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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-K
(Mark One)
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to ________
Commission file number 1-7006
BRUSH WELLMAN INC.
(Exact name of Registrant as specified in charter)
OHIO 34-0119320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17876 ST. CLAIR AVENUE, CLEVELAND, OHIO 44110
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 216-486-4200
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
Title of each class Name of each exchange on which registered
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COMMON STOCK, PAR VALUE $1 PER SHARE NEW YORK STOCK EXCHANGE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
None
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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /x/
The aggregate market value of Common Stock, par value $1 per share, held by
non-affiliates of the registrant (based upon the closing sale price on the New
York Stock Exchange) on March 7, 1995 was approximately $264,265,909.
As of March 7, 1995, there were 16,123,055 shares of Common Stock, par
value $1 per share, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the annual report to shareholders for the year ended December
31, 1994 are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual meeting of shareholders to
be held on May 2, 1995 are incorporated by reference into Part III.
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PART I
ITEM 1. BUSINESS
Brush Wellman Inc. ("Company") manufactures and sells engineered
materials for use by manufacturers and others who perform further operations
for eventual incorporation into capital, aerospace/defense or consumer
products. These materials typically comprise a small portion of the final
product's cost. They are generally premium priced and are often developed or
customized for the customer's specific process or product requirements. The
Company's product lines are supported by research and development activities,
modern processing facilities and a global distribution network.
Customers include manufacturers of electrical/electronic
connectors, communication equipment, computers, automobiles, lasers,
appliances, spacecraft, aircraft, oil field instruments and equipment, sporting
goods, and defense contractors and suppliers to all of the foregoing
industries.
The Company operates in a single business segment with product
lines comprised of beryllium-containing materials and other specialty
materials.
The Company is a fully integrated producer of beryllium,
beryllium alloys (primarily copper beryllium), and beryllia ceramic, each of
which exhibits its own unique set of properties. The Company holds extensive
mineral rights and mines the beryllium bearing ore, bertrandite, in central
Utah. Beryllium is extracted from both bertrandite and imported beryl ore. In
1994, 70% of the Company's sales were of products containing the element
beryllium (74% in 1993 and 80% in 1992). Beryllium-containing products are
sold in competitive markets throughout the world through a direct sales
organization and through owned and independent distribution centers. NGK
Metals Corporation of Reading, Pennsylvania and NGK Insulators, Ltd. of Nagoya,
Japan compete with the Company in the beryllium alloys field. Beryllium alloys
also compete with other generally less expensive materials, including phosphor
bronze, stainless steel and other specialty copper and nickel alloys. General
Ceramics Inc. is a domestic competitor in beryllia ceramic. Other competitive
materials include alumina, aluminum nitride and composites. While the Company
is the only domestic producer of the metal beryllium, it competes with other
fabricators as well as with designs utilizing other materials.
Sales of other specialty materials, principally metal systems and
precious metal products, were 30% of total sales in 1994 (26% in 1993 and 20%
in 1992). Precious metal products are produced by Williams Advanced Materials
Inc. (hereinafter referred to as "WAM"), a subsidiary of the Company comprised
of businesses acquired in 1986, 1989 and 1994. In October 1994, WAM acquired
the assets of Hydrostatics Inc., located in Bethlehem, Pennsylvania. The
Bethlehem facility produces ultra fine wire products for the semiconductor and
electronics markets. WAM's major product lines include sealing lid assemblies,
vapor deposition materials, contact ribbon products for various segments of the
semiconductor markets, clad and precious metal preforms and restorative dental
products. WAM also specializes in precious metal refining and recovery.
______________________________
As used in this report, except as the context otherwise requires, the term
"Company" means Brush Wellman Inc. and its consolidated subsidiaries, all of
which are wholly owned.
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WAM's principal competitors are Semi-Alloys and Johnson Matthey
in the sealing lid assembly business and Materials Research Corporation in the
vapor deposition materials product line. The products are sold directly from
WAM's facilities in Buffalo, New York, Bethlehem, Pennsylvania, and Singapore
as well as through sales representatives.
Technical Materials, Inc. (hereinafter referred to as "TMI"), a
subsidiary of the Company, produces specialty metal systems, consisting
principally of narrow metal strip, such as copper alloys, nickel alloys and
stainless steels into which strips of precious metal are inlaid. TMI also
offers a number of other material systems, including electron beam welded dual
metal, contour milling and skiving, thick and thin selective solder coatings,
selective electroplated products and bonded aluminum strips on nickel-iron
alloys for semiconductor leadframes. Divisions of Handy & Harman, Texas
Instruments and Metallon are competitors for the sale of inlaid strip. Strip
with selective electroplating is a competitive alternative as are other design
approaches. The products are sold directly and through sales representatives.
Sales and Backlog
The backlog of unshipped orders as of December 31, 1994, 1993 and
1992 was $95,354,000, $86,531,000 and $90,201,000, respectively. Backlog is
generally represented by purchase orders that may be terminated under certain
conditions. The Company expects that, based on recent experience,
substantially all of its backlog of orders at December 31, 1994 will be filled
during 1995.
Sales are made to approximately 6,230 customers. Government
sales, principally subcontracts, accounted for about 3.2% of consolidated sales
in 1994 as compared to 6.1% in 1993 and 8.9% in 1992. Sales outside the United
States, principally to Western Europe, Canada and Japan, accounted for
approximately 33% of sales in 1994, 29% in 1993 and 27% in 1992. Financial
information as to sales, identifiable assets and profitability by geographic
area set forth on pages 16-17 in Note L to the consolidated financial
statements in the annual report to shareholders for the year ended December 31,
1994 is incorporated herein by reference.
Research & Development
Active research and development programs seek new product
compositions and designs as well as process innovations. Expenditures for
research and development amounted to $8,754,000 in 1994, $7,121,000 in 1993 and
$7,294,000 in 1992. A staff of 51 scientists, engineers and technicians was
employed in this effort during 1994. Some research and development projects
were externally sponsored and expenditures related to those projects
(approximately $102,000 in 1994, $80,446 in 1993 and $217,000 in 1992) are
excluded from the above totals.
Availability of Raw Materials
The more important raw materials used by the Company are
beryllium (extracted from both imported beryl ore and bertrandite mined from
the Company's Utah properties), copper, gold, silver, nickel and palladium.
