Brush Engineered Materials Inc. Reports Third Quarter Financial Results Consistent With the Previously Announced Estimate.Business Editors CLEVELAND--(BUSINESS WIRE)--Oct. 25, 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 a third quarter net loss of $7.8 million or $0.47 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. on sales of $106.2 million versus net income of $4.1 million or earnings per share diluted of $0.25 on sales of $143.9 million for the same period last year. These results were in line with the Company's previously announced third quarter estimates and include one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when , closure and extended plant 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 costs of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $0.15 per share. Sales continued to be affected by the steep downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. equipment and computer markets which historically approached 50% of the Company's sales. During the quarter the overall global economic 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. also started to have a negative impact on other markets which the Company serves. For the first three quarters of 2001, the Company had a net loss of $0.3 million or $0.02 per share diluted on sales of $380.2 million versus net income of $10.2 million or $0.62 per share diluted on $416.5 million of sales for the same period last year. In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite the significant downturn in the quarter the Company's operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. continued to improve. Debt and current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. were reduced by $19 million in the quarter. While the Company expects this trend to continue, it is in the process of obtaining a waiver The voluntary surrender of a known right; conduct supporting an inference that a particular right has been relinquished. The term waiver is used in many legal contexts. with respect to certain financial covenants in its bank credit facilities credit facilities npl → facilidades fpl de crédito credit facilities npl → facilités fpl de paiement credit facilities . Business Segment Reporting Business segment reporting Reporting the results of the separate divisions or subsidiaries of a business. The third quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. operating results for each segment include certain allocated corporate and shared service expenses. This allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as is consistent with 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 third quarter 2001 sales were $61.8 million, down 34% from 2000 third quarter sales of $93.9 million. Year-to-date sales were $243.8 million, down 13% from sales of $280.2 million for the same period last year. Third quarter operating profit/(loss) for the Metal Systems Group was ($9.4 million) versus $3.6 million for the same period last year. Year-to-date operating profit/(loss) was ($4.4 million) versus $5.8 million for the same period last year. Alloy third quarter 2001 sales of $47.5 million and year-to-date sales of $181.7 million were down 28% and 9% respectively over the same periods last year. Alloy strip sales, comprising one third of the Company's total sales, continued to be impacted through the third quarter by the softness in the telecommunications equipment and computer markets. In addition, alloy bulk products' sales experienced softness in the undersea telecommunications, plastic tooling and oil and gas markets. Alloy Products continues to adjust production levels to be more 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 sales volume and has taken additional cost reduction actions including workforce reduction, the closing of a service center and extended plant shutdowns. Alloy Products reduced employment by 14% during the third quarter. It is anticipated that further cost reduction actions will be taken during the fourth quarter of 2001. TMI's third quarter sales of $8.4 million were down 61% from the third quarter of 2000 and year-to-date sales of $41.5 million were down 34% from the same period last year. TMI sales have been affected throughout the year by softness in the telecommunications, computer/datacom and automotive electronics markets. Beryllium Products' third quarter 2001 sales of $5.9 million were down 13% and year-to-date sales of $20.6 million were up 19% versus the same period last year. The sales weakness during the third quarter was a result of defense program delays. It is anticipated that sales will pick up significantly during the fourth quarter as defense programs are released for production. 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 Groups' sales were $41.7 million for the third quarter and $130.9 million year to date, down 14% and 8% respectively over the same periods last year. Third quarter 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. for the Microelectronics Group was $0.2 million versus $3.0 million for the same period last year. Year-to-date operating profit was $3.5 million versus $7.8 million for the same period last year. WAM's third quarter sales of $33.9 million were down 10% from the third quarter sales of 2000. Third quarter sales less precious metal prices, which are a pass through to customers, were up 5% over 2000 third quarter sales. Year-to-date sales of $101.9 million were up 2% compared to the same period last year. The third quarter sales were impacted by softness in photonics photonics, the science and technology based on and concerned with the controlled flow of photons, or light particles. It is the optical equivalent of electronics, and the two technologies coexist in such innovations as optoelectronic integrated circuits. and traditional microelectronic The miniaturization of electronic circuits. See chip. applications. Electronic Product sales of $7.8 million were down 29% from the third quarter of 2000 and year-to-date sales of $28.9 million were down 8% from the same period last year. The decrease in sales for the quarter and year to date is due to softness in the wireless and fiber optic optic /op·tic/ (op´tik) ocular (1). op·tic or op·ti·cal adj. 1. Of or relating to the eye or vision. 2. telecommunications market. This softness is expected to continue through the balance of 2001. Electronic Products reduced their overall costs during the quarter and has also reduced the workforce by 28% since the beginning of the year. Outlook The continuing decline in the telecommunications equipment and computer markets has significantly affected the sales and operating performance of the Alloy Products, Technical Materials and Electronic Products businesses. In addition, the widespread domestic economic slowdown and the more recent slowdown in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Asia has slowed
sales in many of the Company's other markets. Forecasting in this
very uncertain economic environment is difficult due to a lack of
visibility over customers' demand. The Company expects that fourth
quarter sales will be 5-10% less than third quarter 2001 sales with
earnings similar to third quarter levels.As a result of the continued economic weakness, the Company is completing a cost reduction plan which includes additional employment reductions, extended facility shutdowns and a number of other cost reduction initiatives. These initiatives will be implemented during the fourth quarter and, when combined with the initiatives taken in the third quarter, should lower the Company's annual cost structure by $30 to $40 million and therefore the Company's breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations point by $80 to $100 million annual revenue. Thus, a significant improvement in operating results should be visible as early as the first quarter of 2002. 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 CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , stated, "Although difficult, the actions that we have taken and will continue to take during the fourth quarter will have a significant favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact on our profitability and operating cash flow in early 2002 and well into the 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. 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.
