- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

------------------------

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the quarterly period ended September 26, 2003

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 001-15885

BRUSH ENGINEERED MATERIALS INC.
(Exact name of Registrant as specified in charter)

<Table>

OHIO 34-1919973
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)

17876 ST. CLAIR AVENUE, CLEVELAND, OHIO 44110
(Address of principal executive offices) (Zip Code)
</Table>

216-486-4200
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

As of October 31, 2003 there were 16,563,698 shares of Common Stock, no par
value, outstanding.

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PART I FINANCIAL INFORMATION

BRUSH ENGINEERED MATERIALS INC. AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS

The consolidated financial statements of Brush Engineered Materials Inc.
and its subsidiaries for the quarter ended September 26, 2003 are as follows:

<Table>

Consolidated Statements of Income --
Three and nine months ended September 26,
2003 and September 27, 2002

Consolidated Balance Sheets --
September 26, 2003 and December 31, 2002

Consolidated Statements of Cash Flows --
Three and nine months ended September 26,
2003 and September 27, 2002
</Table>

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

<Table>
<Caption>
THIRD QUARTER ENDED NINE MONTHS ENDED
------------------------- -------------------------
SEPT. 26, SEPT. 27, SEPT. 26, SEPT. 27,
(DOLLARS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS) 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------------------------------

Net sales........................................ $ 94,156 $ 93,481 $ 295,479 $ 283,812
Cost of sales.................................. 79,786 81,466 245,132 246,473
----------- ----------- ----------- -----------
Gross Margin..................................... 14,370 12,015 50,347 37,339
Selling, general and administrative expenses... 14,299 13,986 48,208 46,134
Research and development expenses.............. 998 1,003 3,034 3,177
Other-net...................................... 1,455 952 2,594 20
----------- ----------- ----------- -----------
Operating Loss................................... (2,382) (3,926) (3,489) (11,992)
Interest expense............................... 490 776 1,933 2,275
----------- ----------- ----------- -----------
Loss before income taxes......................... (2,872) (4,702) (5,422) (14,267)
Minority Interest.............................. (2) -- (24) --
Income taxes................................... 190 (1,796) 641 (5,479)
----------- ----------- ----------- -----------
Net Loss......................................... $ (3,060) $ (2,906) $ (6,039) $ (8,788)
=========== =========== =========== ===========
Per Share of Common Stock: Basic................. $ (0.18) $ (0.18) $ (0.36) $ (0.53)
Weighted average number of common shares outstanding... 16,563,098 16,558,417 16,562,559 16,557,026
Per Share of Common Stock: Diluted............... $ (0.18) $ (0.18) $ (0.36) $ (0.53)
Weighted average number of common shares outstanding... 16,563,098 16,558,417 16,562,559 16,557,026
</Table>

See notes to consolidated financial statements.
2

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

<Table>
<Caption>
SEPT. 26, DEC. 31,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------------------------

ASSETS
Current Assets
Cash and cash equivalents................................... $ 4,804 $ 4,357
Accounts receivable....................................... 56,922 47,543
Inventories............................................... 88,034 94,324
Prepaid expenses.......................................... 4,626 9,766
Deferred income taxes..................................... 757 244
-------- --------
Total Current Assets................................... 155,143 156,234
Other assets................................................ 25,576 25,629
Long-term deferred income taxes............................. 242 472
Property, Plant and Equipment............................... 482,053 476,283
Less allowances for depreciation, depletion and
impairment............................................. 339,568 323,739
-------- --------
142,485 152,544
-------- --------
$323,446 $334,879
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Short-term debt........................................... $ 39,262 $ 27,235
Accounts payable.......................................... 15,770 15,129
Other liabilities and accrued items....................... 35,250 30,439
Income taxes.............................................. 1,046 786
-------- --------
Total Current Liabilities.............................. 91,328 73,589
Other Long-Term Liabilities................................. 15,831 17,459
Retirement and Post-employment Benefits..................... 50,506 48,518
Long-term Debt.............................................. 12,185 36,219
Minority interest in subsidiary............................. 48 --
Shareholders' Equity........................................ 153,548 159,094
-------- --------
$323,446 $334,879
======== ========
</Table>

See notes to consolidated financial statements.
3

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

<Table>
<Caption>
NINE MONTHS ENDED
---------------------
SEPT. 26, SEPT. 27,
(DOLLARS IN THOUSANDS) 2003 2002
- -----------------------------------------------------------------------------------

NET LOSS.................................................... $ (6,039) $ (8,788)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH PROVIDED FROM
OPERATING ACTIVITIES:
Depreciation, depletion and amortization.................. 15,562 15,484
Decrease (Increase) in accounts receivable................ (8,919) (3,936)
Decrease (Increase) in inventory.......................... 7,142 17,131
Decrease (Increase) in prepaid and other current assets... 5,169 1,434
Increase (Decrease) in accounts payable and accrued
expenses............................................... 3,292 (2,070)
Increase (Decrease) in interest and taxes payable......... 230 (2,503)
Increase (Decrease) in deferred income taxes.............. 73 (283)
Increase (Decrease) in other long-term liabilities........ 140 (5,667)
Other -- net.............................................. 1,421 1,008
-------- --------
NET CASH PROVIDED FROM OPERATING ACTIVITIES.......... 18,071 11,810
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, plant and equipment.... (4,760) (3,899)
Payments for mine development............................. (137) (58)
Proceeds from sale of property, plant and equipment....... 34 140
-------- --------
NET CASH (USED IN) INVESTING ACTIVITIES.............. (4,863) (3,817)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of short-term debt.............................. (10,729) (10,633)
Proceeds from issuance of long-term debt.................. 2,000 12,000
Repayment of long-term debt............................... (4,034) (13,000)
-------- --------
NET CASH (USED IN) FINANCING ACTIVITIES.............. (12,763) (11,633)
Effects of Exchange Rate Changes............................ 2 (159)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS.............. 447 (3,799)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......... 4,357 7,014
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD................ $ 4,804 $ 3,215
======== ========
</Table>

See notes to consolidated financial statements.
4

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
September 26, 2003 and December 31, 2002 and the results of operations for the
three and nine month periods ended September 26, 2003 and September 27, 2002.
All of the adjustments were of a normal and recurring nature.

