BMC Industries, Inc. Reports Third-Quarter and Nine-Month 2002 Results.Business Editors MINNEAPOLIS--(BUSINESS WIRE)--Oct. 31, 2002 BMC (BMC Software, Inc., Houston, TX, www.bmc.com) A leading supplier of software that supports and improves the availability, performance, and recovery of applications in complex computing environments. Industries, Inc. (NYSE NYSE See: New York Stock Exchange :BMM BMM Baptist Mid Missions BMm Bachelor of Multimedia BMM Bachelor of Mass Media BMM Borrowed Military Manpower BMM Brigade Mixte Mobile (Mixed Mobile Brigade, Cameroon) BMM Broadcast-Based Multimedia BMM Bit Map Memory ): -- Third-Quarter Financial Results Consistent With Previous Guidance. -- Performance Improvement Expected In The Fourth-Quarter With A Return To Profitability In 2003. BMC Industries, Inc. (NYSE:BMM) today announced financial results for the third-quarter and nine-months ended September September: see month. 30, 2002. Results are consistent with guidance provided on the company's second-quarter conference call on July July: see month. 30, 2002. Financial Results For the third-quarter 2002, the company reported consolidated revenues of $57.4 million, down 22 percent from the $73.3 million in third-quarter 2001. The company incurred a net loss of $4.2 million, or $0.16 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to a net loss of $4.1 million, or $0.15 per diluted share, in the third-quarter one year ago. Third-quarter 2001 results included goodwill amortization expense (which has been eliminated as a result of the company adopting FAS 142). For comparative purposes and adjusting third-quarter 2001 results for this charge, the company's third-quarter 2001 pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net loss was $3.8 million, or $0.14 per diluted share. For the nine-months ended September 30, 2002, consolidated revenues were $193.2 million, a decrease of 19 percent from the $237.8 million reported for the same period in 2001. Including the effects of several non-recurring items, recognized in the first-quarter 2002, the company incurred a net loss of $61.4 million, or $2.28 per share, for the first nine-months of 2002. This compares to a net loss of $9.6 million, or $0.35 per share, for the same period in 2001. Excluding these non-recurring items, the company's pro forma net loss for the first nine-months of 2002 was $9.1 million, or $0.34 per share. This compares to pro forma net earnings, adjusted for comparative purposes, of $0.7 million, or $0.03 per share, in the first nine-months of 2001. Management Commentary "In the third-quarter, we continued to take steps to take action; to move in a matter. See also: Step to strengthen our businesses and return the company to profitability," said Douglas C. Hepper, chairman, president and chief executive officer of BMC Industries. "Our Buckbee-Mears group delivered results consistent with our internal expectations, as we work to right-size that business for current market conditions." "At Vision-Ease, we have weathered a string of problems related to consolidating production into our two remaining facilities. These problems resulted in service interruptions to our customers and adversely affected sales." "Our efforts are intensely focused on restoring confidence in our service, and taking full advantage of an improving cost structure and our aggressive product development program to provide the market with the very best polycarbonate A category of plastic materials used to make a myriad of products, including CDs and CD-ROMs. lens value possible. Those efforts are showing results. Currently, we have succeeded in restoring our product fill rates to excellent levels. And, with implementation of a new integrated planning In amphibious operations, the planning accomplished by commanders and staffs of corresponding echelons from parallel chains of command within the amphibious task force. See also amphibious operation; amphibious task force. system in the first half of 2003, we expect to have the technology support to move our service performance to historically high levels." "Finally, continuing improvements in manufacturing performance are increasing lens product margins, and product development initiatives will result in several new products by mid- mid- pref. Middle: midbrain. 2003." Hepper continued, "At the same time, we continue to strengthen the financial health and infrastructure of BMC. In August, we discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: our common stock dividend. This decision was consistent with our stated objective of reducing debt and devoting all available cash to growing the businesses and creating long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. shareholder value." "In September, we reached agreement with our lenders on an amendment to our existing senior credit facility. This agreement extended the facility to May 2004 and reduced its aggregate size to $145 million. As a result, we reclassified the majority of our debt back to long-term status and increased our financial flexibility. BMC's total debt as of September 30, 2002 was $113.3 million, up $2.2 million from June 30, 2002, but down $28.9 million from December 31, 2001. Looking ahead, we expect a slight reduction in debt in the fourth-quarter and we expect our blended interest rate to increase approximately 2.00 percentage points over the