Brush Engineered Materials Inc. Reports Second Quarter Results in Line With Previously Announced Expectations.Business Editors CLEVELAND--(BUSINESS WIRE)--July 26, 2001 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 second quarter sales of $128.5 million, down 6% from 2000 second quarter sales of $137.2 million and 13% lower than the first quarter 2001 sales. The second quarter 2001 sales represent the first quarter-to-quarter sales decline in two years. Second quarter sales were adversely affected by weakness in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. and computer markets, the Company's two largest markets comprising approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 50 percent of total sales. Sales for the first half were $274.0 million, down slightly from sales of $272.6 million in the first half of 2000. Foreign exchange rates negatively impacted sales for the second quarter and first half of 2001 as compared to the same periods in 2000 by $1.6 million and $3.3 million respectively. Net income for the second quarter 2001 was $1.3 million or $0.08 per share 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. versus $3.9 million or $0.24 per share diluted for the same period last year. Net income for the first half was $7.5 million or $0.45 per share diluted, up 23% compared to $6.1 million or $0.38 per share diluted for the first half of 2000. Gross margin as a percent of sales decreased from 21.7% in the second quarter of 2000 to 18.4% in the second quarter of 2001 due to lower sales volume and unfavorable currency effect offset partially by favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. pricing. Gross margin as a percent of sales for the first half of 2001 versus 2000 was about flat. Selling, general and administrative (SG&A) expenses as a percent of sales was 14.6% in the second quarter 2001 versus 15.4% for the second quarter 2000. SG&A expense as a percent of sales for the first half of 2001 of 14.7% improved by 1.1% over 2000. The improvement in SG&A as a percent of sales for the quarter and year to date is driven largely by cost reduction actions and lower legal, medical and environmental health and safety expenses. Business Segment Reporting Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. The second quarter and first half 2001 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. results for each segment include certain corporate and share service allocated expense and other costs and expenses due to 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. of the Company's corporate and capital structure approved by shareholders on May 2, 2000 and completed on January January: see month. 1, 2001. Financial results for each segment have been adjusted for the same periods in 2000 to reflect these changes. 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 second quarter sales were $83.4 million, down 12% from 2000 second quarter sales of $95.1 million. Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. sales were $182.0 million versus $186.3 million for the first half of 2000. Second quarter operating profit/(loss) for the Metal Systems Group was ($1.6 million) versus $2.7 million for the same period last year. Year-to-date operating profit was $4.9 million, more than double last year's first half operating profit of $2.2 million. Alloy Products' second quarter sales of $63.0 million were down 6% from the second quarter of 2000 and were 15% below first quarter 2001 sales. The first six months sales were flat as compared to the first half of 2000. Alloy strip sales, which comprises a third of total sales of the Company and approximately two-thirds of Alloy Product sales, experienced significant order cancellations and a drop off in demand from the telecommunications and computer markets during the second quarter. As the demand slowed in the second quarter, production was adjusted throughout the strip supply chain to manage inventory and control cost. It is anticipated that this softness in demand will continue at least through the third quarter of 2001. In addition, a more extensive plant maintenance shutdown shut·down n. A cessation of operations or activity, as at a factory. shutdown Noun the closing of a factory, shop, or other business Verb shut down will be taken during the third quarter. Alloy bulk product sales increased 2% in the second quarter 2001 over second quarter 2000 while year-to-date sales increased by 7% over the same period last year. Alloy bulk products is beginning to experience some softness in the undersea telecommunications market while the plastic tooling and welding welding, process for joining separate pieces of metal in a continuous metallic bond. Cold-pressure welding is accomplished by the application of high pressure at room temperature; forge welding (forging) is done by means of hammering, with the addition of heat. markets have been soft for most of the year. TMI's second quarter sales of $12.6 million and first half sales of $33.1 million were down 45% and 21% respectively from the same periods last year. This significant decline is due to weak demand 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. and computer/datacom markets. TMI has taken cost reduction actions commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. with the sales decline and is operating at a profit. Beryllium Products' second quarter sales of $7.8 million were up 47% and first half sales of $14.7 million were up 39% over the same periods last year. This sales growth has been driven primarily by increased demand for aerospace and defense product applications. Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. 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. (Electronic Products includes Zentrix Zentrix is a 3D-CG Chinese animated TV series directed by Tony Tong and Felix Ip under the Hong Kong based company Imagi Animation Studios. The original story was written by Tony Tang, Benny Chow, Felix Ip and Francis Kao. Technologies Inc. and Brush brush a bushy tail in dogs. brush Cytology A disposible with synthetic 'whiskers', used to scrape cells from mucosal surfaces. See Endocervical brush. Ceramic This article is about ceramic materials. For the fine art, see Ceramic art. The word ceramic is derived from the Greek word κεραμικός (keramikos). Products Inc.) The Microelectronics Group's sales were $42.3 million for the second quarter and $89.2 million year-to-date, which represents an increase of 1% and 7% respectively over the same period last year. Operating profit was $0.9 million for the second quarter versus $2.7 million for the second quarter of 2000 and $3.3 million for the first six months versus $4.8 million for the same period last year. WAM's second quarter sales of $32.7 million increased 5% over the second quarter 2000 and year-to-date sales of $68.0 million grew 8% over the same period last year. The sales growth was fueled by strong demand from the wireless/photonic microelectronics markets. During the second quarter, WAM acquired certain assets used in the production of frame lid assemblies from a competitor who has withdrawn from this market. It is anticipated that this added capacity will increase WAM's future sales of frame lid assemblies. WAM is experiencing overall record growth and expects demand to be strong through the remainder of 2001. Electronic Products' second quarter sales of $9.6 million were down 9% from the second quarter of 2000. Sales of $21.2 million for the first half were up 4% over the same period last year. Electronic Products experienced softness from the wireless telecommunications market during the second quarter of 2001. This softness was partially offset by demand for thick film circuit products. Outlook The significant decline in the telecommunications and computer markets continues to affect the performance of Alloy Products, Technical Materials Inc. and the Electronic Products businesses. In addition, some of the Company's customers are in the process of taking extended operational maintenance shutdowns due to the 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 these markets. Brush Engineered Materials expects that third quarter sales will be 5% less than second quarter sales. Actions continue to be taken to mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the impact of the lower sales on earnings. The actions include
manufacturing cost reductions, capital expenditure deferrals and a
reduction in overhead spending. Therefore, third quarter earnings are
expected to be similar to the second quarter. However, there is a
potential for a downside DownsideThe dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. in the quarter depending on future order rates. 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, and Chief Executive Officer, said, "Although we are disappointed by this continued economic weakness and the impact it is having on our business, the steps we are taking to mitigate this short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. situation will also help deliver sustainable bottom line benefits in the future as the economy and our markets do rebound rebound (rē´bownd), n/v 1. a recovery from illness. n 2. an outbreak of fresh reflex activity after withdrawal of a stimulus rebound adjective . Given the performance leverage we saw in the first quarter of 2001, I am convinced con·vince tr.v. con·vinced, con·vinc·ing, con·vinc·es 1. To bring by the use of argument or evidence to firm belief or a course of action. See Synonyms at persuade. 2. that we are well positioned to take advantage of an economic upturn, which many now expect to occur in 2002 rather than 2001." 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. Any forward-looking statements in this announcement, including those in the Outlook Section, are based on current expectations. The Company's performance may differ materially from that contemplated by the forward-looking statements as a result of a variety of factors, including the global and domestic economy, fluctuations in customer demand, manufacturing yields and operating performances at the Company's various facilities, changes in product mix, financial condition of customers, the timely and successful completion of pending capital expansions, tax rates, exchange rates, energy costs and other matters referred to in the Company's Securities and Exchange Commission filings. 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.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Investors: Media:
---------- ------
Michael C. Hasychak Patrick S. Carpenter
Brush Engineered Materials Inc. Brush Engineered Materials Inc.
