Brush Wellman Reports Third Quarter 1998 Results.CLEVELAND--(BUSINESS WIRE)--Oct. 26, 1998--Brush Wellman Wellman(n) may refer to:
See: New York Stock Exchange :BW) today reported net income for the third quarter 1998 of $0.1 million, and earnings of one cent 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. . Net income and earnings per share in the third quarter 1997 were $4.0 million and 24 cents, respectively. The third quarter 1998 results were reduced by a previously announced charge of $0.74 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta . This charge relates to the obsolescence ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. of equipment which is being replaced by the Company's new, state-of-the-art 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. manufacturing facility. Absent the charge, third quarter net income and earnings would have been, respectively, $0.6 million and 4 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , diluted. Sales for the third quarter were $96 million, a 12% decrease from sales of $109 million during the third quarter last year, which was the strongest third quarter in the Company's history. Third quarter sales declined in all major lines of business except 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. For the first nine months of 1998, the Company reported a net loss of $6.8 million, or $0.42 per share, diluted. The loss reported for the first nine months 1998 primarily resulted from charges for asset write-downs and reserves totaling $16.1 million after taxes, with a diluted per share impact of $0.99. Most of these charges were taken in the second quarter. The total pre-tax charges for the first nine months were $22.5 million. Absent these charges, the Company earned net income of $9.3 million and earnings per share, diluted, of $0.57 for the first nine months of 1998. This compares with net income of $18.0 million and earnings per share, diluted, of $1.07 in the first nine months of 1997. Sales during the first nine months 1998 were $313 million, down 3% from the record sales of $322 million in the first nine months of 1997. The reduction in earnings compared with the third quarter 1997 resulted from the sales decline, combined with a higher level of costs related primarily to the Alloy expansion. The decrease in sales relative to the third quarter 1997 reflected a variety of factors. First, 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. ), working with customers, continued to switch them from gold-based to lower value precious and non-precious metal-based alloys This is a list of alloys for which an article exists in Wikipedia (or is proposed but not yet written). They are grouped by base metal, in order of increasing atomic number. Within these headings they are in no particular order. for Vapor Deposition Vapor deposition Production of a film of material often on a heated surface and in a vacuum. Vapor deposition technology is used in a large variety of applications. Products. This has resulted in a significant reduction in revenue for WAM. However, the actual level of business at WAM increased in the quarter. Williams Advanced Materials is a wholly-owned subsidiary of Brush Wellman Inc. Revenues were also impacted by the strong dollar and low copper prices, compared with the third quarter last year. A strong dollar, relative to comparative periods, tends to reduce sales and income from the Company's overseas operations due to currency translation effects. Actual production volumes are generally unaffected by changes in currency exchange rates because overseas sales are typically priced in local currencies. In addition, sales of Alloy Products, 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 and 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 ), a wholly-owned subsidiary of Brush Wellman, were affected by softness in Asian and U.S. electronics markets. Also, sales of certain Alloy products continue to be constrained 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. by production capacity limitations. Finally, the strike at General Motors reduced sales of Alloy Products, Ceramic Products and TMI. 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 said, "During the third quarter, our revenues and earnings were adversely affected by several factors, including 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 Asian and U.S. electronics markets, capacity constraints CONSTRAINTS - A language for solving constraints using value inference. ["CONSTRAINTS: A Language for Expressing Almost-Hierarchical Descriptions", G.J. Sussman et al, Artif Intell 14(1):1-39 (Aug 1980)]. , start-up Start-up The earliest stage of a new business venture. issues with our alloy expansion, the strong dollar and the General Motors strike. "We expect to see improvement in several of these areas in the fourth quarter. First, the strike at General Motors ended in August. Second, while yield and productivity issues continue to constrain 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. our sales and impact our production costs, late in the third quarter we began to see improvements in our operating performance on Alloy Products. This trend has continued into the fourth quarter, to date. Third, the recent weakening weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. of the dollar could begin to relieve the
pressures placed on earnings by currency translations, if the present
trend continues. However, in the fourth quarter, we will see additional
operating costs operating costs npl → gastos mpl operacionales related to the start-up of the new strip mill portion of
the Alloy expansion, and the softness in electronics markets may