Brush Engineered Materials Inc.
Digest of Earnings
September 28, 2001
2001 2000
------------ ------------
Third Quarter
-------------
Net Sales $106,194,000 $143,926,000
Net (Loss) Income ($7,767,000) $4,084,000
Share Earnings - Basic ($0.47) $0.25
Average Shares - Basic 16,548,410 16,315,523
Share Earnings - Diluted ($0.47) $0.25
Average Shares - Diluted 16,548,410 16,521,028
Year-to-date
------------
Net Sales $380,174,000 $416,532,000
Net (Loss) Income ($286,000) $10,231,000
Share Earnings - Basic ($0.02) $0.63
Average Shares - Basic 16,508,784 16,248,733
Share Earnings - Diluted ($0.02) $0.62
Average Shares - Diluted 16,508,784 16,392,435
Consolidated Balance Sheets
Sept 28, Dec. 31,
(Dollars in thousands) 2001 2000
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $4,474 $4,314
Accounts receivable 71,299 92,334
Inventories 118,980 115,643
Prepaid expenses 8,308 8,525
Deferred income taxes 33,977 29,263
-------------- ------------
Total Current Assets 237,038 250,079
Other Assets 30,883 31,967
Property, Plant and Equipment 470,048 449,697
Less allowances for depreciation,
depletion and impairment 295,005 279,237
-------------- ------------
175,043 170,460
-------------- ------------
$442,964 $452,506
========= =========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $33,066 $25,435
Accounts payable 21,765 34,714
Other liabilities and accrued
items 34,415 39,021
Dividends payable 0 1,987
Income taxes 6,431 5,535
-------------- ------------
Total Current Liabilities 95,677 106,692
Other Long-Term Liabilities 22,177 15,878
Retirement and Post-employment Benefits 39,961 39,576
Long-term Debt 44,222 43,305
Deferred Income Taxes 19,204 17,148
Shareholders' Equity 221,723 229,907
-------------- ------------
$442,964 $452,506
========= =========
See notes to consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
(Dollars in Third Quarter Ended Nine Months Ended
thousands Sept. 28, Sept. 29, Sept. 28, Sept. 29,
except share and 2001 2000 2001 2000
per share amounts)
----------------------------------------------------------------------
Net sales $ 106,194 $ 143,926 $ 380,174 $ 416,532
Cost of sales 98,941 115,304 315,311 329,912
---------- ---------- ---------- ----------
Gross Margin 7,253 28,622 64,863 86,620
Selling, general
and administrative
expenses 17,700 21,101 57,977 64,065
Research and
development
expenses 1,416 1,870 4,975 5,571
Other-net (1,128) (19) (103) 314
---------- ---------- ---------- ----------
Operating (Loss) Profit (10,735) 5,670 2,014 16,670
Interest expense 679 1,227 2,507 3,407
---------- ---------- ---------- ----------
(Loss) Income before
income taxes (11,414) 4,443 (493) 13,263
Income taxes (3,647) 359 (207) 3,032
---------- ---------- ---------- ----------
Net (Loss) Income $ (7,767) $ 4,084 $ (286) $ 10,231
========== ========== ========== ==========
Per Share of Common
Stock: Basic $ (0.47) $ 0.25 $ (0.02) $ 0.63
Weighted average number
of common shares
outstanding 16,548,410 16,315,523 16,508,784 16,248,733
Per Share of Common
Stock: Diluted $ (0.47) $ 0.25 $ (0.02) $ 0.62
Weighted average number
of common shares
outstanding 16,548,410 16,521,028 16,508,784 16,392,435
Cash dividends per
common share $ - $ 0.12 $ 0.24 $ 0.36
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Nine Months Ending
Sept 28, Sept 29,
(Dollars in thousands) 2001 2000
----------------------------------------------------------------------
Net (Loss) Income ($286) $10,231
Adjustments to Reconcile Net
Income to Net Cash
Provided From Operating Activities:
Depreciation, depletion and
amortization 16,713 17,590
Decrease (Increase) in accounts
receivable 20,857 (18,713)
Decrease (Increase) in inventory (3,333) 993
Decrease (Increase) in prepaid and
other current assets (1,724) 803
Increase (Decrease) in accounts
payable and accrued expenses (17,954) 6,478
Increase (Decrease) in interest
and taxes payable (628) 1,682