next year as a result of this amendment." "Earlier this month, we announced that we had entered into an agreement to settle the shareholder derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. lawsuit lawsuit: see procedure; tort. . While we continue to believe the lawsuit was without merit, the settlement allowed us to focus our full attention on profitably growing our businesses. Also this month, we appointed three talented individuals to our board of directors. Speaking for the management team, we look forward to working with Robert Endacott, Morris Goodwin, Jr., and Alan Longstreet." Buckbee-Mears Group Third-Quarter Operating Highlights Third-quarter 2002 revenues for the Buckbee-Mears group were $31.8 million, a decrease of $7.9 million, or 20 percent, from $39.7 million in the third-quarter of 2001. Overall group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. were down versus last year's third quarter due primarily to BMC's exiting the computer monitor mask business segment. Computer monitor mask sales account for $6.1 million of this quarter's sales decline. Sales revenues from television masks were down 3 percent compared to last year's third quarter due to year-over-year price pressures and a shift in sales from higher-priced invar masks to lower-priced masks. The Buckbee-Mears group reported operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before of $2.2 million during third-quarter 2002, as compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $3.9 million in the third-quarter of 2001. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for third-quarter 2002 was 6.8 percent, as compared to an operating margin loss of 9.8 percent in third-quarter 2001. The group's third-quarter 2001 operating earnings, however, were negatively impacted by costs associated with reduced manufacturing activity and workforce reduction efforts during the third quarter of last year at both its Cortland, New York This article is about the city in Cortland County, New York. For Cortlandt, New York in Westchester County, see Cortlandt, New York. Cortland is a city in Cortland County, New York, USA. As of the 2000 census, the city had a population of 18,740. and Mullheim, Germany facilities. During the third-quarter of 2002, the company announced that it had initiated arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the proceedings in an international arbitration International arbitration is the established method today for resolving disputes between parties to international commercial agreements. As with arbitration generally, it is a creature of contract, i.e. institute against China-based China National Electronics Import and Export Corp. ("CEIEC") and Yantai Zhenghai Electronic Shadow Mask A thin screen full of holes that adheres to the back of a color CRT's viewing glass. The electron beam is aimed through the holes in the mask onto the phosphor dots. There are generally more holes per inch than the maximum resolution obtainable from that monitor. See slot mask. Co., Ltd. ("Yantai"). The company seeks monetary damages Monetary damages, in civil law, refers to compensation given to an injured party by a liable party. Monetary damages may be restitution, a penalty, or both. and injunctive relief injunctive relief n. a court-ordered act or prohibition against an act or condition which has been requested, and sometimes granted, in a petition to the court for an injunction. for alleged violations by Yantai of multiple terms of a license agreement between CEIEC, Yantai and the company's Buckbee-Mears Group. This action followed shortly after the company's favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. settlement of litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. against a German company for its unauthorized use of BMC's proprietary technology, in which the company succeeded in obtaining monetary damages for past infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. actions and a court mandated damage award in the event of any future infringement, as well as recognition of the proprietary nature of BMC's technology. Revenues from non-mask operations were down $0.7 million quarter-over-quarter with this business segment posting a slight operating loss. During the quarter, the group announced that it would move its electroforming Electroforming is a highly specialized process of metal part fabrication using electrodeposition in a plating bath over a base form or mandrel which is subsequently removed. operations from St. Paul St. Paul as a missionary he fearlessly confronts the “perils of waters, of robbers, in the city, in the wilderness.” [N.T.: II Cor. 11:26] See : Bravery , Minnesota to its facility in Cortland, New York with the goal of being fully operational by the end of January 2003. When completed, the company expects the electroforming business to return to profitability. This decision is in addition to other non-mask restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives, including the sale of the non-strategic, sheet-etching portion of this business segment and the discontinuing of company operations in St Paul and closure of the St. Paul facility in 2003. Optical Products Group Third-Quarter Operating Highlights Total Optical Products group third-quarter 2002 revenues were $25.6 million, down $8.0 million, or 24 percent, as compared to revenues in