The availability of these raw materials, as well as other materials used by the
Company, is adequate and generally not dependent on any one
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supplier. Certain items are supplied by a preferred single source, but
alternatives are believed readily available.
Patents and Licenses
The Company owns patents, patent applications and licenses
relating to certain of its products and processes. While the Company's rights
under the patents and licenses are of some importance to its operations, the
Company's businesses are not materially dependent on any one patent or license
or on the patents and licenses as a group.
Environmental Matters
The inhalation of excessive amounts of airborne beryllium
particulate may present a health hazard to certain individuals. For decades the
Company has operated its beryllium facilities under stringent standards of
inplant and outplant discharge. These standards, which were first established
by the Atomic Energy Commission over forty years ago, were, in general,
subsequently adopted by the United States Environmental Protection Agency and
the Occupational Safety and Health Administration. The Company's experience in
sampling, measurement, personnel training and other aspects of environmental
control gained over the years, and its investment in environmental control
equipment, are believed to be of material importance to the conduct of its
business.
Employees
As of December 31, 1994 the Company had 1,833 employees.
ITEM 2. PROPERTIES
The material properties of the Company, all of which are owned in
fee except as otherwise indicated, are as follows:
Cleveland, Ohio - A structure containing 110,000 square feet on
an 18 acre site housing corporate and administrative offices, data processing
and research and development facilities.
Elmore, Ohio - A complex containing approximately 676,000 square
feet of building space on a 385 acre plant site. This facility employs diverse
chemical, metallurgical and metalworking processes in the production of
beryllium, beryllium oxide, beryllium alloys and related products. Beryllium
ore concentrate from the Delta, Utah plant is used in all beryllium-containing
products.
Shoemakersville (Reading), Pennsylvania - A 123,000 square foot
plant on a ten acre site that produces thin precision strips of beryllium
copper and other alloys and beryllium copper rod.
Newburyport, Massachusetts - A 30,000 square foot manufacturing
facility on a four acre site that produces alumina, beryllia ceramic and direct
bond copper products.
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Tucson, Arizona - A 45,000 square foot plant on a ten acre site
for the manufacture of beryllia ceramic parts from beryllium oxide powder
supplied by the Elmore, Ohio facility.
Delta, Utah - An ore extraction plant consisting of 86,000 square
feet of buildings and large outdoor facilities situated on a two square mile
site. This plant extracts beryllium from bertrandite ore from the Company's
mines as well as from imported beryl ore.
Juab County, Utah - The Company holds extensive mineral rights in
Juab County, Utah from which the beryllium bearing ore, bertrandite, is mined
by the open pit method. A substantial portion of these rights is held under
lease. Ore reserve data set forth on page 15 of this Form 10-K annual report
for the year ended December 31, 1994 are incorporated herein by reference.
Fremont, California - A 49,000 square foot leased facility for
the fabrication of precision electron beam welded, brazed and diffusion bonded
beryllium structures. The lease expires in December 1995. The Company does
not plan to renew the lease and is looking to lease space at a smaller
facility.
Theale (Reading), England - A 19,700 square foot leased facility
principally for distribution of beryllium alloys.
Stuttgart, West Germany - A 24,750 square foot leased facility
principally for distribution of beryllium alloys.
Fukaya, Japan - A 35,500 square foot facility on 1.8 acres of
land in Saitama Prefecture principally for distribution of beryllium alloys.
Lincoln, Rhode Island - A manufacturing facility consisting of
124,000 square feet located on seven and one-half acres. This facility
produces metal strip inlaid with precious metals and related metal systems
products.
Buffalo, New York - A complex of approximately 97,000 square feet
on a 3.8 acre site providing facilities for manufacturing, refining and
laboratory services relating to high purity precious metals.
Syracuse, New York - A 14,000 square foot leased portion of a
multi-story facility for the sale of direct bond copper products.
Singapore, Singapore - A 4,500 square foot leased facility for
the assembly and sale of precious metal hermetic sealing lids.
Bethlehem, Pennsylvania - A 6,000 square foot leased facility for
the production and sales of ultra fine wire. The Company plans to close this
facility by the end of 1995. Production will be moved to and absorbed in both
the Buffalo, New York and Singapore facilities.
Production capacity is believed to be adequate to fill the
Company's backlog of orders and to meet the current level of demand. However,
the Company is currently re-
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evaluating production capacity in light of anticipated sales increases from
development of new applications for the Company's products and expanding
international presence.
ITEM 3. LEGAL PROCEEDINGS
The Company is from time to time a defendant in various civil and
administrative proceedings that relate to the ordinary course of its operating
business. These proceedings include environmental, health and safety related
actions and other matters relating to the Company's present and former
operations. Included in such proceedings are the matters discussed below.
(a) Environmental Proceedings.
In April 1993, the Company learned that the Ohio Environmental
Protection Agency ("the Ohio EPA") had referred it to the Ohio Attorney
General's Office (the "OAG") for consideration of initiation of enforcement
proceedings against the Company with respect to alleged violations of various
environmental laws at its facility in Elmore, Ohio. On October 19, 1994, the
Court of Common Pleas for Ottawa County, Ohio entered a consent decree
resolving alleged violations relating to air emission standards. Pursuant to
the terms of the consent decree, the Company paid a total of $47,000.
Negotiations between the OAG and the Company regarding alleged hazardous waste
and solid waste violations, including matters discovered during the course of
such negotiations, have resulted in a preliminary agreement pursuant to which a
consent decree would be entered providing that the Company would pay a total of
$227,000 and undertake a specific pollution prevention project in lieu of
paying additional penalties. This resolution requires the OAG and the Company
to finalize the language of a consent decree to be approved and entered by the
Court of Common Pleas for Ottawa County, Ohio.
On or about September 25, 1992, the Company was served with a
third-party complaint alleging that the Company, along with 159 other
third-party defendants, were jointly and severally liable under the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. Sections 9607(a) and 9613(b), for response costs incurred
in connection with the clean-up of hazardous substances in soil and groundwater
at the Douglassville Site (the "Site") located in Berks County, Pennsylvania.