continue."The weakness of the past two quarters underscores our need to effectively execute our long-range long-range adj. 1. Of, suitable for, or reaching long distances: long-range missiles. 2. Requiring or involving an extended span of time: long-range planning. strategic plan. This plan involves improving our base businesses, expanding Alloy Products and building a microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. business. The successful transition to the new, state-of-the-art Alloy manufacturing facility is our highest immediate priority. Production trials are currently underway on all parts of the new facility, and operators are being trained to use the new equipment. The facility is scheduled to be fully operational by the beginning of 1999. This major expansion, and other investments we have made over the past three years are designed to position the Company to achieve significant and sustainable growth in the years ahead." Any 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. in this announcement are based on current expectations. The Company's performance may differ from that contemplated by the forward-looking statements as a result of a variety of factors including the continuing slow down in Asian and U.S. electronics markets, and other factors affecting the global economy, manufacturing yields and operating performance at the Company's various facilities, changes in product mix, the timely and successful completion of pending capital expansions, tax rates and exchange rates. Brush Wellman Inc., with headquarters 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. , is a manufacturer of engineered materials. The Company and its subsidiaries supply worldwide markets with Beryllium Products, Alloy Products, Ceramic Products, Precious Metal Products and Engineered Material Systems. For further information, please contact: Timothy J. Reid Vice President Corporate Communications Corporate communications is the process of facilitating information and knowledge exchanges with internal and key external groups and individuals that have a direct relationship with an enterprise. Brush Wellman Inc. 17876 St. Clair Avenue St. Clair Avenue is a major street in Toronto, Ontario, Canada. It was laid out in the late eighteenth century by the British as a concession road (the Third Concession), 2 km (1.25 mi) north of Bloor Street and 4 km (2.5 mi) north of Queen Street (formerly Lot Street). St. Cleveland, Ohio 44110 (216) 383-6835 http://www.brushwellman.com -0-
Consolidated Balance Sheets
Oct. 2, Dec. 31,
(Dollars in thousands) 1998 1997
---------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $ 3,414 $ 7,170
Accounts receivable 63,644 62,812
Inventories 99,621 90,714
Prepaid expenses and other
current assets 19,763 18,215
--------- ---------
Total Current Assets 186,442 178,911
Other Assets 34,970 31,319
Property, Plant and Equipment 429,098 463,689
Less allowances for depreciation,
depletion and impairment 253,451 290,067
--------- ---------
175,647 173,622
--------- ---------
$ 397,059 $ 383,852
--------- ---------
--------- ---------
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $ 66,584 $ 28,877
Accounts payable 10,572 13,519
Other liabilities and accrued
items 30,210 28,580
Dividends payable 0 1,967
Income taxes 4,064 5,369
--------- ---------
Total Current Liabilities 111,430 78,312
Other Long-Term Liabilities 6,886 8,200
Retirement and Post-Employment Benefits 39,671 39,825
Long-Term Debt 17,105 17,905
Deferred Income Taxes (358) 2,797
Shareholders' Equity 222,325 236,813
--------- ---------
$ 397,059 $ 383,852
--------- ---------
--------- ---------
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Nine Months Ended
Oct 2, Sept 26,
(Dollars in thousands) 1998 1997
----------------------------------------------------------------------
Net Income ($ 6,824) $ 17,968
Adjustments to Reconcile
Net Income to Net Cash
Provided From
Operating Activities:
Depreciation, depletion
and amortization 17,334 13,012
Amortization of
mine development 2,792 1
Decrease (Increase) in
accounts receivable (594) (22,657)
Decrease (Increase) in
Inventory (7,842) 4,200
Decrease (Increase) in
prepaid and other
current assets (1,735) (1,872)
Increase (Decrease) in
accounts payable and
accrued expenses (1,727) 8,990
Increase (Decrease) in
interest and taxes
payable (1,538) (2,472)
Increase (Decrease) in
deferred income tax (3,155) 438
Increase (Decrease) in
other long-term liabilities (718) 1,590
Impairment of fixed
assets and related
intangibles 14,273 --
Other - net 458 (10)
--------- --------
Net Cash Provided From
Operating Activities 10,724 19,188
Cash Flows from
Investing Activities:
Payments for purchase
of property, plant
and equipment (29,267) (38,918)
Payments for mine
development (294) (9,398)
Proceeds from
(Payments for)
other investments (12,003) 883
--------- --------
Net Cash Provided From
(Used in) Investing
Activities (41,564) (47,433)
Cash Flows from Financing
Activities:
Proceeds from issuance
of short-term debt 38,254 7,829
Repayment of short-term
debt (528) (93)
Proceeds from issuance
of long-term debt -- --
Repayment of long-term debt (800) (960)
Issuance of Common Stock
under stock option plans 3,433 4,118
Purchase of Common Stock
for treasury (5,390) (2,038)
Payments of dividends (7,837) (5,343)
--------- --------
Net Cash Provided From
(Used in) Financing
Activities 27,132 3,513
Effects of Exchange Rate Changes (48) (63)
--------- --------
Net Change in Cash
and Cash Equivalents (3,756) (24,795)
Cash and Cash Equivalents
at Beginning of Period 7,170 31,749
--------- --------
Cash and Cash Equivalents
at End of Period $ 3,414 $ 6,954
--------- --------
--------- --------
See notes to consolidated financial statements.
