these employees
are represented by labor unions. Labor relations are considered to be good.

(d)     FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
        SALES.

Financial information about our foreign and domestic and export sales for the
three most recent fiscal years is contained on page 34 of our annual report to
stockholders for the year ended December 31, 1998, and is incorporated herein by
reference.

FACTORS THAT MAY AFFECT FUTURE RESULTS

NEW PRODUCT DEVELOPMENT. Each of our operations invest significantly in new
product development. Vision-Ease has invested substantial resources toward new
lens offerings in all lens materials: polycarbonate, glass and hard-resin
plastic. These efforts have resulted in many new products that have experienced
success to date, including our Tegra-TM- high-performance polycarbonate
product line and 


                                       9
<PAGE>

progressive no-line lenses. We are also testing our new lamination system, 
which we expect to launch to retail chains over the course of 1999. Our BMSP 
operation continues to focus efforts toward building research and development 
relationships with large, high volume end product manufacturers. In addition, 
BMSP is continuing efforts to improve lead frame production capabilities and 
attempts to gain sales within this market. Finally, Mask Operations continues 
to dedicate resources to new product qualifications, particularly for 
computer monitor masks. We expect these efforts to facilitate our development 
of HDTV and multi-media masks. We must develop these and other new products 
and technologies at competitive prices and quality in order to compete in 
each of the markets we serve. There are no assurances, however, that we will 
succeed in these efforts or that competitors will not develop better quality 
and less expense products.

LITIGATION. We are subject to the normal risks of litigation that affect
business operations, including environmental liability for past or present
environmental practices, product liability, workers' compensation and personal
injury. Although we do not anticipate that any existing claims will result in
material liability, there are no assurances that we will not incur such
liability in the future.

START-UP/RAMP-UP OF PRODUCTION LINES. Our expectations for future results are
based on assumptions regarding the financial impact of planned operation of our
Mask Operations production lines and continued improvement in yields and sales
from these lines. During 1998, we shut-down three of these lines at our Cortland
facility due in part to an imbalance of supply and demand. Although we have
restarted two of these lines, we incurred significant start-up and ramp-up
expenses. If we experience further shutdowns at the Cortland facility, or any of
our other production facilities, we will incur lower yields and higher costs,
thereby adversely affecting our financial results.

PRICING AND MARGINS. Many market and economic factors have adversely 
affected, and could continue to affect, our financial performance and 
projected future results. Since each of our operations supply components to 
manufacturers of end products, imbalances in supply and demand at all levels 
of product distribution could have, and in some instances have had, a 
significant impact on our pricing and margins. Recent expansions by aperture 
mask manufacturers helped create this type of imbalance in the mask market, 
which resulted in extreme pricing pressures. Margins are affected by the need 
to develop new technology. Our ability to meet the market demand for new 
products in a timely fashion requires the investment of resources, which, 
coupled with intense pricing pressures, decreases our margins. Although we 
have taken major steps to reduce our fixed and variable costs in all of our 
operations, there can be no assurance that these efforts will be sufficient 
to offset further pricing pressures.

SOURCES OF SUPPLY. The primary component of a mask is steel. The primary raw
materials used to manufacture optical products are glass blanks and
polycarbonate and plastic resins. Significant changes in the markets for these
materials, including pricing and availability, could have a material adverse
impact on our financial results. In addition, since Optical Products obtains the
majority of its hard-resin plastic and glass lenses from foreign supply
arrangements and operations, factors affecting these suppliers' ability to meet
our demand for these products could adversely impact our results of operation.

FOREIGN CURRENCY. We transact business in currencies other than U.S. dollars.
The primary currencies used include the German mark, the Euro, Japanese yen,
British pound, Canadian dollar, Hungarian forint and Indonesian rupiah. Our
primary competitors in the mask market are located in Japan. Changes in the
currency exchange rates between the U.S. dollar and the German mark compared to
the Japanese yen affect Mask Operations' pricing competitiveness. Although we
take steps to reduce this risk through cross-currency swaps and other hedging
transactions, we are subject to the risk of adverse fluctuations in currency
exchange rates, which may result, and have resulted, in pricing pressures and
reductions in profitability due to currency conversion or translation.