third-quarter 2001. Total polycarbonate lens sales declined $3.2 million as compared to third-quarter 2001. Polycarbonate production problems hampered the group's ability to fully meet customer demand, constraining con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. sales. Lower-margin, plastic lens sales declined $2.6 million. Glass lens sales declined $0.8 million, as the market for this lens material continues to contract worldwide. Despite the overall sales weakness, Vision-Ease experienced demand consistent with last year's third-quarter in several key premium polycarbonate product categories, including its Tegra(R)-coated and photochromic Pho`to`chro´mic a. 1. Of or pertaining to photochromy; produced by photochromy. polycarbonate lenses. The company's sales in the third-quarter also benefited somewhat from the recent introduction of two new film-based products in association with a major retail customer. The first of these products, announced in April, was an anti-reflective, mirror-coated polycarbonate sun lens. These prescription, polarized A one-way direction of a signal or the molecules within a material pointing in one direction. sunglass sun·glass n. 1. A convex lens used to focus the sun's rays and produce heat, especially for ignition. 2. sunglasses Eyeglasses with tinted or polarizing lenses to protect the eyes from the sun's glare. lenses, available in a variety of mirror-coatings, offer customers extra glare reduction as well as the latest fashion look. The other new product, announced in August, is a new proprietary polycarbonate-polarized sun lens utilizing a unique melanin-based film. These polarized melanin melanin (mĕl`ənĭn), water-insoluble polymer of various compounds derived from the amino acid tyrosine. It is one of two pigments found in human skin and hair and adds brown to skin color; the other pigment is carotene, which contributes sun lenses are the latest innovation in prescription sun lens technology, and combine the unique light-absorbing properties of melanin with Vision-Ease's patented polarization polarization Property of certain types of electromagnetic radiation in which the direction and magnitude of the vibrating electric field are related in a specified way. process for superior protection from the sun's harmful rays and enhanced visual comfort. Vision-Ease expects the positive trends for these products to accelerate in coming quarters. The group also intends to introduce several more new products in 2003, utilizing Vision-Ease's demonstrated expertise in lens design and processing technology. The Optical Products group reported a third-quarter 2002 operating loss of $0.1 million versus an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. of $2.2 million in third-quarter 2001. The decline was primarily due to lower sales of higher-margin polycarbonate lenses, and increased domestic polycarbonate manufacturing costs. Partially offsetting these items was continued strong performance from the group's Indonesian manufacturing facility, which continues to increase its polycarbonate production and substantially reduce product costs. BMC Business Outlook The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially from those projected in this news release. The company's outlook remains consistent with guidance previously issued by BMC in July 2002. For the year ended December 31, 2002, BMC expects to report a consolidated net loss of between $2.30 and $2.40 per diluted share, primarily as a result of the company exiting the computer monitor mask business and segments of its non-mask business, isolated polycarbonate manufacturing issues and product shortages, and overall restructuring efforts in both businesses. Excluding certain non-recurring items and before the cumulative effect of an accounting change, the company expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. a pro forma net loss of between $0.30 and $0.40 per diluted share. Completion of the company's various restructuring efforts is decreasing product and operating costs operating costs npl → gastos mpl operacionales throughout the organization and should allow the company to regain profitability in 2003. About BMC Industries BMC Industries, founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products. The Buckbee-Mears group offers a range of services and manufacturing capabilities to meet the most demanding precision metal manufacturing needs. The group is a leading producer of a variety of precision photo-etched and electroformed components that require fine features and tight tolerances. The group is also the only North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. manufacturer of aperture An orifice. It often refers to an opening in which light is allowed to pass in optical systems such as cameras and lasers. See f-stop and numerical aperture. masks, a key component in color television picture tubes. The Optical Products group, operating under the Vision-Ease Lens trade name, is a leading designer, manufacturer and distributor of polycarbonate, glass and plastic eyewear eye·wear n. 1. Eyeglasses, goggles, or other objects worn over the eyes. 2. Fashionable eyeglasses. lenses. Vision-Ease is a technology and market share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet An invisible band of radiation at the upper end of the visible light spectrum. With wavelengths from 10 to 400 nm, ultraviolet starts at the end of visible light and ends at the beginning of X-rays. The primary source of ultraviolet light is the sun. (UV) filtering and impact resistant characteristics. BMC Industries, Inc. is traded on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. under the ticker symbol Ticker Symbol An arrangement of characters (usually letters) representing a particular security listed on an exchange or otherwise traded publicly. When a company issues securities to the public marketplace, it selects an available ticker symbol for its securities which investors "BMM." For more information about BMC Industries, Inc., visit the Company's Web site at www.bmcind.