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Exhibit 99
BRUSH ENGINEERED MATERIALS INC. REPORTS SECOND QUARTER
RESULTS IN LINE WITH PREVIOUSLY ANNOUNCED EXPECTATIONS
FOR IMMEDIATE RELEASE
CLEVELAND, Ohio -- July 26, 2001 -- Brush Engineered Materials Inc.
(NYSE - 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 and computer markets, the Company's two
largest markets comprising approximately 50 percent of total sales. Sales for
the first half were $274.0 million, up 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 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
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
The second quarter and first half 2001 operating profit results for
each segment include certain corporate and share service allocated expense and
other costs and expenses due to the reorganization of the Company's corporate
and capital structure approved by shareholders on May 2, 2000 and completed on
January 1, 2001. Financial results for each segment have been adjusted for the
same periods in 2000 to reflect these changes.
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Metal Systems Group
The Metal Systems Group consists of Alloy Products, Technical Materials,
Inc. (TMI) and Beryllium 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 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 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 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
and computer/datacom markets. TMI has taken cost reduction actions commensurate
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.
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MICROELECTRONICS GROUP
The Microelectronics Group includes Williams Advanced Materials Inc.
(WAM), and Electronic Products. (Electronic Products includes Zentrix
Technologies Inc. and Brush Ceramic 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 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 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 in the quarter depending on future order rates.
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Chairman's Comments
Commenting on the results, Gordon 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 situation will also help deliver sustainable
bottom line benefits in the future as the economy and our markets do rebound.
Given the performance leverage we saw in the first quarter of 2001, I am
convinced 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
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. 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
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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
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CONSOLIDATED BALANCE SHEETS
June 29, Dec. 31,
(Dollars in thousands) 2001 2000
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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
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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
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175,188 170,460
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$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
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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
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$470,660 $452,506
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CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Second Quarter Ended First Half Ended
(Dollars in thousands 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
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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
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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)
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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)
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NET CASH PROVIDED FROM (USED IN) FINANCING ACTIVITIES 14,216 (4,995)
Effects of Exchange Rate Changes 71 (166)
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NET CHANGE IN CASH AND CASH EQUIVALENTS 248 5,359
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 4,314 99
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CASH AND CASH EQUIVALENTS AT END OF PERIOD 4,562 5,458
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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
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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
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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
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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
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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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