                                       10
<PAGE>

INTERNATIONAL MARKETS. Mask Operations has a manufacturing facility located in
Mullheim, Germany and an aperture mask inspection facility in Tatabanya,
Hungary. Vision-Ease has supply agreements with hard-resin plastic lens
manufacturers in Southeast Asia and Mexico and a joint venture in Indonesia for
glass lens manufacturing. In addition, we have many international customers and
are dedicating significant resources to increase business with international
customers at all of our operations. Our international operations and sales could
be adversely affected by governmental regulations, political instability,
economic changes or instability and competitive conditions in other countries in
which, and with which, we conduct business. The economic difficulty experienced
in Asia during the past two years is an example of international conditions that
could adversely affect financial performance. Similar downturns in other areas
of the world, such as South America, could affect our operations without advance
warning.

YEAR 2000. We have developed a four-phase approach to identify and remediate our
information technology and non-information technology systems that could be
affected by the technical problems associated with the year 2000. We believe
that these efforts will result in a smooth transition to the year 2000 without
any significant operational problems for our computer systems. In addition, we
are working with third parties, including suppliers, to identify and ensure
their year 2000 readiness. There are no assurances, however, that we or any
third parties will not incur unforeseen difficulties or the failure of systems
in connection with the year 2000 issue. The failure of these systems could have
a material adverse affect on our business.

ITEM 2.  PROPERTIES

The following table sets forth certain information regarding our principal
production facilities:

<TABLE>
<CAPTION>
                                                                                 APPROXIMATE SQUARE
LOCATION                             PRINCIPAL USE                               FEET OF SPACE
--------                             -------------                               -------------
<S>        <C>                       <C>                                         <C>
OWNED:
           Ramsey, MN                Optical Products                            150,000
                                     - Manufacturing of polycarbonate
                                       lenses, centralized distribution and
                                       research and development
           St. Cloud, MN             Optical Products                            94,500
                                     - Manufacturing of glass and hard-
                                       resin plastic lenses
           Jakarta, Indonesia        Optical Products                            66,000
                                     - Manufacturing of glass lenses
           Mullheim, Germany         Precision Imaged Products                   170,000
                                     - Manufacturing of aperture masks and
                                       precision photo-etched metal
                                       products
           Cortland, NY              Precision Imaged Products                   363,000
                                     - Manufacturing of aperture masks 
           Tatabanya, Hungary        Precision Imaged Products                   51,000
                                     - Inspection of aperture masks
Leased:
           St. Paul, MN              Precision Imaged Products                   131,000
                                     - Manufacturing of  precision photo-
                                       etched metal and electroformed parts
           Azusa, CA                 Optical Products                            120,000
                                     - Manufacturing of polycarbonate and
                                       hard-resin plastic lenses and 
                                       distribution
</TABLE>


                                       11
<PAGE>

We lease approximately 11,000 square feet in suburban Minneapolis, Minnesota for
our corporate headquarters. We lease approximately 8,000 square feet in Brooklyn
Park, Minnesota for our Vision-Ease headquarters. Our lease in St. Paul expires
in February 2004. We believe our existing facilities are sufficient to meet our
current and foreseeable production and other needs.

In addition to the properties listed above, we operate other smaller domestic
and foreign warehouse, distribution and administrative offices. For additional
information concerning our leased properties, see Note 8 to Notes to
Consolidated Financial Statements on page 27 of our annual report to
stockholders for the year ended December 31, 1998.

ITEM 3.  LEGAL PROCEEDINGS

With regard to certain environmental and other legal matters, see Item 1(c)
"Narrative Description of Business - "Precision Imaged Products - Environmental"
and "Optical Products - Environmental" and Item 7 "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Other than as noted above, there are no material pending or threatened legal,
governmental, administrative or other proceedings to which we are a party or of
which any of our property is subject.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by the report.

ITEM 4A.  EXECUTIVE OFFICERS OF THE REGISTRANT

Our executive officers, their ages, the year first elected or appointed as an
executive officer and the offices held as of March 24, 1999 are as follows:

<TABLE>
<CAPTION>
                               DATE FIRST ELECTED
                               OR APPOINTED AS
NAME (AGE)                     AN EXECUTIVE OFFICER         TITLE
----------                     --------------------         -----
<S>                            <C>                          <C>
Paul B. Burke (43)             August 1985                  Chairman of the Board, President and
                                                            Chief Executive Officer

Jon A. Dobson (32)             December 1997                General Counsel and Secretary

William A. Guernsey (47)       November 1997                Senior Vice President,
                                                            Corporate Development

Jeffrey J. Hattara (42)        January 1998                 Vice President, Finance and
                                                            Administration and Chief Financial
                                                            Officer

Steven E. Opdahl (35)          May 1998                     Corporate Controller
</TABLE>

There are no family relationships between or among any of the executive
officers. Executive officers are elected by the Board of Directors for one-year
terms, commencing with their election at the first meeting of the Board of
Directors immediately following the annual meeting of stockholders and
continuing until the next such meeting of the Board of Directors.