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. for Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This news release contains various "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are intended to be covered by the safe harbors created thereby. Statements made in this news release that are not statements of historical facts, including statements regarding future performance, are Forward-Looking Statements. Forward-Looking Statements may be identified by the use of words such as "anticipates", "estimates", "expects", "forecasts", "projects", "intends", "plans", "predicts", and similar expressions. Forward-Looking Statements are subject to a number of risks and uncertainties that could cause, and in certain instances have caused, actual results or outcomes to differ materially from those projected, including, among others, ability to manage working capital and align align (  līn),v to move the teeth into their proper positions to conform to the line of occlusion. costs with market conditions; ability to maintain consistently high product fill rates at Vision-Ease; ability to increase sales of products at Vision-Ease; eventual outcome of the company's outstanding litigation; further aperture mask price declines; slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in growth of, or price reductions in, high-end lens products; fluctuations in currency exchange rates; rising raw material costs; ability to improve operating and manufacturing efficiencies through consolidation of facilities. These and other risks and uncertainties are discussed in further detail in BMC's Annual Report and Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001 and other documents filed with the Securities and Exchange Commission. Investor Conference Call Information ------------------------------------ Thursday, October 31, 2002 10:00 a.m. Central Time (11:00 a.m. Eastern Time) Call-in Number: 800-288-8974 (U.S.) or 612-332-0418 (International) Replay Number: 800-475-6701 (U.S.) or 320-365-3844 (International) Replay Access Code: 656017 The rebroadcast of the conference call will be available starting at 1:30 p.m. Central Time, October 31, 2002 through 11:59 p.m. Central Time, November 7, 2002. The conference call will also be offered live, through a simulcast offered by CCBN CCBN Central Coast Bancorp CCBN Charles County Business Network .com and StreetEvents.com. To access this Webcast, go to the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " portion of the Company's Web site, www.bmcind.com, click on "Conference Calls" and then click on the CCBN icon.
BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
-------------------------------------
2002 2001 2002 2001
----------------------------------------------------------------------
Revenues $57,390 $73,339 $193,180 $237,819
Cost of products sold 52,176 70,786 177,084 211,853
----------------------------------------------------------------------
Gross margin 5,214 2,553 16,096 25,966
Selling 3,176 4,209 10,174 13,576
Administrative 1,484 1,042 4,736 3,798
Non-recurring charges - - 2,800 -
----------------------------------------------------------------------
Income (loss) from operations 554 (2,698) (1,614) 8,592
----------------------------------------------------------------------
Other income and (expense)
Interest expense (2,427) (3,014) (7,626) (8,804)
Interest income 67 63 172 388
Other income (expense) (166) (509) 2,478 525
----------------------------------------------------------------------
Earnings (loss) before income
taxes and accounting change (1,972) (6,158) (6,590) 701
Income tax expense (benefit) 2,213 (2,012) 2,078 10,252
----------------------------------------------------------------------
Earnings (loss) before accounting
change (4,185) (4,146) (8,668) (9,551)
Accounting change - - 52,704 -
----------------------------------------------------------------------
Net earnings (loss) $(4,185)$(4,146)$(61,372) $(9,551)
======================================================================
Basic and diluted earnings (loss)
per share:
Before cumulative effect of
accounting change $(0.16) $(0.15) $(0.32) $(0.35)
Cumulative effect of accounting
change - - (1.96) -
----------------------------------------------------------------------
Net earnings (loss) (0.16) (0.15) (2.28) (0.35)
======================================================================
Number of shares included in per
share computation:
Basic and diluted 26,951 27,101 26,928 27,296
======================================================================
Dividends declared per share $- $0.0150 $0.0050 $0.0450
======================================================================
BMC INDUSTRIES, INC.