NOTE B -- INVENTORIES

<Table>
<Caption>
SEPT. 26, DEC. 31,
(DOLLARS IN THOUSANDS) 2003 2002
- ----------------------------------------------------------------------------------

Principally average cost:
Raw materials and supplies................................ $ 25,088 $ 22,572
In process................................................ 64,525 65,809
Finished goods............................................ 23,655 29,522
-------- --------
Gross inventories.................................... 113,268 117,903
Excess of average cost over LIFO
Inventory value........................................... 25,234 23,579
-------- --------
Net inventories...................................... $ 88,034 $ 94,324
======== ========
</Table>

NOTE C -- COMPREHENSIVE LOSS

The reconciliation between Net Loss and Comprehensive Loss for the three
and nine month periods ended September 26, 2003 and September 27, 2002 is as
follows:

<Table>
<Caption>
THIRD QUARTER ENDED NINE MONTHS ENDED
--------------------- ---------------------
SEPT. 26, SEPT. 27, SEPT. 26, SEPT. 27,
(DOLLARS IN THOUSANDS) 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------------

Net Loss....................................... $(3,060) $(2,906) $(6,039) $ (8,788)
Cumulative Translation Adjustment.............. 344 (118) 274 627
Change in the Fair Value of Derivative
Financial Instruments........................ 2,031 (1,790) 131 (4,957)
------- ------- ------- --------
Comprehensive Loss............................. $ (685) $(4,814) $(5,634) $(13,118)
======= ======= ======= ========
</Table>

NOTE D -- SEGMENT REPORTING

<Table>
<Caption>
METAL MICRO- TOTAL ALL
(DOLLARS IN THOUSANDS) SYSTEMS ELECTRONICS SEGMENTS OTHER TOTAL
- -----------------------------------------------------------------------------------------

THIRD QUARTER 2003
Revenues from external
customers...................... $ 54,074 $ 39,355 $ 93,429 $ 727 $ 94,156
Intersegment revenues............ 572 233 805 3,071 3,876
Profit (loss) before interest and
taxes.......................... (8,036) 3,804 (4,232) 1,850 (2,382)

THIRD QUARTER 2002
Revenues from external
customers...................... $ 56,966 $ 34,269 $ 91,235 $ 2,246 $ 93,481
Intersegment revenues............ 894 444 1,338 3,275 4,613
Profit (loss) before interest and
taxes.......................... (9,975) 1,290 (8,685) 4,759 (3,926)
</Table>

<Table>
<Caption>
METAL MICRO- TOTAL ALL
(DOLLARS IN THOUSANDS) SYSTEMS ELECTRONICS SEGMENTS OTHER TOTAL
- -----------------------------------------------------------------------------------------

FIRST NINE MONTHS 2003
Revenues from external
customers...................... $175,951 $115,316 $291,267 $ 4,212 $295,479
Intersegment revenues............ 2,290 751 3,041 10,725 13,766
Profit (loss) before interest and
taxes.......................... (14,235) 9,814 (4,421) 932 (3,489)

FIRST NINE MONTHS 2002
Revenues from external
customers...................... $176,420 $102,295 $278,715 $ 5,097 $283,812
Intersegment revenues............ 2,261 1,401 3,662 9,907 13,569
Profit (loss) before interest and
taxes.......................... (23,574) 4,959 (18,615) 6,623 (11,992)
</Table>

NOTE E -- INCOME TAXES

A tax provision/benefit was not applied against the loss before income
taxes in the third quarter 2003 or for the first nine months of 2003 for certain
domestic and foreign taxes as a result of the deferred tax valuation allowance
recorded in the fourth quarter 2002 in accordance with SFAS No. 109, "Accounting
for Income Taxes", due to the uncertainty regarding full utilization of the
Company's deferred tax assets. The Company intends to maintain a valuation
allowance until a realization event occurs to support a reversal of all or a
portion of the allowance. Therefore, the $0.2 million income tax expense
recorded in the third quarter 2003 and the $0.6 million expense recorded in the
first nine months of 2003 represent taxes from various state and local
jurisdictions and foreign taxes from Japan and Singapore only. The Company
recorded a tax benefit of $1.8 million in the third quarter 2002 and a benefit
of $5.5 million in the first nine months of 2002. A tax rate of 38.2% of the
loss before income taxes was used in the third quarter 2002 and a rate of 38.4%
was used for the first nine months of 2002.

NOTE F -- DEBT

The Company's Revolving Credit Agreement (the revolver) matures in April
2004 and, therefore, all outstanding borrowings under the revolver are
considered current debt as of April 2003. Accordingly, borrowings of $27.0
million under the revolver previously recorded as long-term were classified as
short-term debt on the Consolidated Balance Sheet as of June 27, 2003.
Repayments of $8.0 million were made against this short-term debt in the third
quarter 2003.

The revolver allows for both short-term and long-term borrowings. The
limitation on outstanding short-term borrowings was revised as part of
renegotiating the agreement in the first quarter 2003. As a result, the Company
transferred $5.0 million of short-term borrowings to long-term borrowings under
the revolver in the first quarter 2003 in order to comply with the reduced
limitation. This non-cash transaction combined with the $27.0 million of debt
becoming current during the second quarter 2003 resulted in a $22.0 million
increase in short-term debt and $22.0 million decrease in long-term debt during
the first nine months of 2003 that did not impact the Consolidated Statement of
Cash Flows for the nine month period ended September 26, 2003.

NOTE G -- STOCK-BASED COMPENSATION

The Company has adopted the disclosure only provisions of SFAS No. 123,
"Accounting for Stock-Based Compensation" and applies the intrinsic value method
in accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and related interpretations in accounting for its stock incentive
plan. In accordance with SFAS No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure," the following table

presents the effect on net loss and net loss per share had compensation cost for
the Company's stock plans been determined consistent with SFAS No. 123.