17876 St. Clair Ave. 17876 St. Clair Ave.
Cleveland, OH 44110 Cleveland, OH 44110
216/383-6823 216/383-6835
http://www.BEMinc.com
Brush Engineered Materials Inc.
Digest of Earnings
June 29, 2001
2001 2000
------------ ------------
Second Quarter
Net Sales $128,457,000 $137,182,000
Net Income $ 1,275,000 $ 3,898,000
Share Earnings - Basic $ 0.08 $ 0.24
Average Shares - Basic 16,508,248 16,224,638
Share Earnings - Diluted $ 0.08 $ 0.24
Average Shares - Diluted 16,690,938 16,358,128
Year-to-date
Net Sales $273,980,000 $272,606,000
Net Income $ 7,481,000 $ 6,147,000
Share Earnings - Basic $ 0.45 $ 0.38
Average Shares - Basic 16,487,575 16,215,338
Share Earnings - Diluted $ 0.45 $ 0.38
Average Shares - Diluted 16,683,572 16,336,023
Consolidated Balance Sheets
June 29, Dec. 31,
(Dollars in thousands) 2001 2000
-------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $ 4,562 $ 4,314
Accounts receivable 88,906 92,334
Inventories 129,673 115,643
Prepaid expenses 7,554 8,525
Deferred income taxes 32,495 29,263
-------- --------
Total Current Assets 263,190 250,079
Other Assets 32,282 31,967
Property, Plant and Equipment 464,328 449,697
Less allowances for depreciation,
depletion and impairment 289,140 279,237
-------- --------
175,188 170,460
-------- --------
$470,660 $452,506
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $ 32,470 $ 25,435
Accounts payable 27,037 34,714
Other liabilities and accrued
items 36,577 39,021
Dividends payable 1,993 1,987
Income taxes 9,593 5,535
-------- --------
Total Current Liabilities 107,670 106,692
Other Long-Term Liabilities 19,160 15,878
Retirement and Post-employment Benefits 39,698 39,576
Long-term Debt 51,305 43,305
Deferred Income Taxes 18,525 17,148
Shareholders' Equity 234,302 229,907
-------- --------
$470,660 $452,506
======== ========
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands Second Quarter Ended First Half Ended
except share June 29, June 30, June 29, June 30,
and per share amounts) 2001 2000 2001 2000
--------------------------------------------------------------------
Net sales $ 128,457 $ 137,182 $ 273,980 $ 272,606
Cost of sales 104,881 107,474 216,369 214,604
--------- --------- --------- ---------
Gross Margin 23,576 29,708 57,611 58,002
Selling, general
and administrative
expenses 18,770 21,147 40,276 42,964
Research and development
expenses 1,867 1,686 3,559 3,700
Other-net 226 110 1,028 338
--------- --------- --------- ---------
Operating Profit 2,713 6,765 12,748 11,000
Interest expense 852 1,061 1,827 2,181
--------- --------- --------- ---------
Income before income taxes 1,861 5,704 10,921 8,819
Income taxes 586 1,806 3,440 2,672
--------- --------- --------- ---------
Net Income $ 1,275 $ 3,898 $ 7,481 $ 6,147
========= ========= ========= =========
Per Share of
Common Stock: Basic $ 0.08 $ 0.24 $ 0.45 $ 0.38
Weighted average
number of common
shares outstanding 16,508,248 16,224,638 16,487,575 16,215,338
Per Share of
Common Stock: Diluted $ 0.08 $ 0.24 $ 0.45 $ 0.38
Weighted average
number of common
shares outstanding 16,690,938 16,358,128 16,683,572 16,336,023
Cash dividends
per common share $ 0.12 $ 0.12 $ 0.24 $ 0.24
Consolidated Statements of Cash Flows First Half Ended
June 29, June 30,
(Dollars in thousands) 2001 2000
-------------------------------------------------------------------
Net Income $ 7,481 $ 6,147
Adjustments to Reconcile
Net Income to Net Cash
Provided From Operating Activities:
Depreciation, depletion and amortization 11,018 12,248