Consolidated Statements of Income
(Unaudited)
(Dollars in thousands Third Quarter Ended Nine Months Ended
except share and per Oct 2, Sept 26, Oct 2, Sept 26,
share amounts) 1998 1997 1998 1997
----------------------------------------------------------------------
Net sales $ 96,240 $ 109,073 $ 313,414 $ 322,135
Cost of sales 76,824 81,845 248,454 239,430
---------- ---------- ---------- ----------
Gross Margin 19,416 27,228 64,960 82,705
Selling,
administrative
and general
expenses 15,422 18,531 48,203 51,091
Research and
development
expenses 2,185 2,013 6,357 5,573
Other-net 1,318 1,103 19,979 599
---------- ---------- ---------- ----------
Operating Profit 491 5,581 (9,579) 25,442
Interest expense 352 18 760 382
---------- ---------- ---------- ----------
Income before
income taxes 139 5,563 (10,339) 25,060
Income taxes 41 1,574 (3,515) 7,092
---------- ---------- ---------- ----------
Net Income $ 98 $ 3,989 $ (6,824) $ 17,968
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Per Share of
Common Stock:
Basic $ 0.01 $ 0.24 $ (0.42) $ 1.11
Weighted average
number of common
shares outstanding 16,197,162 16,355,319 16,295,836 16,283,218
Per Share of
Common Stock:
Diluted $ 0.01 $ 0.24 $ (0.42) $ 1.07
Weighted average
number of
common shares
outstanding 16,272,126 16,889,682 16,295,836 16,630,609
Cash dividends per
common share $ 0.12 $ 0.12 $ 0.36 $ 0.34
See notes to consolidated financial statements.
Notes to Consolidated Financial Statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge 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 October October: see month. 2, 1998 and December December: see month. 31, 1997 and the results of operations for the nine months ended October 2, 1998 and September September: see month. 26, 1997. Note B - Inventories Oct. 2, Dec. 31, (Dollars in thousands) 1998 1997 ------------------------------------------------------------------ Principally average cost: Raw materials and supplies $ 18,357 $ 17,331 In Process 64,094 58,666 Finished 38,820 37,008 -------- -------- 121,271 113,005 Excess of average cost over LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack inventory value 21,650 22,291 -------- -------- $ 99,621 $ 90,714 -------- -------- -------- -------- Note C - Comprehensive Income As of January 1, 1998, the Company adopted Statement 130, "Reporting Comprehensive Income". Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this statement had no impact on the Company's net income or shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. . Statement 130 requires certain items, including foreign currency translation adjustments, which prior to adoption were reported separately in shareholders' equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the requirements of Statement 130. For the third quarter 1998 and 1997, comprehensive income/(loss) amounted to $566,372 and $3,142,417, respectively. Year to date 1998 and 1997 comprehensive income/(loss) amounted to ($7,002,160) and $17,159,390, respectively. The difference between net income/(loss) and comprehensive income/(loss) is the cumulative translation adjustment for the periods presented. Note D - Special Charge In the third quarter 1998, the Company recorded special charges totaling $0.7 million pre-tax and $0.5 million after-tax for additional depreciation charges on equipment that is scheduled to be taken out of service with the planned completion of certain capital projects by December 31, 1998. This amount was charged to Cost of sales on the consolidated income statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. for the third quarter 1998. Year to date special charges total $22.5 million pre-tax and $16.1 million after-tax as charges were recorded in the second quarter 1998 primarily for write-downs of property, plant and equipment, inventory and goodwill, and increases to environmental reserves. Of the $22.5 million, $5.6 million was charged to Cost of sales and $16.9 million was charged to Other-net on the consolidated income statement for the nine month period ending October 2, 1998. In analyzing the strategic plans for each of the Company's business units, management determined that the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of certain assets within its Microelectronics and Metal Systems Groups were impaired based upon current cash flow projections A Cash Flow Projection is an attempt to forecast the cash flows that will be generated by an asset, often a company, over a specified time frame. Methodology Projections can be made with varying levels of detail, but any cash flow projection for a business entails . Property, plant and equipment and related intangibles with a carrying value of $19.6 million was written down by $14.3 million to its estimated fair market value in the second quarter 1998. The fair market value was determined by a discounted cash flow analysis using the Company's estimated pre-tax weighted average cost of capital Weighted average cost of capital (WACC) Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment. Often the weighted average of the cost of equity and the cost of debt The weights are determined by the relative proportions of equity . The impaired assets Impaired Asset An asset with a market value that is worth less than its book value. Notes: If the sum of all estimated future cash flows is less than the carrying value of the asset, then the asset would be considered impaired and would have to be written down to its fair may be held for future use. The $14.3 million 'impairment is included in Other-net on the consolidated income statement for the nine month period ending October 2, 1998. Inventory write-downs and certain provisions were also taken in the second quarter 1998 as a result of the reduced market growth expectations and current market conditions. Note E - New Pronouncement In June 1998, the Financial Accounting Standards Board Financial Accounting Standards Board (FASB) Board composed of independent members who create and interpret Generally Accepted Accounting Principles (GAAP). issued Statement No. 133, Accounting for Derivative Instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. and Hedging Activities, which is required to be adopted in years beginning after June 15, 1999. The Statement permits early adoption as of the beginning of any fiscal quarter after its issuance. The Statement will require the Company to recognize all derivatives derivatives In finance, contracts whose value is derived from another asset, which can include stocks, bonds, currencies, interest rates, commodities, and related indexes. Purchasers of derivatives are essentially wagering on the future performance of that asset. on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. The ineffective portion of a derivative's change in fair value will be immediately recognized in earnings. The Company has not yet determined when it will adopt the Statement nor has it determined what the effect of the Statement will be on earnings and the financial position of the Company. |
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