United States of America v. Berks Associates, Inc., et al. v. Aamco
Transmissions, et al., United States District Court for the Eastern District of
Pennsylvania, Case No. 91-4968. Prior to the commencement of litigation, the
Company responded to a request for information from the United States
Environmental Protection Agency (the "United States EPA") by denying that it
arranged to send any substances to the Site. Although the Company has no
documents in its own files relating to the shipment of any waste to the Site,
documents maintained by third-party plaintiffs suggest that 8,344 gallons of
waste oil from the Company may have been taken there. According to a
consultant retained by third-party plaintiffs, approximately 153 million
gallons of waste were sent to the Site. It has been reported by counsel for
the third-party plaintiffs that the United States claims that it has spent $17
million in remediating the Site. The Company denies liability. Defendants and
some third-party defendants have spent approximately $2 million on studies and
preliminary clean-up. Consultants have estimated that the total clean-up costs
could range from $25-100
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million, depending on the type of remedy ultimately implemented. An alternate
remedy being presented by the Berks Associates PRP Group is estimated by its
consultants to cost approximately $30 million. The Company has been
participating in court-ordered settlement proceedings, which have resulted in a
de minimis settlement offer by the United States. The Company has accepted the
offer and is awaiting notice from the government showing the final settlement
calculation.
On July 26, 1994, the Company received a complaint, service of
which was waived on September 29, 1994, in Glidden Company et al. v. American
Color and Chemical, et al., No. 94-C3970, filed in the United States District
Court for the Eastern District of Pennsylvania. The plaintiffs are five
companies which, pursuant to orders issued by the United States EPA under
CERCLA, have been spending funds to secure, maintain and conduct an
investigation of the Berks Landfill in Sinking Springs, Pennsylvania. The
plaintiffs are alleged to have had their wastes disposed of at the landfill,
which operated from 1950 through October 1, 1986. The 18 defendants consist of
former owners or operators of the site and alleged transporters and/or
generators of waste disposed of at the site. It is believed that hundreds of
other entities disposed of waste at the site during its long period of
operation. The plaintiffs seek to recover their past and future costs pursuant
to rights of contribution under CERCLA and the Pennsylvania Hazardous Sites
Cleanup Act. Plaintiffs allege that, as of September 1994, they had spent
$355,000 to secure and maintain the site and that they expected to spend $1.7
million for a remedial investigation/feasibility study and a risk assessment.
A proposed case management order has been submitted to the court.
Proceedings Concluded Since the End of Third Quarter 1994. On
November 1, 1989, the Company appealed to the Ohio Environmental Board of
Review to vacate or modify certain conditions in an NPDES wastewater discharge
permit issued by the Ohio EPA for the Company's Elmore, Ohio facility. The
Company challenged these conditions on several bases, including technical
infeasibility and economic unreasonableness. Settlement discussions resulted
in an agreement pursuant to which the Ohio EPA modified the permit and the
Company dismissed its appeal.
(b) Beryllium Exposure Claims
The inhalation of excessive amounts of airborne beryllium
particulate may present a health hazard to certain individuals. For decades
the Company has operated its beryllium facilities under stringent standards of
inplant and outplant discharge. These standards, which were first developed by
the Atomic Energy Commission over forty years ago, were, in general,
substantially adopted by the United States EPA and the Occupational Safety and
Health Administration.
Pending Claims. The Company is currently a defendant in the
following product liability actions where the plaintiffs allege injury
resulting from exposure to beryllium and beryllium-containing materials and are
claiming recovery based on various legal theories. The Company believes that
resolution of these cases will not have a material adverse effect on the
Company.
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Date Lawsuit
Name of Plaintiff Instituted Forum Relief Requested
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John W. Rosenbauer and Spouse February 1989 Court of Common Pleas, Damages in excess of $20,000 for
Westmoreland County, personal injury and loss of consortium
Pennsylvania
Richard Neiman and Spouse November 1990 Court of Common Pleas, Damages in excess of $20,000 for
Philadelphia County, personal injury and in excess of
Pennsylvania $20,000 for loss of consortium
Geraldine G. Ruffin, September 1991 Superior Court, Essex Compensatory and punitive damages of
individually and as executrix County, New Jersey an unspecified amount
Steven Campbell January 1992 Superior Court for Compensatory and punitive damages of
Orange County, an unspecified amount
California
Ray Amante April 1992 Superior Court for Compensatory and punitive damages of
Orange County, an unspecified amount
California
McKinley Houk October 1992 United States District Compensatory damages of $5 million and
Court, Eastern District punitive damages of $3 million
of Tennessee
William Ray Vance and Spouse October 1992 United States District Compensatory damages of $3 million for
Court, Eastern District personal injury, $1 million for loss
of Tennessee of consortium and combined punitive
damages of $5 million
David Taggart and Spouse October 1992 Court of Common Pleas, Compensatory damages in excess of
Chester County, Pennsyl- $25,000 each for personal injury and loss
vania of consortium against Williams Ad-
vanced Materials, Inc. a subsidiary of
the Company
Ernest Needham December 1992 Superior Court of New Compensatory damages of an unspecified
Jersey, Passaic County amount
Harry Robbins and Spouse June 1993 Court of Common Pleas, Both parties individually seek
Montgomery County, compensatory damages in excess of
Pennsylvania $50,000. Mr. Robbins also seeks
punitive damages in excess of $50,000
Bruce Hand and Spouse September 1993 Superior Court, Passaic Compensatory damages of an unspecified
County, New Jersey amount
Frances Lutz February 1994 Superior Court, Passaic Compensatory damages of an unspecified
County, New Jersey amount
Troy Murphy Morgan, Corky June 1994 United States District Aggregate claim, including
Dean McCarter and Spouse, Court, Eastern District compensatory and punitive damages, in
Richard Emory Myers, Sr. and of Tennessee the amount of $19 million
Spouse and Kathlene Beatty
Larry Roberts and Spouse December 1994 Superior Court, Orange Both parties seek compensation damages
County, California in unspecified amounts. Mr. Roberts
also seeks punitive damages in an
unspecified amount
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Defense for each of the cases identified above is being conducted by counsel
selected by the Company and retained, with certain reservations of rights, by
the Company's insurance carriers.