                                       12
<PAGE>

Except as indicated below, the executive officers have not changed their
principal occupations or employment during the past five years.

Mr. Burke is also a director of BMC. Mr. Burke joined BMC as Associated General
Counsel in June 1983, and became Vice President, Secretary and General Counsel
in August 1985. In November 1987, he was appointed Vice President, Ft.
Lauderdale Operations of the Vision-Ease division and in May 1989, he was
appointed President of Vision-Ease. In May 1991, Mr. Burke was elected President
and Chief Operating Officer of BMC, and in July 1991, he became President and
Chief Executive Officer. Mr. Burke was appointed Chairman of the Board in May
1995.

Mr. Dobson joined BMC in April 1995 as Director of Legal Services. In December
1997, he was appointed General Counsel and Secretary. Prior to joining BMC, Mr.
Dobson was an associate with Lindquist & Vennum PLLP, a Minneapolis law firm,
practicing exclusively in corporate and securities law.

Mr. Guernsey joined BMC in July 1992 as President, Mask Operations. He was
appointed Senior Vice President, Corporate Development in November 1997. Prior
to joining BMC, Mr. Guernsey held management positions with several
manufacturing companies, most recently as Vice President and General Manager of
Allis Mineral Systems, a U.S. division of Swedish based Svedala Industries.

Mr. Hattara joined BMC in January 1998 as Vice President, Finance and 
Administration and Chief Financial Officer. From September 1978 to January 
1998, he served in several management positions at USG Corporation, most 
recently as Director of Finance, USG International, Inc.

Mr. Opdahl joined BMC in May 1998 as Corporate Controller. From March 1997 to 
March 1998, he served as Vice President, Finance and Chief Financial Officer 
of Famous Dave's of America, Inc. From May 1994 to March 1997, Mr. Opdahl 
served in a variety of financial management positions with Honeywell, Inc. 
From June 1986 to April 1994, Mr. Opdahl worked in several audit and business 
advisory positions with Arthur Andersen LLP.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

"Price Range of Common Stock" on page 35 of our annual report to stockholders
for the year ended December 31, 1998 is incorporated herein by reference.

The Company expects to continue its policy of paying regular cash dividends,
although there is no assurance as to future dividends because they are dependent
on future earnings, capital requirements, financial condition and subject to
certain restrictions in the Company's revolving domestic credit facility.

ITEM 6.  SELECTED FINANCIAL DATA

"Historical Financial Summary" on page 10 of our annual report to stockholders
for the year ended December 31, 1998 is incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

"Management's Discussion and Analysis" on Pages 11 - 18 of our annual report to
stockholders for the year ended December 31, 1998 is incorporated herein by
reference.


                                       13
<PAGE>

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

"Management's Discussion and Analysis" on pages 15 - 16 of our annual report to
stockholders for the year ended December 31, 1998 is incorporated herein by
reference.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and related notes on pages 19 - 34 and the
Report of our Independent Auditors on page 35 of our annual report to
stockholders for the year ended December 31, 1998 are incorporated herein by
reference, as is the unaudited information under the caption "Selected Quarterly
Data" on page 36.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

(a)      DIRECTORS OF THE REGISTRANT

         The information under the caption "Election of Directors" on pages 2-5 
of our proxy statement for the annual meeting of stockholders to be held May 12,
1999 is incorporated herein by reference.

(b)      EXECUTIVE OFFICERS OF THE REGISTRANT

         Information concerning our executive officers is included in this
report under Item 4A, "Executive Officers of the Registrant."

(c)      COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

         The information under the caption "Section 16(a) Beneficial Ownership
Reporting Compliance" on pages 15-16 of our proxy statement for the annual 
meeting of stockholders to be held May 12, 1999 is incorporated herein by 
reference.

ITEM 11.  EXECUTIVE COMPENSATION

The information contained under the caption "Executive Compensation" on pages
6-8 and 10-14, and "Election of Directors--Information About the Board and Its 
Committees" on pages 3-4 of our proxy statement for the annual meeting of 
stockholders to be held May 12, 1999 is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" on pages 5-6 of our proxy statement for the
annual meeting of stockholders to be held May 12, 1999 is incorporated herein by
reference.


                                       14
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the caption "Certain Transactions" on page 15 of
our proxy statement for the annual meeting of stockholders to be held May 12, 
1999 is incorporated herein by reference.


