Brush Engineered Materials Inc. Reports First Quarter 2003 Sales Up 11% Over First Quarter 2002.Business Editors CLEVELAND--(BUSINESS WIRE)--April 24, 2003 Brush Engineered Materials Brush Engineered Materials Inc. is a multinational company specializing in high performance engineered materials emphasizing the qualities of strength, reliability, miniaturization and weight savings, thermal dissipation, electrical conductivity and reflectivity. Inc. (NYSE NYSE See: New York Stock Exchange :BW) today reported first quarter sales of $99.5 million, up 11% over the first quarter sales of 2002. The increase in sales was visible in both of the Company's business segments, Metal Systems and Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. . The strongest quarter-over-quarter growth was in the computer, data storage, automotive, optical media and defense markets. International sales were up 14% driven by strength in Asia and domestic sales were up 10%. Income (Loss) before income taxes improved by 55% or $3.4 million compared to the first quarter of the prior year. The significant improvement was driven by the higher sales, a favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mix and improvements in operating efficiencies. Gross margin as a percent of sales improved by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 6% compared to the first quarter of 2002. The loss before income taxes in the first quarter of 2003 was $2.8 million compared to a net loss of $6.2 million in the first quarter of 2002. Considering that approximately 6 percentage points of the 11% sales growth was due to precious metal prices, precious metal mix and currency, the 55% improvement in the Company's pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss is even more significant. The Company's 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. net loss per share comparison to prior year is affected by its accounting for income taxes. The net loss for the first quarter 2003 was $3.0 million or $0.18 per share diluted versus a net loss of $3.8 million or $0.23 per share diluted for the same period last year. In the fourth quarter of 2002, in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System No. 109 "Accounting for Income Taxes," the Company recorded a $19.9 million charge as part of income tax expense in 2002 to establish a valuation allowance for substantially all of its net deferred tax assets in recognition of uncertainty regarding full realization (specification) realization - A UML semantic relationship between a classifier that specifies a contract and another classifier that guarantees to carry it out. [Handout by Mr. David Gillibrand]. . The Company intends to maintain a valuation allowance on the net deferred tax assets until a realization event occurs to support reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of all or a portion of the reserve. Therefore, the Company's first quarter 2003 results include a tax provision of $0.2 million for certain foreign, state and local taxes but do not include a federal tax benefit. In the first quarter 2002 an income tax benefit of $2.4 million was recorded which reduced the net loss in that period. The net result of this $2.6 million change in taxes was to reduce the quarter-over-quarter after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. improvement to $0.8 million. Business Segment Reporting Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. Metal Systems Group The Metal Systems Group consists of Alloy alloy (ăl`oi, əloi`) [O. Fr.,=combine], substance with metallic properties that consists of a metal fused with one or more metals or nonmetals. Products, Technical Materials, Inc. (TMI TMI Too Much Information TMI Three Mile Island TMI TRMM Microwave Imager TMI Transactions on Medical Imaging TMI Texas Military Institute TMI Teen Missions International TMI Tauber Manufacturing Institute ) and Beryllium beryllium (bərĭl`ēəm) [from beryl ], metallic chemical element; symbol Be; at. no. 4; at. wt. 9.01218; m.p. about 1,278°C;; b.p. 2,970°C; (estimated); sp. gr. 1.85 at 20°C;; valence +2. Products. The Metal Systems Group's first quarter sales of $61.2 million were 9% above first quarter 2002 sales of $55.9 million. The first quarter 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 $3.4 million was an improvement of $5.1 million compared to the 2002 first quarter operating loss of $8.5 million. Alloy Products' sales of $40.4 million were 6% above 2002 first quarter sales of $38.3 million and 16% above 2002 fourth quarter sales of $34.8 million. The increase in sales is due to strength in the computer, automotive, appliance A stand-alone hardware device or software environment dedicated to a specific task. See hardware appliance and software appliance. and plastic tooling markets. In addition, Alloy benefited from inventory adjustments in the telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. supply chain. Alloy is making progress with the introduction of its new products including, Alloy 390, moldMAX XL(R) and ToughMet(R). These new materials are targeted at broadening broad·en tr. & intr.v. broad·ened, broad·en·ing, broad·ens To make or become broad or broader. broad product breadth Breadth The percentage of assets or stocks advancing relative to those unchanged or declining. Also the number of independent forecasts available per year. A stock picker forecasting returns to 100 stocks every quarter exhibits a breadth of 400, assuming each forecast is and opening up opportunities into other diverse markets. In addition, Alloy continues to make progress in reducing manufacturing operating costs operating costs npl → gastos mpl operacionales and increasing inventory turns. TMI first quarter 2003 sales of $11.9 million were 3% above first