The Company is also a defendant in separate suits filed on June
10, 1994 by six Company employees and their spouses against the Company and
certain Company employees in the Superior Court of Pima County, Arizona. The
plaintiffs claim that, during their employment with the Company, they
contracted chronic beryllium disease as a result of exposure to beryllium and
beryllium- containing products. The plaintiffs seek compensatory and punitive
damages of an unspecified amount based on allegations that the Company
intentionally misrepresented the potential danger of exposure to beryllium and
breached an agreement to pay certain benefits in the event the plaintiffs
contracted chronic beryllium disease. Defense of this case is being conducted
by counsel retained by the Company, and the Company's insurance carrier is
investigating its liability for these claims. The Company believes that
resolution of these cases will not have a material adverse effect on the
Company.
Recent Developments Relating to Pending Claims. David Taggart
and his spouse filed suit against WAM on October 2, 1992 in the Court of Common
Pleas of Chester County, Pennsylvania. Mr. Taggart claimed that he was exposed
to beryllium-containing materials manufactured, distributed or sold by WAM
during his employment. Mrs. Taggart claimed loss of consortium. The complaint
sought damages in excess of $25,000 under various theories. On August 3,
1994, the plaintiffs dismissed their complaint against WAM for lack of product
involvement so that the Company remains a party only as a defendant to
remaining cross-claims by other defendants.
(c) Asbestos Exposure Claims
A subsidiary of the Company (the "Subsidiary") is a co-defendant
in thirty cases making claims for asbestos-induced illness allegedly relating
to the former operations of the Subsidiary, then known as The S. K. Wellman
Corp. All of these cases have been reported in prior filings with the S.E.C.
The Subsidiary is one of a large number of defendants in each case. The plain-
tiffs seek compensatory and punitive damages, in most cases of unspecified
sums. Each case has been referred to a liability insurance carrier for
defense. With respect to those referrals on which a carrier has acted to date,
a carrier has accepted the defense of the actions, without admitting or denying
liability. Two hundred and ten similar cases previously reported have been
dismissed or disposed of by pre-trial judgment, one by jury verdict of no
liability and ten others by settlement for nominal sums. The Company believes
that resolution of the pending cases referred to above will not have a material
effect upon the Company.
The Subsidiary has entered into an agreement with the predecessor
owner of its operating assets, Pneumo Abex Corporation (formerly Abex
Corporation), and five insurers, regarding the handling of these cases. Under
the agreement, the insurers share expenses of defense, and the Subsidiary,
Pneumo Abex Corporation and the insurers share payment of settlements and/or
judgments. Certain expenses of handling the cases are also subject to a
limited, separate reimbursement agreement with Pneumo Abex Corporation. In
eleven of the pending cases, both expenses of defense and payment of
settlements and/or judgments are subject to a limited, separate reimbursement
agreement with MLX Corp., the parent of the company that purchased the
Subsidiary's operating assets in 1986.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Executive Officers of the Registrant
The following table provides information as to the executive
officers of the Company.
Name Age Positions and Offices
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Gordon D. Harnett 52 Chairman of the Board, President, Chief Executive Officer and Director
Carl Cramer 46 Vice President Finance, Chief Financial Officer
Jere H. Brophy 60 Vice President Technology
Stephen Freeman 48 Vice President Alloy Products
Craig B. Harlan 57 Vice President International - Europe
Robert H. Rozek 60 Senior Vice President International and Beryllium Products
Andrew J. Sandor 55 Vice President Operations
Daniel A. Skoch 45 Vice President Human Resources
Mr. Harnett was elected Chairman of the Board, President, Chief
Executive Officer and Director of the Company effective January 22, 1991. He
had served as a Senior Vice President of The B. F. Goodrich Company from
November 1988.
Mr. Cramer was elected Vice President Finance and Chief
Financial Officer in December 1994. Prior to that, he served as President of
U.S. Operations and Director for the Americas and Australasia for the Swedish
multinational, Esselte Meto.
Dr. Brophy was elected Vice President Technology effective March
31, 1988. Prior to that, he was Vice President of Engineering, Engine and
General Components Group, Automotive Sector of TRW Inc.
Mr. Freeman was elected Vice President Alloy Products effective
February 7, 1995. He had served as Vice President Sales and Marketing since
August 3, 1993. He had served as Vice President Sales and Marketing-Alloy
Products since July, 1992. Prior to that, he had served as Management
Consultant for Adastra, Inc.
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Mr. Harlan was elected Vice President International-Europe
effective June 7, 1994. He had served as Vice President Business Development
since August, 1993. He had served as Senior Vice President, Sales and
Marketing since October, 1991. He had served as Vice President/General
Manager, Alloy Division since January 1, 1987.
Mr. Rozek was elected Senior Vice President International and
Beryllium Products on March 7, 1995. He had served as Vice President
International effective October 1991. He had served as Vice President,
Corporate Development effective February 27, 1990. He was elected Vice
President, Governmental and Environmental Affairs in April 1989.
Mr. Sandor was elected Vice President Operations in October 1991.
He had served as Senior Vice President since September 1989. He was appointed
Vice President/General Manager, Material Systems Division effective January 1,
1988.
Mr. Skoch was elected Vice President Human Resources in July
1991. Prior to that he was Corporate Director - Personnel.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS
The Company's Common Stock is traded on the New York Stock
Exchange. As of March 7, 1995, there were 2,519 shareholders of record.
Information as to stock price and dividends declared set forth on page 17 in
Note M to the consolidated financial statements in the annual report to
shareholders for the year ended December 31, 1994 is incorporated herein by
reference. The Company's ability to pay dividends is generally unrestricted,
except that it is obligated to maintain a specified level of tangible net worth
pursuant to an existing credit facility.
ITEM 6. SELECTED FINANCIAL DATA
Selected Financial Data on pages 22 and 23 of the annual report
to shareholders for the year ended December 31, 1994 is incorporated herein by
reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Worldwide sales in 1994 were $346 million compared to $295
million in 1993 and $265 million in 1992. The product lines of beryllium
alloys, specialty metal systems and precious metal products achieved
significant sales increases in 1994. Sales also increased in the ceramics
product line while beryllium product line sales had a significant reduction in
1994 as compared to 1993.