                                    PART IV.

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)   1.       FINANCIAL STATEMENTS

               The following items are incorporated herein by reference from
               the pages indicated in our annual report to stockholders for
               the year ended December 31, 1998.

<TABLE>
<CAPTION>
               CONSOLIDATED FINANCIAL STATEMENTS:                                                 PAGE
               <S>                                                                                <C>
               Consolidated Statements of Operations for the Years Ended
               December 31, 1998, 1997 and 1996.................................................   19

               Consolidated Balance Sheets as of December 31, 1998 and 1997.....................   20

               Consolidated Statements of Stockholders' Equity for the Years
               Ended December 31, 1998, 1997 and 1996...........................................   21

               Consolidated Statements of Cash Flows for the Years Ended
               December 31, 1998, 1997 and 1996.................................................   22

               Notes to Consolidated Financial Statements.......................................  23-34

               Report of Independent Auditors...................................................   35

               Selected Quarterly Financial Data (unaudited)....................................   36
</TABLE>

2.    FINANCIAL STATEMENT SCHEDULE:

               The following financial statement schedule is included herein
               and should be read in conjunction with the consolidated
               financial statements referenced above:
<TABLE>
<CAPTION>
                                                                                                  PAGE:
               <S>                                                                                <C>
               II  - Valuation and Qualifying Accounts..........................................   18
</TABLE>

               Schedules other than the one listed above are omitted because
               of the absence of the conditions under which they are required
               or because the information required is included in the
               consolidated financial statements or the notes thereto.

      3.       EXHIBITS:

               Reference is made to the Exhibit Index contained on pages
               20-26 of this Form 10-K.

               A copy of any of the exhibits listed or referred to herein
               will be furnished at a reasonable cost to any person who was a
               BMC stockholder as of March 24, 1999, upon receipt from 


                                       15
<PAGE>

               any such person of a written request for any exhibit. Requests
               should be sent to Investor Relations Department, BMC Industries,
               Inc., One Meridian Crossings, Suite 850, Minneapolis, MN 55423.

               The following is a list of each management contract or
               compensatory plan or arrangement required to be filed as an
               exhibit to this Form 10-K pursuant to Item 14(c):

               a)       1984 Omnibus Stock Program, as amended effective
                        December 19, 1989 (incorporated by reference to
                        Exhibit 10.1 of the Company's Annual Report on Form 10-K
                        for the year ended December 31, 1989 (File No. 1-8467)).

               b)       1997 Management Incentive Bonus Plan Summary 
                        (incorporated by reference to Exhibit 10.1 to the 
                        Company's Form 10-Q for the quarter ended March 31, 1997
                        (File No. 1-8467)).

               c)       1999 Management Incentive Bonus Plan Summary 
                        (filed herewith as Exhibit 10.3).

               d)       Revised Executive Perquisite/Flex Policy (effective as
                        of January 1, 1998) (filed herewith as Exhibit 10.4).

               e)       Restated and Amended Directors' Deferred Compensation
                        Plan (incorporated by reference to Exhibit 10.15 to the
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1996 (File No. 1-8467)).

               f)       Form of Change of Control Agreement entered into between
                        the Company and Messrs. Burke and Wright (incorporated
                        by reference to Exhibit 10.31 to the Company's Annual
                        Report on Form 10-K for the year ended December 31, 1991
                        (File No. 1-8467)).

               g)       Form of Change of Control Agreement entered into between
                        the Company and Messrs. Dobson, Guernsey, Hattara and 
                        Opdahl (incorporated by reference to Exhibit 10.47 to 
                        the Company's Annual Report on Form 10-K for the year 
                        ended December 31, 1997 (File No. 1-8467)).

               h)       1994 Stock Incentive Plan (incorporated by reference to
                        Exhibit 10.12 to the Company's Annual Report on Form
                        10-K for the year ended December 31, 1993 (File
                        No. 1-8467)).

               i)       Amendment No. 1 to the 1994 Stock Incentive Plan
                        (incorporated by reference to Exhibit 10.3 to the 
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 30, 1996 (File No. 1-8467)).

               j)       Amendment No. 2 to the 1994 Stock Incentive Plan
                        (incorporated by reference to Exhibit 10.2 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended September 30, 1997 (File No. 1-8467)).

               k)      BMC Stock Option Exercise Loan Program, as amended
                        June 12, 1998 (incorporated herein by reference to
                        Exhibit 10.4 of the Company's Quarterly Report on
                        Form 10-Q for the quarter ended June 30, 1998 (File
                        No. 1-8467)).