PRO FORMA NET EARNINGS/(LOSS) CALCULATION
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------------
2002 2001 2002 2001
----------------------------------------------------------------------
Reported net earnings (loss) $(4,185)$(4,146)$(61,372)$(9,551)
Adoption of FAS 142 (a) - 304 52,704 913
Gain on sale of non-core assets
(a) - - (2,205) (630)
Non-recurring charges (a) - - 1,764 -
Tax valuation reserve adjustment - - - 10,000
----------------------------------------------------------------------
Pro forma net earnings (loss) (4,185) (3,842) (9,109) 732
Number of shares used in diluted
EPS 26,951 27,101 26,928 27,438
----------------------------------------------------------------------
Pro forma diluted EPS $(0.16) $(0.14) $(0.34) $0.03
----------------------------------------------------------------------
(a) Assumes tax at the Company's estimated incremental tax rate of
37%, rather than the financial statement effective tax rate,
except for the $52,704 FAS 142 accounting change for which no tax
benefit was assumed.
BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(Unaudited)
Sept. 30, Dec. 31,
ASSETS 2002 2001
----------------------------------------------------------------------
Current assets
Cash and cash equivalents $1,339 $1,941
Trade accounts receivable, net 29,884 35,024
Inventories 55,634 71,634
Deferred income taxes 7,973 10,250
Other current assets 4,849 4,197
----------------------------------------------------------------------
Total current assets 99,679 123,046
----------------------------------------------------------------------
Property, plant and equipment 271,914 281,916
Less accumulated depreciation 150,762 150,375
----------------------------------------------------------------------
Property, plant and equipment, net 121,152 131,541
----------------------------------------------------------------------
Deferred income taxes 4,942 7,166
Intangibles assets, net 9,103 62,069
Other assets 6,356 7,924
----------------------------------------------------------------------
Total assets $241,232 $331,746
======================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------------------------------
Current liabilities
Short-term borrowings $707 $854
Current portion long-term debt 13,000 -
Accounts payable 21,841 19,707
Income taxes payable 2,969 7,532
Accrued expenses and other current liabilities 20,446 24,700
----------------------------------------------------------------------
Total current liabilities 58,963 52,793
----------------------------------------------------------------------
Long-term debt 99,604 141,314
Other liabilities 21,320 19,526
Deferred income taxes 2,699 1,602
Stockholders' equity
Common stock 46,921 46,786
Retained earnings 20,472 81,979
Accumulated other comprehensive income (loss) (8,678) (12,180)
Other (69) (74)
----------------------------------------------------------------------
Total stockholders' equity 58,646 116,511
----------------------------------------------------------------------
Total liabilities and stockholders' equity $241,232 $331,746
======================================================================
BMC INDUSTRIES, INC.
SEGMENT INFORMATION
(Unaudited)
(in thousands, except percentages)
Three Months Ended September 30,
------------------------------------------------------
Buckbee-Mears Optical Products Consolidated
------------------------------------------------------
2002 2001 2002 2001 2002 2001
----------------------------------------------------------------------
Revenues $31,786 $39,719 $25,604 $33,620 $57,390 $73,339
Cost of products
sold 28,818 42,284 23,358 28,502 52,176 70,786
----------------------------------------------------------------------
Gross margin 2,968 (2,565) 2,246 5,118 5,214 2,553
Gross margin % 9.3% (6.5)% 8.8% 15.2% 9.1% 3.5%
Selling 807 1,332 2,369 2,877 3,176 4,209
Unallocated
corporate
administration - - - - 1,484 1,042
----------------------------------------------------------------------
Income (loss)
from operations $2,161 $(3,897) $(123) $2,241 $554 $(2,698)
======================================================================
Operating income
% 6.8% (9.8)% (0.5)% 6.7% 1.0% (3.7)%
Capital spending $1,827 $4,024
Depreciation and
amortization $5,086 $5,857
EBITDA $5,474 $2,650
EBITDA % 9.5% 3.6%
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