The significant sales growth in beryllium alloys was achieved in
both domestic and international markets. The principal markets driving the
increase were automotive electronics, computers, telecommunications and
appliances. Most beryllium alloy products experienced gains in 1994 as
compared to 1993. On the economic front, beryllium alloys were supported by a
strong U.S. economy, continued growth in Asia and improving conditions in
Europe. While the favorable economic background was a plus, the key to the
added volume was a focused marketing effort. This effort was a combination of
the marketing, sales, technical, quality and operating groups working as a team
to provide quality, cost-competitive products on a timely basis. This was best
seen in the expanding use of the Company's Alloy 174 strip in automotive
electronics on a growing list of car platforms and global demand for the
Company's products in undersea cable components. Also, in the steel industry,
Phase 3HP Mold Plate underwent field trials at two slab casters during 1994
with performance results exceeding expectations in all respects.
Beryllium sales were lower due to completion of the Defense
Logistics Agency (DLA) supply contract and reduced AlBeMet(R) sales due to the
end of an application at a computer disk drive manufacturer. Although overall
defense spending is at a reduced level, this is still the base business to
support the beryllium product line in the near term. Looking further out,
efforts in marketing, research and manufacturing are devoted to developing
materials and applications for
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aerospace and avionics markets where evolving needs for high performance
materials are strong.
Ceramic sales increased in 1994 as compared to 1993. The
increase was principally in the U.S. automotive and worldwide
telecommunications industries, which have more than offset declining defense
applications. New applications with long- term growth potential are being
developed with recently introduced products derived from beryllia tape and
direct bond copper. Prospects for growth are promising in automotive
electronics and wireless communications.
Specialty metal systems saw major gains in 1994 as compared to
1993. During 1994, this product line was able to maintain the momentum of
programs set in motion in 1992 and 1993. The additional sales resulted
primarily from a combination of successfully executing marketing strategies,
enlarging market share and new product applications. The improved economy also
contributed to growth. In 1995, these combined efforts will continue, along
with a strong emphasis on the manufacturing and engineering areas.
Precious metal products also showed a significant increase in
1994 over 1993. Continued high demand and increased market share for frame lid
assemblies from semiconductor manufacturers, along with increasing vapor
deposition target sales, accounted for most of the improved volume. A
substantial portion of the increase came from frame lid assembly sales in Asia
through the Singapore facility. To further enhance this product line, Williams
Advanced Materials purchased the assets, including net working capital, of
Hydrostatics Inc., a small manufacturer of precious metal ultra-fine wire
produced using an innovative technology. This product fills an identified need
to support markets in the semiconductor and hybrid microelectronics industries.
The transaction was completed in October, 1994. Sales in 1995 are expected to
be adversely affected by technology changes that impact the frame lid assembly
volume. However, the newly acquired fine wire product will be introduced to
their customer base throughout 1995.
International sales were $115 million in 1994, $86 million in
1993 and $71 million in 1992. The 1994 increase was primarily from beryllium
alloys and the previously mentioned frame lid assemblies fabricated in
Singapore. This increase occurred even though delivery of disk drive
components ceased in 1994. Although much of the beryllium alloy sales increase
was in Europe and Asia, growth was also seen in other parts of the world.
International sales in 1995 will probably not match the 1994 growth rate, due
to anticipated lower sales of frame lid assemblies.
The Company's increased sales in 1993 as compared to 1992
involved all five product lines. A significant increase in precious metal
products, AlBeMet(R) sales for the disk drive application and higher beryllium
alloy sales in the U.S. and Asia accounted for most of the increase. Key
growth markets were automotive electronics, computers, semiconductors and
telecommunications.
Gross margin (sales less cost of sales) was 26.6%, 22.9% and
27.2% of sales in the years 1994, 1993 and 1992, respectively. A major portion
of the $2.6 million of provisions taken in 1994 was included in cost of sales.
A provision of $2 million was reserved for downsizing the Applications
Development Center in Fremont, California and a charge of $0.6 million was made
in the ceramic product line to transfer direct bond copper production from the
Syracuse, New
-12-
14
York facility to the Newburyport, Massachusetts plant. Without these charges,
gross margin would have been 27.2%. Higher sales and production volumes of
beryllium alloys account for much of the improvement. The beryllium alloy
product line has also been experiencing lower unit costs from the higher
throughput and has benefitted from manufacturing improvements, especially in
strip products. In the beryllium product line, margins recovered from 1993.
However, the major reason for improvement in the beryllium product line was
that 1994 did not experience the negative impact of manufacturing problems with
the AlBeMet(R) disk drive component that occurred in 1993.
The lower gross margin in 1993 compared to 1992 was caused by a
product mix shift to lower margin products, particularly those with a high
precious metal content, and manufacturing problems associated with the
AlBeMet(R) disk drive component.
Selling, administrative and general expenses in 1994 were $55.5
million (16.0% of sales) compared to $47.8 million (16.2% of sales) in 1993.
The increase was across all expense categories and includes an increased
accrual for incentive compensation. A portion of the increase in
administrative costs relates to an alloy business process redesign effort. A
group of employees and consultants have been charged with reviewing/analyzing
specific activities in the Company to find opportunities for improvement. This
process redesign effort will continue throughout 1995.
Selling, administrative and general expenses in 1993 increased
from 1992. The increase in marketing, selling and customer service activities
was partially offset by a reduction in administrative and general expenses
which included lower incentive compensation.
Research and development (R&D) expenses of $8.8 million in 1994
exceeded the $7.1 million spent in 1993 by more than 20%. The addition was
primarily in the beryllium and ceramic product lines where efforts are centered
on new product development. The beryllium alloy product line also saw an
increase as efforts were directed at both product development and process
technology enhancements. R&D expenses in 1995 are expected to be in the $8
million range. In 1992, R&D expenses were $7.3 million.
Interest expense was $2.1 million in 1994, $3.0 million in 1993
and $3.2 million in 1992. All amounts are net of interest capitalized on
active construction and mine development projects. Lower average debt reduced
interest costs in 1994. Lower interest rates and less debt, on average,
favorably impacted interest costs in 1993 as compared to 1992.
Other-net expense was $2.6 million in 1994, $2.2 million in 1993
and $1.3 million in 1992. This category included such expenses as amortization
of goodwill and other intangibles, the effect of currency exchange and
translation and other non- operating items. Included in all three years were
the postretirement benefit costs pursuant to Statement of Financial Accounting
Standard (FAS) 106 for a divested operation. In 1993, the Company made an
adjustment to the FAS 106 demographic assumptions for the divested operation,
which resulted in a reduction of the liability and increased income by $1.3
million. Concurrently, the carrying value of a building from the divested
operation was reduced by $0.9 million. Included in 1993 and 1992,
respectively, were $0.7 million and $1.4 million of nonrecurring gains.