quarter 2002 and 25% above the fourth quarter of 2002. The sales increase was driven by strength in the automotive and computer markets. The computer market growth is coming predominately from Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. . Beryllium Products' first quarter 2003 sales of $8.8 million increased 44% compared to first quarter 2002 sales of $6.1 million and were 24% above fourth quarter 2002 sales. Beryllium Products has continued to experience strong sales fueled by the defense market. It is anticipated that this strength will continue through the second quarter of 2003. Microelectronics Group The Microelectronics Group includes Williams Advanced Materials Advanced Materials is a leading peer-reviewed materials science journal published every two weeks. Advanced Materials includes Communications, Reviews, and Feature Articles from the cutting edge of materials science, including topics in chemistry, physics, Inc. (WAM WAM - Intermediate language for compiled Prolog, used by the Warren Abstract Machine. "An Abstract Prolog Instruction Set", D.H.D. Warren, TR 309, SRI 1983. ) and Electronic Products. The Microelectronics Group's first quarter 2003 sales of $38.3 million were 14% above first quarter 2002 sales of $33.5 million. 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 $2.5 million was 15% above the first quarter of 2002. WAM first quarter 2003 sales of $30.5 million were 18% above the same period last year. The majority of the sales increase was due to precious metal prices and mix. WAM's value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. (which are sales less the cost of metal) was up 3% from the first quarter of 2002. WAM's strong sales have been driven primarily by optical media, data storage and packaging materials. Electronic Products' first quarter 2003 sales of $7.8 million were about flat with first quarter 2002 sales of $7.7 million. Segments of the wireless market served by Electronic Products are showing some signs of improvement. The reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. and 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). of Electronic Products announced earlier this year is already benefiting the profitability of this business unit. Outlook There continues to be a lack of visibility in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and computer markets as order entry lead times remain short. In addition, the automotive market is showing some signs of softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. . As a result, forecasting sales continues to be a challenge. However, order entry is stronger and the near-term near-term adj. Of, for, or involving a short period of time in the near future. outlook for international sales, particularly in Southeast Asia, remains strong. It is therefore anticipated that revenues for the second quarter of 2003 could improve up to 5% over the first quarter 2003 sales of $99.5 million. Chairman's Comments Commenting on the results, Gordon Gordon, river in W Tasmania, Australia, 125 mi (200 km) long. Flowing from mountains to the W coast, its main tributaries are the Franklin and Denison from the N, and Serpentine and Olga to the S. D. Harnett, Chairman, President and Chief Executive Officer, stated, "Evidence of progress was apparent in the first quarter results. Sales are up and we have continued to reduce our operating losses. The cost reduction initiatives and new product development efforts launched over the past two years are having an impact on our results and improving the Company's outlook. We continue to maintain our discipline in capital and overhead spending and are striving to achieve profitability in the near future." 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. Portions of the narrative set forth in this press release that are not statements of historical or current facts are forward-looking statements. The Company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: -- The global and domestic economy; -- The condition of the markets which the Company serves, whether defined geographically ge·o·graph·ic also ge·o·graph·i·cal adj. 1. Of or relating to geography. 2. Concerning the topography of a specific region. ge or by segment, with the major market segments being telecommunications and computer, optical media, automotive electronics, industrial components, aerospace and defense and appliance; -- Changes in product mix and the financial condition of particular customers; -- The Company's success in implementing its strategic plans and the timely and successful completion of pending capital expansion projects; -- The availability of adequate lines of credit and the associated interest rates; -- Other financial factors, including tax rates, exchange rates, pension costs, energy costs and the cost and availability of insurance; -- The uncertainties concerning the impact resulting from war or terrorist activities; -- Changes in government regulatory requirements Regulatory requirements are part of the process of drug discovery and drug development. Regulatory requirements describe what is necessary for a new drug to be approved for marketing in any particular country. and the enactment of new legislation that impacts the Company's obligations; and, -- The conclusion of pending 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. matters in accordance with the Company's expectation that there will be no material adverse effects. Brush Engineered Materials Inc. is headquartered in Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . The Company, through its wholly-owned subsidiaries, supplies worldwide markets with beryllium products, alloy products, electronic products, precious metal products, and engineered material systems.
Brush Engineered Materials Inc.