<Table>
<Caption>
THIRD QUARTER ENDED NINE MONTHS ENDED
------------------- -------------------
SEPT. 26 SEPT. 27 SEPT. 26 SEPT. 27
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS) 2003 2002 2003 2002
- -------------------------------------------------------------------------------------------

Net loss, as reported........................... $(3,060) $(2,906) $(6,039) $(8,788)
Less stock based compensation expense determined
under fair value method for all stock options,
net of related income tax benefit............. 281 239 899 855
------- ------- ------- -------
Pro forma net loss.............................. $(3,341) $(3,145) $(6,938) $(9,643)
======= ======= ======= =======
Basic and diluted loss per share, as reported... (0.18) $ (0.18) $ (0.36) $ (0.53)
Basic and diluted loss per share, pro forma..... $ (0.20) $ (0.19) $ (0.42) $ (0.58)
</Table>

The fair value was estimated on the grant date using the Black-Scholes
option pricing model with the following assumptions for options issued:

<Table>
<Caption>
THIRD QUARTER
ENDED NINE MONTHS ENDED
------------------- -------------------
SEPT. 26 SEPT. 27 SEPT. 26 SEPT. 27
2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------

Risk free interest rates.......................... 3.19% 4.84% 3.63% 4.52%
Dividend yield.................................... 0% 0% 0% 0%
Volatility........................................ 39.5% 39.6% 39.5% 39.6%
Expected lives (in years)......................... 8 8 8 8
</Table>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD-LOOKING STATEMENTS

Portions of the narrative set forth in this document 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 economy;

- The condition of the markets which the Company serves, whether defined
geographically or by segment, with the major market segments being
telecommunications and computer, automotive electronics, industrial
components, optical media, 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 and terrorist
activities;

- Changes in government regulatory requirements and the enactment of new
legislation that impacts the Company's obligations; and,

- The conclusion of pending litigation matters in accordance with the
Company's expectation that there will be no material adverse effects.

RESULTS OF OPERATIONS

The Company's sales and operating results in the third quarter 2003, while
an improvement over the third quarter 2002, declined from the second quarter
2003 levels as the sales improvements generated earlier in the year did not
continue into the third quarter. However, operational efficiencies, cost
reduction efforts and a favorable product mix have allowed the Company to
increase its margin contribution rate, control its overhead and reduce the
operating loss for the quarter and the first nine months compared to the same
periods last year. A federal domestic income tax benefit was not recorded
against the loss before income taxes in the first three quarters of 2003 in
accordance with accounting guidelines (and as previously disclosed), which has a
negative impact on the net income and earnings per share comparisons with 2002.
Despite the operating loss, the Company continued to generate cash from
operations in 2003, which allowed the Company to reduce debt and fund its
capital expenditures.

<Table>
<Caption>
THIRD QUARTER FIRST NINE MONTHS
--------------- -----------------
(MILLIONS, EXCEPT PER SHARE DATA) 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------

Sales.............................................. $ 94.2 $ 93.5 $295.5 $283.8
Operating Loss..................................... (2.4) (3.9) (3.5) (12.0)
Net Loss........................................... (3.1) (2.9) (6.0) (8.8)
Diluted E.P.S...................................... $(0.18) $(0.18) $(0.36) $(0.53)
</Table>

Sales of $94.2 million in the third quarter 2003 were less than 1% higher
than sales in the third quarter 2002 while year-to-date sales of $295.5 million
were 4% higher than the year ago period. Demand from the computer and
telecommunications market, which is still the largest single market for the
Company, has not demonstrated any appreciable or sustainable growth throughout
2003, although certain segments have shown modest improvements. The optical
media and magnetic head markets have remained strong in 2003. Sales for defense
applications declined in the third quarter but this was mainly due to push-outs
of existing orders and did not represent a loss of business. Demand from the
automotive market improved in the first half of this year but softened in
certain sectors during the third quarter. The plastic tooling market remained
weak in the second and third quarters 2003 after growing in the first quarter of
this year. Higher precious metal pass-through prices accounted for $4.5 million
of the year-to-date sales increase.

Total international sales of $29.3 million were 31% of sales in the third
quarter 2003 compared to $25.8 million and 28% of sales in the third quarter
2002. For the first nine months of the year, international sales were $91.6
million (31% of sales) in 2003 and $78.8 million (28% of sales) in 2002 as
international sales have grown $12.8 million while domestic sales declined $1.1
million. Approximately $0.4 million of the third quarter 2003 sales growth and
$4.7 million of the year-to-date sales growth is due to the translation rate
effects of the weaker dollar.

The gross margin of $14.4 million (15% of sales) in the third quarter 2003
was a $2.4 million improvement over the gross margin of $12.0 million (13% of
sales) in the third quarter 2002. For the first three quarters of the year, the
gross margin of $50.3 million in 2003 is $13.0 million higher than in 2002 on an
$11.7 million increase in sales. The gross margin as a percent of sales also
improved to 17% in 2003 from 13% in 2002. In addition to the impact of changes
in volumes, margins increased as a result of a favorable product mix and foreign
currency effect, improved plant performance and lower manufacturing overhead
expenses.

Selling, general and administrative (SG&A) expenses were $14.3 million, or
15% of sales, in the third quarter 2003 versus $14.0 million, also 15% of sales,
in the third quarter 2002. For the first three quarters of the year, SG&A
expenses totaled $48.2 million in 2003 and $46.1 million in 2002. SG&A expenses
were 16% of sales in the first nine months of both 2003 and 2002. The third
quarter 2002 SG&A expense included a one-time $2.0 million credit that reduced
expense resulting from a favorable court ruling which enabled the Company to
increase the recovery portion on insured legal claims that previously were
subject to apportionment. Cost savings from the manpower reductions and other
initiatives combined with changes in the incentive compensation accruals
accounted for the majority of the remaining difference in SG&A expenses between
quarters. For the first nine months of the year, the impact of the cost savings
initiatives was offset by the financing fees incurred at the

corporate office level in the first quarter 2003 and the impact of the weaker
dollar on the translation of foreign currency denominated expenses.

Research and development (R&D) expenses were $1.0 million in the third
quarter 2003, which is unchanged from the third quarter 2002. Third quarter
year-to-date R&D expenses were $3.0 million in 2003 and $3.2 million in 2002.
There has been no significant change in the R&D direction and effort during the
course of the current year. Approximately 60% of the R&D effort supports the
Metal Systems Group.