-13-
15
Income before income taxes in 1994 of $23.0 million was
significantly higher than the 1993 pre-tax income of $7.7 million. Higher
sales volume and related gross margin improvements account for the increase.
The increased selling, general and administrative expense offsets some of the
gains in gross margin. In 1993, pre-tax income of $7.7 million was
significantly lower than the 1992 pre-tax income of $13.7 million. The
reduction was due to the lower gross margin, owing principally to manufacturing
problems with the disk drive component and lower sales of beryllium for
defense-related applications.
The effective tax rate employed for 1994 was 19.4% of pre-tax
income as compared to 16.2% of pre-tax income in 1993. The increase in
pre-tax income accounts for the higher rate. The effective rate was
significantly below statutory rates due to relatively fixed tax credits and
allowances as shown in Note H to the Consolidated Financial Statements. In
1992, an effective rate of 23.6% of pre-tax income was utilized.
Comparative earnings per share were $1.14 in 1994, $0.40 in 1993
and $0.65 in 1992.
FINANCIAL POSITION
CAPITAL RESOURCES AND LIQUIDITY
Cash flow from operating activities totaled $35.2 million in
1994. Cash balances increased by $12.7 million while total debt decreased by
$1.1 million. During 1994, accounts receivable increased $5.8 million or 13%,
which is slightly above the 12% year-on-year increase in fourth quarter sales.
Total inventories increased $7.1 million. The beryllium product line invento-
ries have been reduced to correspond to lower sales. The beryllium alloy
product line inventories grew in line with the higher sales levels.
Capital expenditures for property, plant and equipment amounting
to $17 million in 1994 were for upgrades and additions to improve quality and
productivity. Expenditures in 1994 included a project to extend the life and
capacity of the waste disposal pond at the Company's Utah extraction facility.
Capital expenditures in 1995 will probably exceed the $17 million spent in
1994.
Long-term financial resources available to the Company include
$60 million of medium-term notes and $50 million under a bank credit agreement
(unused at December 31, 1994). Long-term debt at December 31, 1994 was $18.5
million or 9% of total capital.
Short-term debt at December 31, 1994 was $20.6 million, of which
$5 million represents the current maturity of a medium-term note, and the
remainder is denominated principally in gold and yen to provide hedges against
assets so denominated. In addition, credit lines amounting to $59.8 million
are available.
Funds being generated from operations plus the available
borrowing capacity are believed adequate to support operating requirements,
capital expenditures, remediation projects, dividends and small acquisitions.
Excess cash, if any, is invested in money market instruments and other high
quality investments.
-14-
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Cash flow from operating activities in 1993 was $18 million. The
Company borrowed the $15 million cash surrender value from a group of
Company-owned life insurance policies. The proceeds were used to repay all
borrowings under the bank credit agreement. Total debt was reduced $13.4
million while capital expenditures for property, plant and equipment totaled
$11.9 million and dividends totalled $4.2 million. Long-term debt at December
31, 1993 was 12% of total capital.
ORE RESERVES
The Company's reserves of beryllium-bearing bertrandite ore are
located in Juab County, Utah. An ongoing drilling program has generally added
to proven reserves. Proven reserves are the measured quantities of ore
commercially recoverable through the open pit method. Probable reserves are
the estimated quantities of ore known to exist, principally at greater depths,
but prospects for commercial recovery are indeterminable. Ore dilution that
occurs during mining approximates 7%. About 87% of beryllium in ore is
recovered in the extraction process. The Company augments its proven reserves
of bertrandite ore through the purchase of imported beryl ore (approximately 4%
beryllium) which is also processed at the Utah extraction plant.
1994 1993 1992 1991 1990
----- ------ ------ ------ ------
Proven bertrandite ore reserves at
year end (thousands of dry tons) 6,747 6,786 6,787 6,855 6,758
Grade % beryllium 0.251% 0.251% 0.251% 0.251% 0.251%
Probable bertrandite ore reserves at
year-end (thousands of dry tons) 7,559 7,594 7,482 7,215 7,302
Grade % beryllium 0.279% 0.279% 0.281% 0.284% 0.281%
Bertrandite ore processed (thousands
of dry tons, diluted) 79 92 91 80 85
Grade % beryllium, diluted 0.240% 0.232% 0.234% 0.237% 0.234%
INFLATION AND CHANGING PRICES
The prices of major raw materials, such as copper, nickel and
gold, purchased by the Company were up during 1994. Such changes in costs are
generally reflected in selling price adjustments. The prices of labor and
other factors of production generally increase with inflation. Additions to
capacity, while more expensive over time, usually result in greater
productivity or improved yields. However, market factors, alternative
materials and competitive pricing have affected the Company's ability to offset
wage and benefit increases. The Company employs the last-in, first-out (LIFO)
inventory valuation method domestically to more closely match current costs
with revenues.
-15-
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ENVIRONMENTAL MATTERS
As indicated in Note K to the Consolidated Financial
Statements, the Company maintains an active program of environmental
compliance. For projects involving remediation, estimates of the probable
costs are made and the Company has set aside a reserve of $3.8 million at
December 31, 1994 ($4.4 million at December 31, 1993). This reserve covers
existing or currently foreseen projects.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of independent auditors and the following
consolidated financial statements of the Company included in the annual report
to shareholders for the year ended December 31, 1994 are incorporated herein by
reference:
Consolidated Balance Sheets - December 31, 1994 and 1993.
Consolidated Statements of Income - Years ended December 31, 1994,
1993 and 1992.
Consolidated Statements of Shareholders' Equity - Years ended December
31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows - Years ended December 31, 1994,
1993 and 1992.
Notes to Consolidated Statements.
Report of Independent Auditors.
Quarterly Data on page 17 of the annual report to shareholders for the years
ended December 31, 1994 and December 31, 1993 and Ore Reserves on page 15 of
this Form 10-K annual report for the year ended December 31, 1994 are
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
-16-
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under Election of Directors on pages 2 through
5 of the Proxy Statement dated March 13, 1995 is incorporated herein by
reference. Information with respect to Executive Officers of the Company is
set forth earlier on pages 9 and 10 of this Form 10-K annual report.