                                       16
<PAGE>

               l)      Employment Severance Agreement by and between the
                        Company and Jeffrey J. Hattara, dated January 26, 1998
                        (incorporated by reference to Exhibit 10.48 of the
                        Company's Annual Report on Form 10-K for the year ended
                        December 31, 1997 (File No. 1-8467)).

               m)      Employment Agreement by and between the Company and Paul
                        B. Burke, dated as of January 1, 1999 (filed herewith as
                        Exhibit 10.25).

               n)      BMC Industries, Inc. Executive Benefit Plan, effective
                        January 1, 1993 (filed herewith as Exhibit 10.11).

               o)      First Declaration of Amendment, effective September 1,
                        1998, to the BMC Industries, Inc. Executive Benefit Plan
                        (filed herewith as Exhibit 10.12).

(b)      REPORTS ON FORM 8-K

         The Company did not file any reports on Form 8-K during the quarter
         ended December 31, 1998.

(c)      EXHIBITS

         The response to this portion of Item 14 is submitted as a separate
         section of this report.

(d)      FINANCIAL STATEMENT SCHEDULES

         The response to this portion of Item 14 is submitted as a separate
         section of this report.


                                       17
<PAGE>

Schedule II Valuation and Qualifying Accounts
Years Ended December 31


(in thousands)

<TABLE>
<CAPTION>
                                               Additions
                               Balance        Charged to                          Translation         Balance
                             Beginning of      Costs and                         Adjustment and        End of
                                 Year          Expenses         Deductions           Other              Year
------------------------------------------------------------------------------------------------------------------
1998
------------------------------------------------------------------------------------------------------------------
<S>                                 <C>              <C>               <C>                 <C>            <C>
Allowance for doubtful
accounts                              $891             $438               $69                  $6          $1,266
Allowance for merchandise
returns                              1,227            1,856             1,735                  10           1,358
------------------------------------------------------------------------------------------------------------------
                                    $2,118           $2,294            $1,804                 $16          $2,624
------------------------------------------------------------------------------------------------------------------
Inventory reserves                  $7,421           $9,691            $4,494                $173         $12,791
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
1997
------------------------------------------------------------------------------------------------------------------
Allowance for doubtful
accounts                            $1,513             $321              $933               ($10)            $891
Allowance for merchandise
returns                                817            1,559             1,088                (61)           1,227
------------------------------------------------------------------------------------------------------------------
                                    $2,330           $1,880            $2,021               ($71)          $2,118
------------------------------------------------------------------------------------------------------------------
Inventory reserves                  $6,949           $1,049              $335              ($242)          $7,421
------------------------------------------------------------------------------------------------------------------

------------------------------------------------------------------------------------------------------------------
1996
------------------------------------------------------------------------------------------------------------------
Allowance for doubtful
accounts                            $1,863             $388              $730                ($8)          $1,513
Allowance for merchandise
returns                                773              930               857                (29)             817
------------------------------------------------------------------------------------------------------------------
                                    $2,636           $1,318            $1,587               ($37)          $2,330
------------------------------------------------------------------------------------------------------------------
Inventory reserves                  $3,815           $3,040              $161                $255          $6,949
------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       18
<PAGE>

                                   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 March
31, 1999, on its behalf by the undersigned, thereunto duly authorized.

                                       BMC INDUSTRIES, INC.

                                       By:   /s/ Jeffrey J. Hattara
                                          ----------------------------------
                                             Jeffrey J. Hattara
                                             Vice President of Finance and
                                               Administration and Chief
                                               Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below on March 31, 1999, by the following persons on behalf of
the registrant and in the capacities indicated.

          Signature                             Title

/s/ Paul B. Burke
------------------------------------            Chairman of the Board, President
 Paul B. Burke                                  and Chief Executive Officer
                                                (Principal Executive Officer)

/s/ Jeffrey J. Hattara
------------------------------------            Vice President of Finance and
Jeffrey J. Hattara                              Administration and Chief
                                                Financial Officer (Principal
                                                Financial  Officer)

/s/ Steven E. Opdahl
------------------------------------            Corporate Controller (Principal
Steven E. Opdahl                                Accounting Officer)

/s/ Lyle D. Altman
------------------------------------            Director
Lyle D. Altman

/s/ John W. Castro
------------------------------------            Director
John W. Castro

/s/ H. Ted Davis
------------------------------------            Director
H. Ted Davis

/s/ Joe E. Davis
------------------------------------            Director
Joe E. Davis

/s/ Harry A. Hammerly
------------------------------------            Director
Harry A. Hammerly