Other-net expense was $1.5 million in the third quarter 2003 compared to
$1.0 million in the third quarter 2002. For the first nine months of the year,
other-net expense was $2.6 million in 2003 and less than $0.1 million in 2002.
The mark-to-market (i.e. unrealized valuation adjustment) of the directors'
compensation plan caused $0.6 million of the difference in the expense between
the two quarters and $1.2 million of the year-to-date difference. Foreign
currency exchange gains and losses accounted for $1.6 million of the
year-to-date difference, the majority of which occurred in the first half of the
year. Other-net also includes metal financing fees, amortization of intangible
assets, bad debt expenses, gain and loss on the disposal of fixed assets and
other non-operating items.

The operating loss was $2.4 million in the third quarter 2003 compared to
$3.9 million in the third quarter 2002. Higher margins as a result of
efficiencies, product mix and cost reductions offset in part by an increase in
various expenses generated the $1.5 million improvement. For the first nine
months of the year, the operating loss was $3.5 million in 2003 and $12.0
million in 2002. The $8.5 million improvement resulted from higher gross margins
offset in part by changes in SG&A expenses and a reduction in currency exchange
gains.

Interest expense was $0.5 million in the third quarter 2003 and $1.9
million for year-to-date third quarter 2003 compared to $0.8 million and $2.3
million in the respective periods of 2002. The main reason for the reduced
interest expense in 2003 was that the average outstanding debt balance has been
lower in 2003 than in 2002.

The loss before income taxes was $2.9 million in the third quarter 2003, a
$1.8 million improvement over the loss from the third quarter 2002. For the
first nine months of the year, the $5.4 million loss before income taxes in 2003
was an $8.8 million improvement over the prior year.

An income tax expense of $0.2 million was recorded in the third quarter
2003 and $0.6 million in the first three quarters of 2003 for foreign, state and
local taxes in those jurisdictions where the Company did not record a valuation
allowance. A tax benefit for domestic losses and a tax expense for income
generated by certain foreign operations in the first three quarters of 2003 were
offset by changes in the deferred tax valuation allowance. In the fourth quarter
2002, valuation allowances were recorded for domestic and certain foreign
deferred tax assets in accordance with SFAS No. 109, "Accounting for Income
Taxes", due to the uncertainty regarding full realization of these assets. The
Company intends to maintain a valuation allowance until a realization event
occurs to support reversal of all or a portion of the allowance. In 2002, a tax
rate of 38.2% was applied against the loss before income taxes to calculate a
tax benefit of $1.8 million in the third quarter and a rate of 38.4% was used to
calculate a tax benefit of $5.5 million in the first nine months of that year.
The benefits from foreign source income and percentage depletion were the main
differences between the effective and statutory rates in the third quarter and
first nine months of 2002.

The net loss was $3.1 million in the third quarter 2003 compared to $2.9
million in the third quarter 2002. For the first nine months of the year, the
net loss was $6.0 million in 2003 and $8.8 million in 2002. The year-to-date net
loss only improved $2.8 million on an $8.8 million decrease in the loss before
income taxes due to the differences in income tax provisions.

SEGMENT DISCLOSURES

The Company aggregates its five businesses into two reportable
segments -- the Metal Systems Group and the Microelectronics Group (MEG). The
"Other" column in the segment disclosures in the Notes to the Consolidated
Financial Statements includes the results for: Brush Resources Inc., a wholly
owned subsidiary that manages the Company's mining and extraction mill
operations and sells beryllium hydroxide to the outside as well as to the Metal
Systems Group; BEM Services Inc., a wholly owned subsidiary that provides
administrative
9

services to the other units within the Company on a cost-plus basis; and the
parent Company's corporate and administrative expenses. External sales by Brush
Resources were $0.7 million in the third quarter 2003 compared to $2.2 million
in the third quarter 2002 while sales for the first nine months of the year were
$4.2 million in 2003 and $5.1 million in 2002.

METAL SYSTEMS GROUP

<Table>
<Caption>
THIRD QUARTER FIRST NINE MONTHS
-------------- -----------------
(MILLIONS) 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------

Sales............................................... $54.1 $ 57.0 $176.0 $176.4
Operating Loss...................................... $(8.0) $(10.0) $(14.2) $(23.6)
</Table>

The Metal Systems Group consists of Alloy Products, the company's largest
unit, Technical Materials, Inc. (TMI), a wholly owned subsidiary, and Beryllium
Products. Sales by each of these units were as follows:

<Table>
<Caption>
THIRD QUARTER FIRST NINE MONTHS
------------- -----------------
(MILLIONS) 2003 2002 2003 2002
- ----------------------------------------------------------------------------------------

Alloy Products....................................... $36.8 $37.8 $119.3 $117.1
TMI.................................................. 9.1 10.9 31.7 34.8
Beryllium Products................................... 8.2 8.3 25.0 24.5
</Table>

Sales of Alloy Products were $36.8 million in the third quarter 2003, 3%
lower than the third quarter 2002 while sales for the first three quarters of
2003 of $119.3 million were 2% higher than the first three quarters of last
year. Alloy products manufactures two major product families -- strip products
and bulk products.

Strip products, which consist of thin gauge strip and thin diameter rod and
wire, are sold into the computer and telecommunications, automotive and
appliance markets. Sales of strip products were higher in the third quarter 2003
and the first three quarters of 2003 than the comparable periods in 2002. Pounds
sold of traditional strip and rod and wire products, which generally are the
higher priced, higher beryllium-containing alloys, were up 19% in the third
quarter and 18% for the first three quarters of 2003 over the respective periods
of 2002. The majority of the growth in strip sales was in South Asia and Europe.
A portion of the international sales growth is due to a relocation of business
and applications from the U.S. to overseas operations.

Bulk products are copper, nickel and aluminum based alloys manufactured in
rod, bar, tube, plate and other customized forms. Sales of bulk products were
lower in the third quarter and the first three quarters of 2003 compared to the
respective periods in 2002. Bulk product pounds sold decreased 16% in the third
quarter 2003 from the third quarter 2002 and 17% for the first three quarters of
2003 from the first three quarters of 2002. Demand from the plastic tooling
market softened in the second quarter 2003 and that softening continued through
the third quarter 2003 as a result of a slowdown in the domestic market and
adjustments to inventory levels by the Company's major distributors. Sales for
undersea telecommunications applications, which at one time was the largest
market for bulk products, remained severely depressed while aerospace and oil
and gas sales improved slightly in the current year over the prior year. During
the first quarter 2002, the Company had a one-time, large volume, low priced
sale of master alloy that increased sales in that period.