ITEM 11. EXECUTIVE COMPENSATION
The information under Executive Officer Compensation on pages
8 through 16 of the Proxy Statement dated March 13, 1995 is incorporated herein
by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information under Common Stock Ownership of Certain
Beneficial Owners and Management on pages 6 and 7 of the Proxy Statement dated
March 13, 1995 is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information under Compensation Committee Interlocks and
Insider Participation and Related Party Transactions on page 16 of the Proxy
Statement dated March 13, 1995 is incorporated herein by reference.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) 1. Financial Statements and Supplemental Information
Included in Part II of this Form 10-K annual report
by reference to the annual report to shareholders for
the year ended December 31, 1994 are the following
consolidated financial statements:
Consolidated Balance Sheets - December 31, 1994 and
1993.
Consolidated Statements of Income - Years ended
December 31, 1994, 1993 and 1992.
Consolidated Statements of Shareholders' Equity -
Years ended December 31, 1994, 1993 and 1992.
Consolidated Statements of Cash Flows - Years ended
December 31, 1994, 1993 and 1992.
Notes to Consolidated Statements.
Report of Independent Auditors.
(a) 2. Financial Statement Schedules
The following consolidated financial information for
the years 1994, 1993 and 1992 is submitted herewith:
Schedule II - Valuation and qualifying accounts
All other schedules for which provision is made in
the applicable accounting regulations of the
Securities and Exchange Commission are not required
under the related instructions or are inapplicable,
and therefore have been omitted.
-18-
20
(a) 3. Exhibits
(3a) Articles of Incorporation of the Company as
amended February 28, 1989.
(3b) Regulations of the Company as amended April
25, 1989 and further amended April 27, 1993.
(4a) Credit Agreement dated as of December 13,
1994 between the Company and National City
Bank acting for itself and as agent for three
other banking institutions.
(4b) Rights Agreement between the Company and
Society National Bank (formerly Ameritrust
Company National Association) as amended
February 28, 1989.
(4c) Issuing and Paying Agency Agreement dated as
of February 1, 1990, including a specimen
form of a medium term note issued thereunder,
between the Company and First Trust N.A.
(formerly with Morgan Guaranty Trust Company
of New York).
(4d) Pursuant to Regulation S-K, Item 601 (b)(4),
the Company agrees to furnish to the
Commission, upon its request, a copy of the
instruments defining the rights of holders of
long-term debt of the Company that are not
being filed with this report.
(10a) * Employment Agreement entered into by the
Company and Mr. Gordon D. Harnett on
March 20, 1991 (filed as Exhibit 10a to
the Company's Form 10-K Annual Report for
the year ended December 31, 1990),
incorporated herein by reference.
(10b) * Form of Employment Agreement entered into
by the Company and Messrs. Brophy, Hanes,
Harlan, Rozek and Sandor on
February 20, 1989.
(10c) * Form of Amendment to the Employment
Agreement (dated February 20, 1989)
entered into by the Company and Messrs.
Brophy, Hanes, Harlan, Rozek and Sandor
dated February 28, 1991 (filed as Exhibit
10c to the Company's Form 10-K Annual
Report for the year ended December 31,
1990), incorporated herein by reference.
(10d) * Form of Employment Agreement entered into
by the Company and Mr. Daniel A. Skoch on
January 28, 1992, Mr. Stephen Freeman
dated August 3, 1993, and Mr. Carl Cramer
dated December 6, 1994 (filed as Exhibit
10d to the Company's Form 10-K Annual
Report for the year ended December 31,
1991), incorporated herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
-19-
21
(10e) * Form of Trust Agreement between the
Company and Key Trust Company of Ohio,
N.A. (formerly Ameritrust Company
National Association) on behalf of
Messrs. Waite, Brophy, Hanes, Harlan,
Rozek and Sandor dated February 20, 1989,
Mr. Harnett dated March 20, 1991 and Mr.
Skoch dated January 28, 1992, Mr. Stephen
Freeman dated August 3, 1993, and Mr.
Carl Cramer dated December 6, 1994.
(10f) Form of Indemnification Agreement entered
into by the Company and Mr. C. G. Waite
on June 27, 1989 and Mr. G. D. Harnett on
March 20, 1991.
(10g) Form of Indemnification Agreement entered
into by the Company and Messrs. J. H.
Brophy, A. J. Sandor, C. B. Harlan, H.
D. Hanes, and R. H. Rozek on June 27,
1989, Mr. D. A. Skoch on January 28,
1992, Mr. Stephen Freeman dated August 3,
1993, and Mr. C. Cramer on December 6,
1994.
(10h) Form of Indemnification Agreement entered
into by the Company and Messrs. C. F.
Brush, F. B. Carr, W. E. MacDonald, J.
L. McCall, W. P. Madar, G. C. McDonough,
R. M. McInnes, H. G. Piper and J.
Sherwin Jr. on June 27, 1989 and Mr. A.
C. Bersticker on April 27, 1993.
(10i) * Directors' Retirement Plan as amended
January 26, 1993 (filed as Exhibit 10i to
the Company's Form 10-K Annual Report for
the year ended December 31, 1992),
incorporated herein by reference.
(10j) * Deferred Compensation Plan for
Nonemployee Directors effective January
1, 1992 (filed as Exhibit I to the
Company's Proxy Statement dated March 6,
1992), incorporated herein by reference.
(10k) * Form of Trust Agreement between the
Company and National City Bank dated
January 1, 1992 on behalf of Nonemployee
Directors of the Company (filed as
Exhibit 10k to the Company's Form 10- K
Annual Report for the year ended December
31, 1992), incorporated herein by
reference.
(10l) * Incentive Compensation Plan adopted
December 16, 1991, effective January 1,
1992 (filed as Exhibit 10l to the
Company's Form 10-K Annual Report for the
year ended December 31, 1991),
incorporated herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
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22
(10m) * Management Performance Compensation Plan
adopted February 22, 1993, effective
January 1, 1993 (filed as Exhibit 10m to
the Company's Form 10-K Annual Report for
the year ended December 31, 1992),
incorporated herein by reference.