/s/ James M. Ramich
------------------------------------            Director
James M. Ramich


                                       19
<PAGE>

                              BMC Industries, Inc.
                  Exhibit Index to Annual Report on Form 10-K
                      For the Year Ended December 31, 1998

<TABLE>
<CAPTION>
Exhibit No.                                          Exhibit Method of Filing
-----------                                          ------------------------
<S>           <C>                                <C>
   2.1        Asset Purchase Agreement,          Incorporated by reference to Exhibit
              dated as of March 25, 1998,        2.1 to the Company's Current Report on
              between Monsanto Company and       Form 8-K dated March 25, 1998 and 
              VIS-ORC, Inc.                      filed with the Commission on April 3,
                                                 1998 (File No. 1-8467).

   2.2        Amendment No. 1 to the Asset       Incorporated by reference to the 
              Purchase Agreement, dated as       Company's Current Report on Form 8-K
              of May 15, 1998, between           dated May 15, 1998 and filed with the
              Monsanto Company and               Commission on May 29, 1998 (File No.
              Vision-Ease Lens Azusa, Inc.,      1-8467).
              f/k/a VIS-ORC, Inc.

   3.1        Second Restated Articles           Incorporated by reference to Exhibit
              of Incorporation of the            3.1 to the Company's Annual Report on
              Company, as amended.               Form 10-K for the year ended December
                                                 31, 1994 (File No. 1-8467).

   3.2        Amendment to the Second            Incorporated by reference to Exhibit
              Restated Articles of               3.2 to the Company's Annual Report on
              Incorporation, dated May 8,        Form 10-K for the year ended December
              1995.                              31, 1994 (File No. 1-8467).

   3.3        Amendment to the Second            Incorporated by reference to Exhibit
              Restated Articles of               3.1 to the Company's quarterly report
              Incorporation, dated October       on Form 10-Q for the quarter ended
              30, 1995.                          September 30, 1995 (File No. 1-8467).

   3.4        Amendment to the Second            Filed electronically herewith.
              Restated Articles of
              Incorporation, dated
              August 7, 1998

   3.5        Restated Bylaws of the             Incorporated by reference to Exhibit
              Company, as amended.               3.4 to the Company's Annual Report on
                                                 Form 10-K for the year ended December
                                                 31, 1994 (File No. 1-8467).
</TABLE>


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<TABLE>
<S>           <C>                                <C>
   3.6        Amendment to the Restated          Incorporated by reference to Exhibit
              Bylaws of the Company.             3.5 to the Company's Annual Report on
                                                 Form 10-K for the year ended December
                                                 31, 1997 (File No. 1-8467).

   3.7        Amendment to the Restated          Filed electronically herewith.
              Bylaws of the Company, dated
              February 20, 1998

   4.1        Specimen Form of the               Incorporated by reference to Exhibit
              Company's Common Stock             4.3 to the Company's Registration
              Certificate.                       Statement on Form S-2 (File No.
                                                 2-83809).

   4.2        Form of Share Rights Agreement,    Incorporated by reference to Exhibit 1
              dated as of June 30, 1998,         to the Company's Registration Statement
              between the Company and Norwest    on Form 8-A, dated July 14, 1998.
              Bank, National Association, as
              Rights Agent.

   10.1       1984 Omnibus Stock Program,        Incorporated by reference to Exhibit
              as amended effective December      10.1 to the Company's Annual Report on
              19, 1989.                          Form 10-K for the year ended December
                                                 31, 1989 (File No. 1-8467).

   10.2       1997 Management Incentive          Incorporated by reference to Exhibit
              Bonus Plan Summary.                10.1 to the Company's Quarterly Report
                                                 on Form 10-Q for the quarter ended
                                                 March 31, 1997 (File No. 1-8467).

   10.3       1999 Management Incentive          Filed electronically herewith.
              Bonus Plan Summary.

   10.4       Revised Executive
              Perquisite/Flex Policy             Filed electronically herewith.
              (effective as of January 1,
              1998).

   10.5       BMC Savings and Profit             Filed electronically herewith.
              Sharing Plan, restated,
              effective September 1, 1998.
</TABLE>


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<S>           <C>                                <C>
   10.6       Restated and Amended               Incorporated by reference to Exhibit
              Directors' Deferred                10.15 to the Company's Annual Report
              Compensation Plan.                 on Form 10-K for the year ended
                                                 December 31, 1996 (File No. 1-8467).