TMI manufactures engineered material systems for connectors, contacts and
semi-conductor applications within the computer and telecommunications and
automotive electronics markets. TMI sales of $9.1 million in the third quarter
were 16% lower than the third quarter 2002 while year-to-date sales of $31.7
million were 9% lower than the first three quarters of 2002. After growing in
each of the first two quarters of 2003 over the corresponding previous quarters,
sales in the third quarter 2003 were 14% lower than the second quarter 2003.
Order entry levels from the automotive industry initially softened late in the
second quarter 2003 in large part due to seasonal slowdowns as the automotive
plants transitioned production to the new model year. However, sales order rates
from this market remained soft and only started to improve late in the third
quarter and early into the fourth quarter. Demand from the computer and
telecommunications market has not shown any sustained growth throughout 2003.
Cost reduction and control efforts allowed TMI to be profitable in the quarter
and for the year despite the fall-off in sales volume.

Beryllium Products manufactures pure beryllium and beryllium aluminum
alloys for applications that require high stiffness and/or low-density
materials. Revenues from Beryllium Products were $8.2 million in the third
quarter 2003, down slightly from the $8.3 million of revenue generated in the
third quarter 2002, while third quarter 2003 year-to-date revenues were $25.0
million, a 2% improvement over the comparable period in 2002. Revenues were
lower in the third quarter 2003 as a result of delays and push outs of existing
defense-related orders into the next fiscal year for the federal government;
orders were not lost but merely delayed due to government budget and spending
limitations. The year-over-year increase in sales is due to higher demand from
the automotive market.

The gross margin on Metal System Group sales was $5.6 million (10% of
sales) in the third quarter 2003 compared to $3.9 million (7% of sales) in the
third quarter 2002. For the first three quarters of the year, the gross margin
was $25.4 million in 2003 an increase of $10.2 million over the margin of $15.2
million generated in 2002. The year-to-date gross margin also improved to 14% of
sales in 2003 from 9% of sales in 2002.

A favorable product mix, operational improvements and a favorable
translation impact on margins from the weaker dollar combined to increase
margins $2.7 million in the third quarter 2003 and $7.9 million for the first
three quarters of 2003 over the respective periods in 2002. Operational
improvements were made at the Elmore, Ohio and Lincoln, Rhode Island facilities
in support of Alloy, TMI and Beryllium sales. The lower sales volume reduced the
margin contribution by $1.6 million in the third quarter 2003 compared to the
third quarter 2002 while the volume impact on the year-to-date margin was an
unfavorable $1.3 million. Manufacturing overhead was $0.6 million lower in the
third quarter 2003 and $3.6 million lower for the first nine months of 2003 than
the comparable periods in 2002 as a result of cost reduction efforts, primarily
in Alloy Products.

Total SG&A, R&D and other-net expenses of $13.6 million in the third
quarter 2003 were $0.2 million lower than the third quarter 2002 while third
quarter year-to-date expenses of $39.7 million in 2003 were $0.9 million higher
than in 2002. Lower foreign currency exchange gains (and higher currency losses)
and the unfavorable impact of the weaker dollar on the translation of foreign
currency denominated expenses partially offset by manpower reductions and other
cost savings efforts account for the majority of the difference in expenses
between years.

The operating loss for the Metal Systems Group was $8.0 million in the
third quarter 2003 compared to $10.0 million in the third quarter 2002 while the
operating loss was $14.2 million for the first nine months of the 2003, a $9.4
million improvement over the operating loss in the first nine months of 2002.

MICROELECTRONICS GROUP

Sales................................................ $39.4 $34.3 $115.3 $102.3
Operating Profit..................................... $ 3.8 $ 1.3 $ 9.8 $ 5.0
</Table>

The MEG includes Williams Advanced Materials Inc. (WAM), a wholly owned
subsidiary, and Electronic Products. Sales by each unit were as follows:

<Table>
<Caption>
THIRD QUARTER FIRST NINE MONTHS
------------- ------------------
(MILLIONS) 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------

WAM................................................... $31.9 $27.1 $92.1 $80.1
Electronic Products................................... 7.5 7.2 23.2 22.2
</Table>

WAM sells precious, non-precious and specialty metal products into the
optical media, magnetic head, electron tube and the wireless, photonic,
semi-conductor and hybrid segments of the microelectronics market. WAM sales of
$31.9 million in the third quarter 2003 were 18% higher than sales of $27.1
million in the third quarter 2002. For the first three quarters of the year, WAM
sales were $92.1 million in 2003, a 15% increase over sales of $80.1 million in
2002. Underlying volumes grew 6% in the third quarter 2003 and for the first
three quarters of 2003 over the respective periods of 2002. The cost of the
precious metal sold by WAM is passed through to the customer; sales grew at a
faster rate than the volumes primarily as a result of changes in metal

prices and the mix of metals sold. Volumes from each of WAM's largest product
families grew, including vapor deposition targets (for the optical media and
magnetic head markets), frame lid assemblies and specialty alloys. Demand for
WAM's materials from the wireless segment of the microelectronics market has
also strengthened in 2003. Refining revenues were down slightly in the first
three quarters of 2003 compared to 2002.

Sales by Electronic Products were $7.5 million in the third quarter 2003, a
4% improvement over the third quarter 2002, while sales in the first three
quarters of the year of $23.2 million improved 5% over the prior period.
Beryllia ceramic sales were higher in the third quarter and first nine months of
2003 than in the comparable periods of 2002. Sales of electronic packages, which
are sold into the computer and telecommunications market, were slightly higher
in the third quarter after being significantly lower in the first half of the
year compared to the same periods of 2002. Sales of thick film circuits, which
have defense and commercial applications, were higher in each of the first three
quarters of 2003 than 2002, but sales and orders began to slow down during the
third quarter and sales are anticipated to continue to soften in the fourth
quarter 2003. The slowdown in the third quarter sales was due in part to push
outs of existing defense orders.