(10n) * Supplemental Retirement Plan as amended
and restated December 1, 1992 (filed as
Exhibit 10n to the Company's Form 10-K
Annual Report for the year ended December
31, 1992), incorporated herein by
reference.
(10o) * Amendment Number 3, adopted February 8,
1995, to Supplemental Retirement Benefit
Plan as amended and restated December 1,
1992.
(10p) * Form of Trust Agreement between the
Company and Key Trust Company of Ohio,
N.A. (formerly Society National Bank)
dated January 8, 1993 pursuant to the
December 1, 1992 amended Supplemental
Retirement Benefit Plan (filed as Exhibit
10p to the Company's Form 10-K Annual
Report for the year ended December 31,
1992), incorporated herein by reference.
(10q) * Management Performance Compensation Plan
adopted February 7, 1995, effective
January 1, 1995.
(10r) * 1979 Stock Option Plan, as amended
pursuant to approval of shareholders on
April 21, 1982 (filed as Exhibit 15A to
Post-Effective Amendment No. 3 to
Registration Statement No. 2- 64080),
incorporated herein by reference.
(10s) * 1984 Stock Option Plan as amended by the
Board of Directors on April 18, 1984 and
February 24, 1987 (filed as Exhibit 4.4
to Registration Statement No. 33-28605),
incorporated herein by reference.
(10t) * 1989 Stock Option Plan (filed as Exhibit
4.5 to Registration Statement No.
33-28605), incorporated herein by
reference.
(10u) * 1990 Stock Option Plan for Nonemployee
Directors (filed as Exhibit 4.6 to
Registration Statement No. 33-35979),
incorporated herein by reference.
(10v) * 1977 Stock Appreciation Rights Plan
(filed as Exhibit 4.6 to Registration
Statement No. 33- 28605), incorporated
herein by reference.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
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23
(10w) * 1995 Stock Incentive Plan subject to
approval by shareholders at the Company's
annual meeting to be held on May 2, 1995
(filed as Exhibit A to the Proxy
Statement dated March 13, 1995),
incorporated herein by reference.
(11) Statement re: calculation of per share
earnings for the years ended December 31,
1994, 1993 and 1992.
(13) Portions of the Annual Report to shareholders
for the year ended December 31, 1994.
(21) Subsidiaries of the registrant.
(23) Consent of Ernst & Young LLP.
(24) Power of Attorney.
(27) Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the fourth
quarter of the year ended December 31, 1994.
*Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 14(c) of this Report.
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24
SIGNATURES
Pursuant to the requirements of Section 13 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.
March 22, 1995
BRUSH WELLMAN INC.
By: /s/Gordon D. Harnett By: /s/Carl Cramer
------------------------------------- ---------------------------
Gordon D. Harnett Carl Cramer
Chairman of the Board, Vice President and
President and Chief Executive Officer Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.
GORDON D. HARNETT* Chairman of the Board,
- ------------------------------- President, Chief Executive March 22, 1995
Gordon D. Harnett Officer and Director
(Principal Executive Officer)
CARL CRAMER* Vice President and Chief March 22, 1995
- ------------------------------- Financial Officer
Carl Cramer
ALBERT C. BERSTICKER* Director March 22, 1995
- -------------------------------
Albert C. Bersticker
CHARLES F. BRUSH, III* Director March 22, 1995
- -------------------------------
Charles F. Brush, III
FRANK B. CARR* Director March 22, 1995
- -------------------------------
Frank B. Carr
WILLIAM P. MADAR* Director March 22, 1995
- -------------------------------
William P. Madar
JULIEN L. McCALL* Director March 22, 1995
- -------------------------------
Julien L. McCall
GERALD C. McDONOUGH* Director March 22, 1995
- -------------------------------
Gerald C. McDonough
ROBERT M. McINNES* Director March 22, 1995
- -------------------------------
Robert M. McInnes
HENRY G. PIPER* Director March 22, 1995
- ------------------------------
Henry G. Piper
JOHN SHERWIN, JR.* Director March 22, 1995
- ----------------------------
John Sherwin, Jr.
CLARK G. WAITE* Director March 22, 1995
- ------------------------------
Clark G. Waite
*The undersigned, by signing his name hereto, does sign and
execute this report on behalf of each of the above-named officers and
directors of Brush Wellman Inc., pursuant to Powers of Attorney executed by
each such officer and director filed with the Securities and Exchange
Commission.
By: /s/Carl Cramer
----------------------
Carl Cramer March 22, 1995
Attorney-in-Fact
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25
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
BRUSH WELLMAN AND SUBSIDIARIES
Years ended December 31, 1994, 1993 and 1992
COL. A COL. B COL. C COL. D COL. E
- -----------------------------------------------------------------------------------------------------------------------------------
ADDITIONS
-------------------------------------
DESCRIPTION Balance at Beginning (1) (2) Deductions--Describe BALANCE AT END
of Period Charged to Costs Charged to Other of Period
and Expenses Accounts--Describe
- -----------------------------------------------------------------------------------------------------------------------------------
Year ended December 31, 1994
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 904,913 $ 254,042 $ -0- $ 122,158(A) $1,036,797
Inventory reserves and
obsolescence $3,187,135 $ -0- $ -0- $1,721,096(C) $1,466,039
Allowance for deferred tax
assets $1,540,000 $ -0- $ -0- $1,540,000(D) $ -0-
Year ended December 31, 1993
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 781,389 $ 234,392 $ -0- $ 110,868(A) $ 904,913
Inventory reserves and
obsolescence $ -0- $3,187,135 $ -0- $ -0- $3,187,135
Allowance for deferred tax
assets $ -0- $ -0- $1,540,000(B) $ -0- $1,540,000
Year ended December 31, 1992
Deducted from asset accounts:
Allowance for doubtful
accounts receivable $ 792,162 $ 5,245 $ -0- $ 16,018(A) $ 781,389
Note A - Bad debts written off.
Note B - The Company adopted SFAS No. 109, "Accounting for Income Taxes,"
effective January 1, 1993. Under Statement 109, a deferred tax asset of
$1,540,000 was recorded for net operating loss carryforwards. Since it
was unknown as to whether the deferred tax asset would be utilized, a
valuation allowance was recorded to offset the asset.
Note C - Inventory written off.
Note D - Net operating loss carryforwards utilized or expired.