   10.7       1994 Stock Incentive Plan.         Incorporated by reference to Exhibit
                                                 10.12 to the Company's Annual Report
                                                 on Form 10-K for the year ended
                                                 December 31, 1993 (File No. 1-8467).

   10.8       First Declaration of               Incorporated by reference to Exhibit
              Amendment to the BMC               10.3 to the Company's Quarterly Report
              Industries, Inc. 1994 Stock        on Form 10-Q for the quarter ended
              Incentive Plan.                    June 30, 1996 (File No. 1-8467).

   10.9       Second Declaration of              Incorporated by reference to Exhibit
              Amendment, dated August 8,         10.2 to the Company's Quarterly Report
              1997, to the BMC Industries,       on Form 10-Q for the quarter ended
              Inc. 1994 Stock Incentive          September 30, 1997 (File No. 1-8467).
              Plan.

   10.10      BMC Stock Option Exercise          Incorporated by reference to exhibit
              Loan Program, as Amended June      10.4 to the Company's Quarterly Report
              12, 1998.                          on Form 10-Q for the quarter ended
                                                 June 30, 1998 (File No. 1-8467).

   10.11      BMC Industries, Inc.               Filed electronically herewith.
              Executive Benefit Plan,
              effective January 1, 1993.

   10.12      First Declaration of               Filed electronically herewith.
              Amendment to the BMC
              Industries Executive Benefit
              Plan, effective September 1,
              1998.

   10.13      Lease Agreement, dated             Incorporated by reference to Exhibit
              November 20, 1978, between         10.9 to the Company's Registration
              Control Data Corporation and       Statement on Form S-2 (File No.
              the Company.                       2-79667).
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                                      22
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<S>           <C>                                <C>
   10.14      Amendment to Lease Agreement,      Incorporated by reference to Exhibit
              dated December 27, 1983,           10.24 to the Company's Annual Report
              between Control Data               on Form 10-K for the year ended
              Corporation and the Company.       December 31, 1983 (File No. 1-8467).

   10.15      Amendment to Lease Agreement,      Incorporated by reference to Exhibit
              dated April 9, 1986, between       10.15 to the Company's Annual Report
              Control Data Corporation and       on Form 10-K for the year ended
              the Company.                       December 31, 1987 (File No. 1-8467).

   10.16      Amendment to Lease Agreement,      Incorporated by reference to Exhibit
              dated April 12, 1989, between      10.14 to the Company's Annual Report
              GMT Corporation (as successor      on Form 10-K for the year ended
              in interest to Control Data        December 31, 1989 (File No. 1-8467).
              Corporation) and the Company.

   10.17      Amendment to Lease Agreement,      Incorporated by reference to Exhibit
              dated March 19, 1990, between      10.15 to the Company's Annual Report
              GMT Corporation and the            on Form 10-K for the year ended
              Company.                           December 31, 1989 (File No. 1-8467).

   10.18      Amendment to Lease Agreement,      Incorporated by reference to Exhibit
              dated May 17, 1993, between        10.20 to the Company's Annual Report
              GMT Corporation and the            on Form 10-K for the year ended
              Company.                           December 31, 1993 (File No. 1-8467).

   10.19      Amendment of Lease, dated          Incorporated by reference to Exhibit
              April 6, 1994 by and between       10.23 to the Company's Annual Report
              GMT Corporation and the            on Form 10-K for the year ended
              Company.                           December 31, 1994 (File No. 1-8467).

   10.20      Waiver of Condition                Incorporated by reference to Exhibit
              Precedent, dated July 29,          10.24 to the Company's Annual Report
              1994, by and between GMT           on Form 10-K for the year ended
              Corporation and the Company.       December 31, 1994 (File No. 1-8467).
</TABLE>


                                       23
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<S>           <C>                                <C>
   10.21      Amendment of Lease, dated          Incorporated by reference to Exhibit
              September 25, 1997 by and          10.34 to the Company's Annual Report
              between GMT Corporation and        on Form 10-K for the year ended
              the Company.                       December 31, 1997 (File No. 1-8467).

   10.22      Form of Change of Control          Incorporated by reference to Exhibit
              Agreement entered into             10.31 to the Company's Annual Report
              between the Company and            on Form 10-K for the year ended
              Messrs. Burke and                  December 31, 1991 (File No. 1-8467).
              Wright.

   10.23      Form of Change of Control          Incorporated by reference to Exhibit
              Agreement entered into             10.47 to the Company's Annual Report
              between the Company and            on Form 10-K for the year ended
              Messrs. Dobson, Guernsey,          December 31, 1997 (File No. 1-8467).
              Hattara and Opdahl.