The gross margin on MEG sales was $8.0 million in the third quarter 2003
compared to $6.7 million in the third quarter 2002. For the first nine months of
the year, the gross margin was $23.7 million in 2003 and $20.0 million in 2002.
The gross margin was 20% of sales for the quarter and year-to-date periods in
2003 and 19% for the quarter and year-to-date periods in 2002. The improved
sales volumes increased the margin contribution by $1.5 million in the third
quarter 2003 and $2.6 million for the first three quarters of 2003 over the
comparable periods of 2002. The sales mix effect on margins was slightly
unfavorable in the quarter but a favorable $1.1 million for year-to-date 2003
versus year-to-date 2002, mainly due to WAM products. Manufacturing overhead
costs were relatively unchanged in the current quarter and year compared to the
prior year.

Total SG&A, R&D and other-net expenses were $4.2 million in the third
quarter 2003, a $1.1 million reduction from the third quarter 2002. For the
first nine months of the year, expenses were $13.9 million in 2003 and $15.1
million in 2002. Cost reductions associated with the restructuring of Electronic
Products initiated beginning in the fourth quarter 2002 and lower incentive
compensation accruals were the main causes for the reduced expenses in the
current quarter and for the year. The metal financing fee at WAM was also
slightly lower in 2003 than in 2002.

Operating profit of $3.8 million in the third quarter 2003 was a $2.5
million improvement over the third quarter 2002 while the operating profit for
the first three quarters of 2003 of $9.8 million was a $4.8 million improvement
over the same period last year. The improved margins on the increased sales
coupled with the lower expenses generated the higher profits. For the first nine
months of the year, operating profit was 9% of sales in 2003 and 5% of sales in
2002.

LEGAL

One of the Company's subsidiaries, Brush Wellman Inc. (BWI), is a defendant
in proceedings in various state and federal courts brought by plaintiffs
alleging that they have contracted chronic beryllium disease or other lung
conditions as a result of exposure to beryllium. Plaintiffs in beryllium cases
seek recovery under theories of intentional tort and various other legal
theories and seek compensatory and punitive damages, in many cases of an
unspecified sum. Spouses, if any, claim loss of consortium.

The following table summarizes the activity associated with beryllium
cases. Settlement payment and dismissal for a single case may not occur in the
same period.

<Table>
<Caption>
QUARTER ENDED
------------------------------
SEPT. 26, 2003 JUNE 27, 2003
- -----------------------------------------------------------------------------------------

Total cases pending...................................... 26 22
Total plaintiffs......................................... 61 55
Number of claims (plaintiffs) filed during period
ended.................................................. 7(12) 2(3)
Number of claims (plaintiffs) settled during period
ended.................................................. 2(4) 1(1)
Aggregate cost of settlements during period ended
(dollars in thousands)................................. $95 $254
Number of claims (plaintiffs) otherwise dismissed........ 1(2) 1(1)
Number of claims (plaintiffs) voluntarily withdrawn...... 0(0) 0(0)
</Table>

Additional beryllium claims may arise. Management believes that the Company
has substantial defenses in these cases and intends to contest the suits
vigorously. Employee cases, in which plaintiffs have a high burden of proof,
have historically involved relatively small losses to the Company. Third party
plaintiffs (typically employees of customers or contractors) face a lower burden
of proof than do employees or former employees, but these cases are generally
covered by varying levels of insurance. A reserve was recorded for beryllium
litigation of $3.6 million at September 26, 2003 and $4.2 million at December
31, 2002. A receivable was recorded of $3.9 million at September 26, 2003 and
$4.9 million at December 31, 2002 from the Company's insurance carriers as
recoveries for insured claims.

Although it is not possible to predict the outcome of the litigation
pending against the Company and its subsidiaries, the Company provides for costs
related to these matters when a loss is probable and the amount is reasonably
estimable. Litigation is subject to many uncertainties, and it is possible that
some of these actions could be decided unfavorably in amounts exceeding the
Company's reserves. An unfavorable outcome or settlement of a pending beryllium
case or additional adverse media coverage could encourage the commencement of
additional similar litigation. The Company is unable to estimate its potential
exposure to unasserted claims.

While the Company is unable to predict the outcome of the current or future
beryllium proceedings, based upon currently known facts and assuming
collectibility of insurance, the Company does not believe that resolution of
these proceedings will have a material adverse effect on the financial condition
or the cash flow of the Company. However, the Company's results of operations
could be materially affected by unfavorable results in one or more of these
cases. Currently, two purported class actions are pending.

Standards for exposure to beryllium are under review by the United States
Occupational Safety and Health Administration, and by private standard-setting
organizations. One result of these reviews might be more stringent worker safety
standards. More stringent standards, as well as other factors such as the
adoption of beryllium disease compensation programs and publicity related to
these reviews may also affect buying decisions by the users of
beryllium-containing products. If the standards are made more stringent or the
Company's customers decide to reduce their use of beryllium-containing products,
the Company's operating results, liquidity and capital resources could be
materially adversely affected. The extent of the adverse effect would depend on
the nature and extent of the changes to the standards, the cost and ability to
meet the new standards, the extent of any reduction in customer use and other
factors that cannot be estimated.

FINANCIAL POSITION

Cash flow from operations was $18.1 million for the first nine months of
2003 as the effects of changes in working capital items and other adjustments
more than offset the net loss of $6.0 million. The cash balance was $4.8 million
at the end of the third quarter 2003, an increase of $0.4 million for the year,
as the majority of the available cash from operations was used to reduce debt
and to fund capital expenditures.

The accounts receivable balance of $56.9 million at the end of the third
quarter 2003 was $9.4 million higher than at December 31, 2002. The days sales
outstanding, a measure of the average collection period, was 57 days

as of the end of the third quarter, which was an increase over the prior year
end. This increase was due in part to the higher international sales and
receivables, which typically take longer to collect than domestic receivables.
Accounts written off to bad debts and the increase to the bad debt allowance was
$0.4 million higher in the first nine months of 2003 than the first nine months
of 2002.

Inventories of $88.0 million at the end of the third quarter 2003 were $6.3
million lower than at year-end 2002. The majority of the inventory reduction is
within Alloy Products and TMI due to operating improvements, inventory control
efforts and adjustments to balance inventories with current demand. The quantity
in Alloy Products inventory was down 11% for the year. Inventory at Brush
Resources increased as a result of extracting ore in excess of current
production requirements in order to remove the ore from existing pits within the
allowable safety time frame. Inventory turns in the third quarter 2003 improved
slightly over turns at the end of last year.

The Company collected a federal income tax refund of $3.8 million during
the third quarter 2003. This amount had been recorded as a prepaid expense as of
December 31, 2002.