Digest of Earnings
March 28, 2003
2003 2002
------------ ------------
First Quarter 2003
Net Sales $99,518,000 $89,582,000
Net Loss ($3,016,000) ($3,834,000)
Share Earnings - Basic ($0.18) ($0.23)
Average Shares - Basic 16,561,430 16,554,667
Share Earnings - Diluted ($0.18) ($0.23)
Average Shares - Diluted 16,561,430 16,554,667
Consolidated Balance Sheets
(Unaudited)
Mar 28, Dec. 31,
(Dollars in thousands) 2003 2002
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $3,387 $4,357
Accounts receivable 58,980 47,543
Inventories 94,805 94,324
Prepaid expenses 8,830 9,766
Deferred income taxes 301 244
--------- ---------
Total Current Assets 166,303 156,234
Other Assets 25,350 25,629
Long-term deferred income taxes 529 472
Property, Plant and Equipment 477,960 476,283
Less allowances for depreciation,
depletion and impairment 328,810 323,739
--------- ---------
149,150 152,544
--------- ---------
$341,332 $334,879
========= =========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $23,166 $27,235
Accounts payable 21,966 15,129
Other liabilities and accrued items 31,183 30,439
Income taxes 976 786
--------- ---------
Total Current Liabilities 77,291 73,589
Other Long-Term Liabilities 16,507 17,459
Retirement and Post-employment Benefits 49,102 48,518
Long-term Debt 41,185 36,219
Shareholders' Equity 157,247 159,094
--------- ---------
$341,332 $334,879
========= =========
See notes to consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
First Quarter Ended
(Dollars in thousands except share and per March 28, March 29,
share amounts) 2003 2002
----------------------------------------------------------------------
Net sales $99,518 $89,582
Cost of sales 82,405 79,328
----------- -----------
Gross Margin 17,113 10,254
Selling, general and administrative
expenses 17,298 15,240
Research and development expenses 1,108 1,074
Other-net 829 (559)
----------- -----------
Operating Loss (2,122) (5,501)
Interest expense 689 733
----------- -----------
Loss before income taxes (2,811) (6,234)
Income taxes 205 (2,400)
----------- -----------
Net Loss $(3,016) $(3,834)
=========== ===========
Per Share of Common Stock: Basic $(0.18) $(0.23)
Weighted average number
of common shares outstanding 16,561,430 16,554,667
Per Share of Common Stock: Diluted $(0.18) $(0.23)
Weighted average number
of common shares outstanding 16,561,430 16,554,667
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 28, March 29,
(Dollars in thousands) 2003 2002
----------------------------------------------------------------------
Net Loss ($3,016) ($3,834)
Adjustments to Reconcile Net Loss to Net Cash
Provided From (Used in) Operating Activities:
Depreciation, depletion and amortization 5,184 5,119
Decrease (Increase) in accounts receivable (11,640) (3,384)
Decrease (Increase) in inventory (454) 4,074
Decrease (Increase) in prepaid and other current
assets 926 867
Increase (Decrease) in accounts payable and
accrued expenses 7,476 (1,266)
Increase (Decrease) in interest and taxes
payable 282 (715)
Increase (Decrease) in deferred income taxes (52) (55)
Increase (Decrease) in other long-term liabilities (333) (234)
Other - net 1,445 (139)
--------- ---------
Net Cash Provided From (Used in)
Operating Activities (182) 433
Cash Flows from Investing Activities:
Payments for purchase of property, plant and
equipment (1,587) (887)
Payments for mine development (101) -
Payments for other investments (1) -
Proceeds from sale of property, plant and
equipment 9 -
--------- ---------
Net Cash Used in Investing Activities (1,680) (887)
Cash Flows from Financing Activities:
Proceeds from issuance/(repayment) of short-term
debt 842 (2,077)
Proceeds from issuance of long-term debt - 6,968
Repayment of long-term debt (34) (10,000)
--------- ---------
Net Cash Provided From (Used in) Financing
Activities 808 (5,109)
Effects of Exchange Rate Changes 84 2
--------- ---------
Net Change in Cash and Cash Equivalents (970) (5,561)
Cash and Cash Equivalents at Beginning of Period 4,357 7,014
--------- ---------
Cash and Cash Equivalents at End of Period $3,387 $1,453
========= =========
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
(Unaudited)
Note A - Accounting Policies
In management's opinion, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position as of March 28, 2003 and December 31, 2002 and the
results of operations for the three month periods ended March 28, 2003
and March 29, 2002. All of the adjustments were of a normal and
recurring nature.
Note B - Inventories
Mar. 28, Dec. 31,
(Dollars in thousands) 2003 2002
----------------------------------------------------------------------
Principally average cost:
Raw materials and supplies $22,810 $22,572
In process 65,899 65,809
Finished goods 30,796 29,522
-------- --------
Gross inventories 119,505 117,903
Excess of average cost over LIFO
Inventory value 24,700 23,579
-------- --------
Net inventories $94,805 $94,324
======== ========
Note C - Comprehensive Loss
The reconciliation between Net Loss and Comprehensive Loss for the
three month periods ended March 28, 2003 and March 29, 2002 is as
follows:
First Quarter Ended
Mar. 28, Mar. 29,
(Dollars in thousands) 2003 2002
--------------------------------------------------------------------
Net Loss $(3,016) $(3,834)
Cumulative Translation Adjustment (74) (88)
Change in the Fair Value of Derivative
Financial Instruments 1,164 1,392
--------------------
Comprehensive Loss $(1,926) $(2,530)
====================
Note D - Segment Reporting
Metal Micro- Total All
(Dollars in thousands) Systems Electronics Segments Other Total
----------------------------------------------------------------------
First Quarter 2003
----------------------
Revenues from
external customers $61,207 $38,311 $99,518 $- $99,518
Intersegment revenues 901 272 1,173 3,573 4,746
Profit (loss) before
interest and taxes (3,424) 2,537 (887) (1,235) (2,122)
First Quarter 2002
----------------------
Revenues from
external customers $55,917 $33,545 $89,462 $120 $89,582
Intersegment revenues 599 483 1,082 2,889 3,971
Profit (loss) before
interest and taxes (8,525) 2,202 (6,323) 822 (5,501)
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