   10.24      Employment Severance               Incorporated by reference to Exhibit
              Agreement by and between the       10.48 to the Company's Annual Report
              Company and Jeffrey J.             on Form 10-K for the year ended
              Hattara, dated January 26,         December 31, 1997 (File No. 1-8467).
              1998.

   10.25      Employment Agreement by and        Filed electronically herewith
              between the Company and Paul
              B. Burke, dated as of 
              January 1, 1999.

   10.26      Commitment letter, dated           Incorporated by reference to Exhibit
              March 24, 1998, from BT Alex.      10.1 to the Company's Quarterly Report
              Brown for an unsecured             on Form 10-Q for the quarter ended
              revolving credit facility          March 30, 1998 (File No. 1-8467).
              totaling $275 million.

   10.27      Credit Agreement, dated as of      Incorporated by reference to Exhibit
              May 15, 1998, between the          10.1 to the Company's Quarterly Report
              Company, Bankers Trust             on Form 10-Q for the quarter ended
              Company as Administrative          June 30, 1998 (File No. 1-8467).
              Agent, NBD Bank as
              Documentation Agent and
              Various Lending Institutions.
</TABLE>


                                       24
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<TABLE>
<S>           <C>                                <C>
   10.28      Amended and Restated Credit        Incorporated by reference to Exhibit
              Agreement, dated as of June        10.2 to the Company's Quarterly Report
              25, 1998, among the Company,       on Form 10-Q for the quarter ended
              Several Banks, Bankers Trust       June 30, 1998 (File No. 1-8467).
              Company as the Agent and a
              Lender and NBD Bank as
              Documentation Agent and a
              Lender.

   10.29      Amendment No. 1 to Amended         Incorporated by reference to Exhibit
              and Restated Credit                10.3 to the Company's Quarterly Report
              Agreement, dated as of July        on Form 10-Q for the quarter ended
              23, 1998, among the Company,       June 30, 1998 (File No. 1-8467).
              Several Banks, Bankers Trust
              Company as Agent and a
              Lender, NBD Bank as
              Documentation Agent and a
              Lender.

   10.30      Amendment No. 2  to Amended        Filed electronically herewith.
              and Restated Credit Agreement,
              dated as of December 30, 1998,
              among the Company, Several Banks,
              Bankers Trust Company as Agent
              and a Lender, NBD Bank as
              Documentation Agent and a
              Lender.

   10.31      Product Manufacturing and          Incorporated by reference to Exhibit
              Sales Agreement, dated             10.36 to the Company's Annual Report
              October 17, 1994, between          on Form 10-K for the year ended
              Polycore Optical, PTE. Ltd.        December 31, 1994 (File No. 1-8467).
              and Vision-Ease, a unit of
              the Company, without exhibits.

   10.32      Amendment of the Product           Incorporated by reference to Exhibit
              Manufacturing and Sales            10.1 to the Company's Quarterly Report
              Agreement, dated August 11,        on Form 10-Q for the quarter ended
              1997, between Polycore             September 30, 1997 (File No. 1-8467).
              Optical, PTE, Ltd. and
              Vision-Ease Lens, Inc.
</TABLE>


                                       25
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<S>           <C>                                <C>
   10.33      Lease, dated October 29,           Incorporated by reference to Exhibit
              1997, by and among the             10.3 to the Company's quarterly Report
              Company and Meridian               on Form 10-Q for the quarter ended
              Crossings LLC (d/b/a Told          September 30, 1997 (File No. 1-8467).
              Development Company).

   13.1       Portions of the Company's          Filed electronically herewith.
              1998 Annual Report to
              Stockholders incorporated
              herein by reference in this
              Annual Report on Form 10-K.

   21.1       Subsidiaries of the                Filed electronically herewith.
              Registrant.

   23.1       Consent of Ernst & Young LLP,      Filed electronically herewith.
              Independent Auditors.

   27.1       Financial Data Schedule            Filed electronically herewith.

   99.1       Press Release, dated December      Filed electronically herewith.
              11, 1998, announcing
              quarterly dividend.

   99.2       Press Release, dated February      Filed electronically herewith.
              1, 1999, announcing fourth
              quarter 1998 results.

   99.3       Press Release, dated February      Filed electronically herewith.
              24, 1999, announcing filing of
              antidumping petition against
              certain aperture masks from
              Japan and South Korea.

   99.4       Press Release, dated March         Filed electronically herewith.
              11, 1999 announcing quarterly
              dividend.
</TABLE>


                                       26