Capital expenditures were $4.9 million in the first nine months of 2003 as
management continued to tightly control capital investments. The Company has
maintained its quarterly capital spending at less than $2.0 million for seven
straight quarters. Spending by the MEG totaled $2.4 million in the first nine
months of 2003 with WAM accounting for the majority of that total. WAM's capital
expenditures included an acquisition of assets from a former competitor used in
the manufacture of coverlids for sale into the microelectronics market. Spending
by the Metal Systems Group was $1.6 million in the first three quarters of 2003.

Other liabilities and accrued items of $35.3 million at the end of the
third quarter 2003 were $4.9 million higher than at year-end 2002 due to an
increased accrual for salaries and wages (timing of the pay cycle versus the end
of the period), changes in derivative fair values (increased losses on
outstanding hedges from the appreciated value of the euro) and higher fringe
benefit accruals.

Total balance sheet debt of $51.5 million at the end of the third quarter
2003 was $12.0 million lower than the debt balance of $63.5 million at December
31, 2002. Short-term debt of $39.3 million at the end of the third quarter
included $19.0 million of debt borrowed under the Company's revolving credit
agreement (the revolver) that previously would have been classified as long-term
borrowings. However, the revolver matures in April 2004 and therefore all
borrowings under the agreement were considered current debt and were classified
accordingly. The remaining $12.2 million of long-term debt on the September 26,
2003 balance sheet consists of industrial revenue bonds, variable rate demand
notes and a promissory note that have maturities beyond 2004. The Company was in
compliance with debt covenants as of the end of the third quarter 2003.

The Company is currently in negotiations with potential lenders to
refinance the Company's debt on a long-term basis. The Company is evaluating
various combinations of refinancing options, including, but not limited to, a
new revolving credit agreement, term loan and subordinated debt. One of the
options may result in the purchase of assets used in the manufacture of strip
products at the Elmore, Ohio facility currently financed by a $51.8 million
off-balance sheet operating lease with the proceeds from a new term loan. As a
result, property, plant and equipment on the balance sheet would increase for
the purchased assets and the Company's balance sheet debt (but not its over-all
obligations or leverage) would also increase by a like amount. The Company is in
the process of developing, negotiating and analyzing final terms, covenants,
maturities, interest rates and fees for these various options. Management
anticipates that a new long-term financing structure will be in place prior to
the maturity of the current revolver and perhaps prior to the end of 2003.
Depending upon the final renegotiated debt structure, existing deferred
financing costs as well as certain derivative losses recorded in other
comprehensive income may be written off the balance sheet and charged to expense
concurrent with the signing of the new or renegotiated agreements. The on-going
amortization of deferred financing costs under a new financing structure may
also be higher than the current amortization expense.

The retirement and post-employment benefit liability of $50.5 million at
the end of the third quarter 2003 increased $2.0 million since year-end 2002
primarily due to the higher pension expense in the current year.

There were no significant changes in the Company's off-balance sheet lease
obligations during the first nine months of 2003. Lease payments were made as
scheduled which reduced the outstanding lease obligations by
14

$4.3 million. The balance outstanding under the off-balance sheet precious metal
consigned inventory arrangements declined due to a reduction in the quantities
of metal on hand during 2003.

Cash flow from operations was $11.8 million during the first nine months of
2002 as the effects of depreciation and working capital changes more than offset
the net loss. Accounts receivable grew $4.8 million as a result of an increase
in the days sales outstanding in the first nine months of 2002. Inventories were
$15.9 million, or 15%, lower at the end of the third quarter 2002 than at
year-end 2001, with the majority of the reduction in Alloy Products as a result
of manufacturing improvements and aggressive actions to reduce scrap and other
inventories on hand. Capital expenditures totaled $4.0 million in the first
three quarters of 2002. The Company paid $5.1 million to settle numerous CBD
lawsuits in the first three quarters of 2002 and received back $2.4 million from
its insurance carriers as partial recoveries against the insured portion of
these claims. Total balance sheet debt of $64.2 million at the end of the third
quarter 2002 was $10.6 million lower than at December 31, 2001. Cash balances
decreased $3.8 million during the first three quarters of 2002.

Funds from operations and the available borrowing capacity are believed to
be adequate to support operating requirements, capital expenditures and
environmental remediation projects. The Company's ability to raise additional
debt financing above the existing lines may currently be limited due to the
current operating losses, available collateral and leverage ratios.

OUTLOOK

With short lead times and without a significant change in the sales order
entry patterns for shipments in the fourth quarter, the Company anticipates that
sales in the fourth quarter will be similar to the third quarter. However, the
Company is optimistic about the potential for sales growth in 2004 and beyond.
In the third quarter 2003, Beryllium Products obtained an order to provide
material for the WEBB telescope that should generate approximately $15 million
in additional revenue over the 2004 to 2006 time frame. The Company's market
research indicates that activity levels are increasing across many of the
Company's major markets and that these markets may show improvements early next
year. In addition to growth from the underlying markets, management believes
that the Company's market and product development efforts also have the
potential to increase sales in 2004 and going forward. Alloy Products, in
addition to its continued penetration of the strip market, has recently
introduced a higher conductivity strip product for the computer and electronics
markets and continues to develop applications in the aerospace, heavy equipment
and oil and gas industries using the Company's non-beryllium spinodal alloys.
TMI is developing products for the emerging fuel cell market and is also
attempting to leverage its existing plating technology and capacity to develop
additional revenue. Beryllium Products is commercializing new beryllium aluminum
applications and platforms across various markets. WAM will continue its
development of semi-conductor PVD materials and will also look to expand its
market share and product offerings in Asia through its recently created joint
venture.

Margins have improved in 2003 and on-going overhead costs have been tightly
controlled. Management anticipates that the programs in place, including Lean
Six Sigma, will help support these positive trends going forward. However, other
factors, including medical benefit and pension costs, may put additional
pressures on costs next year.

The Company anticipates that its debt will be refinanced on a long-term
basis in the near future, which should help to solidify the Company's capital
structure. Working capital investments, particularly inventory, and capital
expenditures will continue to be closely managed in order to optimize the
Company's cash flows.