Decrease (Increase) in accounts receivable 1,984 (17,708)
Decrease (Increase) in inventory (14,959) 3,257
Decrease (Increase) in prepaid
and other current assets (116) 412
Increase (Decrease) in accounts
payable and accrued expenses (9,987) 9,012
Increase (Decrease) in interest
and taxes payable 3,078 1,270
Increase (Decrease) in
deferred income taxes (135) (119)
Increase (Decrease) in
other long-term liabilities 2,691 2,006
Other - net 746 548
-------- -------
Net Cash Provided From
Operating Activities 1,801 17,073
Cash Flows from Investing Activities:
Payments for purchase of property,
plant and equipment (15,559) (6,415)
Payments for mine development (281) (138)
-------- -------
Net Cash Provided From
(Used in) Investing Activities (15,840) (6,553)
Cash Flows from Financing Activities:
Proceeds from issuance/
(repayment of) short-term debt 8,437 (7,460)
Proceeds from issuance of long-term debt 15,500 18,000
Repayment of long-term debt (7,500) (12,000)
Issuance of Common Stock under
stock option plans 1,753 384
Payments of dividends (3,974) (3,919)
-------- -------
Net Cash Provided From
(Used in) Financing Activities 14,216 (4,995)
Effects of Exchange Rate Changes 71 (166)
-------- -------
Net Change in Cash and
Cash Equivalents 248 5,359
Cash and Cash Equivalents
at Beginning of Period 4,314 99
-------- -------
Cash and Cash Equivalents
at End of Period 4,562 5,458
======== =======
Segment Reporting
As a result of the recent corporate restructuring, the Company changed
how costs flowed between its businesses. Certain costs that were
previously included in the "All Other" column in the segment
disclosures are being charged to Metal Systems and Microelectronics
beginning in the first quarter 2001. Beginning in 2001, the "All
Other" column includes the operating results of BEM Services Inc. and
Brush Resources Inc., two wholly-owned subsidiaries of the Company, as
well as the parent company's operating expenses. BEM Services charges
a management fee for the services provided to the other businesses
within the Company on a cost-plus basis. Brush Resources may sell
beryllium hydroxide, produced from its mine and extraction mill in
Utah, to outside customers and to businesses within the Metal Systems
Group. Segment results from the prior year have been restated to
reflect these changes on a pro forma basis.
Metal Micro- Total All
Systems Electronics Segments Other Total
-------- -------- -------- -------- --------
(Dollars in thousands)
Second Quarter 2001
-------------------
Revenues from
external customers $ 83,402 $ 42,301 $125,703 $ 2,754 $128,457
Intersegment revenues 352 472 824 5,539 6,363
Profit (loss) before
interest and taxes (1,614) 921 (693) 3,406 2,713
Second Quarter 2000
-------------------
Revenues from
external customers $ 95,088 $ 41,818 $136,906 $ 276 $137,182
Intersegment revenues 1,023 240 1,263 5,766 7,029
Profit (loss) before
interest and taxes 2,683 2,659 5,342 1,423 6,765
First Six Months 2001
---------------------
Revenues from
external customers $182,030 $ 89,196 $271,226 $ 2,754 $273,980
Intersegment revenues (1,938) (1,301) (3,239) (10,386) (13,625)
Profit (loss) before
interest and taxes 4,946 3,340 8,286 4,461 12,747
First Six Months 2000
---------------------
Revenues from
external customers $186,263 $ 83,425 $269,688 $ 2,918 $272,606
Intersegment revenues 2,578 526 3,104 11,033 14,137
Profit (loss) before
interest and taxes 2,245 4,801 7,046 3,954 11,000
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