Increase (Decrease) in deferred
income taxes (156) (136)
Increase (Decrease) in other
long-term liabilities 2,985 1,518
Other - net 478 2,253
------- -------
Net Cash Provided From Operating
Activities 16,952 22,699
Cash Flows from Investing Activities:
Payments for purchase of property,
plant and equipment (20,651) (13,030)
Payments for mine development (282) (308)
------- -------
Net Cash Provided From (Used in)
Investing Activities (20,933) (13,338)
Cash Flows from Financing Activities:
Proceeds from issuance/ (repayment
of) short-term debt 7,349 (11,331)
Proceeds from issuance of
long-term debt 27,417 23,000
Repayment of long-term debt (26,500) (12,000)
Issuance of Common Stock under
stock option plans 1,753 3,175
Payments of dividends (5,967) (5,882)
------- -------
Net Cash Provided From (Used in)
Financing Activities 4,052 (3,038)
Effects of Exchange Rate Changes 89 (240)
------- -------
Net Change in Cash and Cash
Equivalents 160 6,083
Cash and Cash Equivalents at
Beginning of Period 4,314 99
------- -------
Cash and Cash Equivalents at End
of Period 4,474 6,182
======= =======
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements
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 September 28, 2001 and December 31, 2000 and
the results of operations for the third quarter ended September 28,
2001 and September 29, 2000.
Note B - Inventories
Sep. 28, Dec. 31,
(Dollars in thousands) 2001 2000
-----------------------------------------------------------------
Principally average cost:
Raw materials and supplies $18,371 $19,458
In process 82,337 88,956
Finished goods 44,775 33,202
-------- --------
Gross inventories 145,483 141,616
Excess of average cost over LIFO
Inventory value 26,503 25,973
-------- --------
Net inventories $118,980 $115,643
======== ========
Note C - Comprehensive Income
see separate tab Note C
Note D - 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 Resouces 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.
Micro-
Metal Elect- Total All
(Dollars in Systems ronics Segments Other Total
thousands) ----------------------------------------------
Third Quarter 2001
------------------
Revenues from
external customers $61,778 $41,656 $103,434 $2,760 $106,194
Intersegment revenues 578 542 1,120 1,311 2,431
Segment profit
(loss) before
interest and
taxes (9,393) 208 (9,185) (1,550) (10,735)
Third Quarter 2000
------------------
Revenues from
external customers 93,917 48,498 142,415 1,511 143,926
Intersegment revenues 748 553 1,301 5,239 6,540
Segment profit
(loss) before
interest and
taxes 3,572 3,042 6,614 (944) 5,670
First Nine Months 2001
----------------------
Revenues from
external customers $243,809 $130,851 $374,660 $5,514 $380,174
Intersegment revenues 2,516 1,843 4,359 11,697 16,056
Segment profit
(loss) before
interest and
taxes (4,445) 3,548 (897) 2,911 2,014
First Nine Months 2001
----------------------
Revenues from
external customers 280,181 131,923 412,104 4,428 416,532
Intersegment revenues 3,326 1,079 4,405 16,272 20,677
Segment profit
(loss) before
interest and
taxes 5,817 7,843 13,660 3,010 16,670
Note C - Comprehensive Income
The reconciliation between Net Income and Comprehensive Income for the
three and nine month periods ending September 28, 2001 and September
29, 2000 is as follows:
Three Months Ending Nine Months Ending
--------------------- -------------------
Sept. 28, Sept. 29, Sept. 28, Sept. 29,
(Dollars in Thousands) 2001 2000 2001 2000
--------- -------- -------- -------
Net Income (Loss) $ (7,767) $ 4,084 $ (286) $10,231
Cumulative Translation
Adjustment 579 (336) (201) (875)
Change in the Fair
Value of Derivative
Financial Instruments (5,480) - (5,493) -
--------- -------- -------- -------
Comprehensive Income $ (12,668) $ 3,748 $ (5,980) $ 9,356
========= ======== ======== =======
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