CRITICAL ACCOUNTING POLICIES

DEFERRED TAXES: As previously noted, deferred tax benefits related to
losses incurred in the first three quarters of 2003 were offset by provisions
for deferred tax valuation allowances. During the fourth quarter 2002, a
valuation allowance was recorded against domestic and certain foreign deferred
tax assets as a result of recent cumulative losses generated by the Company.
Despite the valuation allowance, the Company retains the ability to utilize the
benefits of its domestic loss carry forwards and other deferred tax assets on
future tax returns. A domestic federal tax benefit will not be recorded in
subsequent periods should the Company continue to generate

pre-tax losses. Should the Company generate a pre-tax profit in subsequent
periods, a federal tax expense will not be recorded either to the extent that
the remaining valuation allowance can be used to offset that expense.

PENSIONS: Market interest rates have declined during 2003 and, if this
trend continues, the discount rate used to value the pension plan liabilities at
year-end 2003 may be lower than the 6.75% rate used at year-end 2002. A lower
discount rate coupled with other pension valuation assumptions and actual plan
performance may result in an increase in the minimum pension liability and an
additional charge to other comprehensive income within shareholders' equity to
be recorded at December 31, 2003. The amount of any potential charge cannot be
estimated at the present time due to the number and complexity of the variables
involved. Management anticipates that the pension expense will be higher in 2004
than in 2003. The Company may also be required to make a cash contribution to
its defined benefit pension plan in 2004.

For additional information regarding the Company's critical accounting
policies, please refer to pages 21 and 22 of the Company's annual report to
shareholders for the period ended December 31, 2002.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

For information regarding the Company's market risks, please refer to pages
23 and 24 of the Company's annual report to shareholders for the period ended
December 31, 2002.

ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this quarterly report, the Company
carried out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's President, Chairman and Chief
Executive Officer, and Vice President Finance and Chief Financial Officer, of
the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the Company's management has concluded that the Company's disclosure
controls and procedures are effective. There have been no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company and its subsidiaries are subject, from time to time, to a
variety of civil and administrative proceedings arising out of their normal
operations, including, without limitation, product liability claims, health,
safety and environmental claims and employment-related actions. Among such
proceedings are the cases described below.

BERYLLIUM CLAIMS

There are claims pending in various state and federal courts against Brush
Wellman Inc., one of the Company's subsidiaries, by some of its employees,
former employees or their surviving spouses, and by third party individuals
(typically employees of customers or of independent contractors) alleging that
they contracted, or have been placed at risk of contracting, chronic beryllium
disease or other lung conditions as a result of exposure to beryllium.
Plaintiffs in beryllium cases seek recovery under theories of intentional tort
and various other legal theories and seek compensatory and punitive damages, in
many cases of an unspecified sum. Spouses, if any, claim loss of consortium.

During the third quarter of 2003, the number of beryllium cases increased
from 22 cases (involving 55 plaintiffs) as of June 27, 2003, to 26 cases
(involving 61 plaintiffs) as of September 26, 2003. During the third quarter,
six third party cases (involving eight plaintiffs) were filed. One purported
class action (involving four named plaintiffs) was filed. One third party case
(involving two plaintiffs) was settled and dismissed. One third party case
(involving one plaintiff) was settled; however, the Company is awaiting final
court dismissal. One third party case (involving two plaintiffs) that was
previously reported as having been settled, but in which the Company was
awaiting final court dismissal, was dismissed by the court during the third
quarter. One third party case (involving two plaintiffs) was voluntarily
dismissed by the plaintiffs.

The 26 pending beryllium cases fall into three categories: four "employee
cases" involving an aggregate of four Brush Wellman employees, former employees
or surviving spouses (in three of these cases, a spouse has also filed claims as
part of his or her spouse's case); 20 cases involving third-party individual
plaintiffs, with 21 individuals (and 14 spouses who have filed claims as part of
their spouse's case, and nine children who have filed claims as part of their
parent's case); and two purported class actions involving ten individuals, as
discussed more fully below. Employee cases, in which plaintiffs have a higher
burden of proof, have historically involved relatively small losses to the
Company. Third-party plaintiffs (typically employees of our customers or
contractors) face a lower burden of proof than do employees or former employees,
but these cases are generally covered by varying levels of insurance.

In one purported class action in which Brush Wellman is seeking review of
the appellate court's reversal of the trial court's denial of class
certification, the named plaintiffs allege that past exposure to beryllium has
increased their risk of contracting chronic beryllium disease and possibly
cancer, although they do not claim to have actually contracted any disease. They
seek medical monitoring funds to be used to detect medical problems that they
believe may develop as a result of their exposure, and seek punitive damages.
This purported class action was brought by named plaintiffs on behalf of
tradesmen who worked in one of Brush Wellman's facilities as employees of
independent contractors.

In the second purported class action that is pending against Brush Wellman,
the named plaintiffs allege that they were exposed to beryllium in the course of
their employment with a customer of Brush Wellman, and that they are sensitized
to beryllium. They seek medical monitoring funds to be used to detect medical
problems that they believe may develop as a result of their exposure, and seek
punitive damages. This purported class action was brought by named plaintiffs on
behalf of employees who worked in the state of California at the facilities of
one of Brush Wellman's customers, and the spouses of those workers.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<Table>

10 Amended and Restated Supply Agreement between RWE Nukem,
Inc. and Brush Wellman Inc. for the sale and purchase of
beryllium products.
11 Statement re computation of per share earnings (filed as
Exhibit 11 to Part I of this report).
31.1 Rule 13a-14(a) Certifications
31.2 Rule 13a-14(a) Certifications
32.1 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
32.2 Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes Oxley Act of 2002
</Table>

(b) Reports on Form 8-K

In a report on Form 8-K filed October 24, 2003, Brush Engineered
Materials Inc. incorporated into Item 7 its October 24, 2003 press
release, reporting on its earnings for the first quarter of 2003. The
press release, with summary financial information, was furnished
pursuant to Items 9 and 12.

In a report on Form 8-K filed September 2, 2003, Brush Engineered
Materials Inc. issued a press release announcing that the "Current
Investor" section of its website had been updated.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.

<Table>

BRUSH ENGINEERED MATERIALS INC.
Dated: November 6, 2003
/s/ John D. Grampa
-----------------------------------------------------
John D. Grampa
Vice President Finance
and Chief Financial Officer
</Table>