EXHIBIT 99.1
CONTACT: Jeffrey J. Hattara (NYSE - BMC)
(612) 851-6030 FOR IMMEDIATE RELEASE
BMC REPORTS SECOND QUARTER 1998 RESULTS
July 24, 1998 - Minneapolis, MN - BMC Industries, Inc. reported a net loss of
$38.1 million, or $1.42 per diluted share, for the second quarter 1998.
Included in the loss were one-time, non-cash after-tax charges of $26.7 million
($42.8 million pre-tax) for write-down of the value of certain Mask Operations
fixed assets and $6.9 million ($11.0 million pre-tax) for the write-off of
acquired research and development purchased in conjunction with the previously
announced Orcolite acquisition. In addition, the Company incurred unusual
second quarter charges of $7.1 million ($11.3 million pre-tax) primarily for
moving certain mask inspection operations, early mask line shutdowns and
layoffs, and establishing additional mask inventory reserves. Excluding the
charges described above, BMC had net earnings of $2.6 million, or $0.09 per
diluted share compared to earnings of $12.0 million, or $0.42 per share, for the
second quarter 1997. Total second quarter revenues increased 6% from $80.3
million in 1997 to $84.9 million in 1998.
Paul B. Burke, BMC's Chairman and Chief Executive Officer stated "While
obviously we are disappointed to report such a loss for the quarter, it should
be noted that the loss is predominantly the result of one-time, non-cash
charges. The largest of these charges is the mask asset writedown which was
necessitated by severe pricing reductions and continuing adverse market
conditions for computer monitor masks. After careful assessment of the computer
monitor mask markets and business potential, management determined it was
appropriate to write-down the value of these assets. While Mask Operations
faced such serious challenges during the quarter, Vision-Ease and BMSP had
record second quarters in both revenue and profitability and the integration of
the Orcolite business with Vision-Ease is proceeding as planned."
Second quarter sales for the Precision Imaged Products operation (including both
the Mask Operations and Buckbee-Mears St. Paul) were 4% below sales in the
second quarter 1997. Computer monitor sales were less than forecast, but were
345% over the prior year increasing to $10.2 million in the second quarter
compared to $2.3 million in the second quarter of 1997. Television mask unit
sales were up slightly over 1997; however, sales dollars were down 22% from the
prior year quarter primarily due to the sales mix shift from invar to standard
AK steel masks and overall price decreases. Invar sales were down 48% compared
to the prior year quarter. Mask Operations anticipates that the soft market for
invar television masks will
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continue for the balance of the year. Sales of jumbo (30" and larger) masks
made of AK steel decreased 21% while sales of large (25" to 29") masks increased
23% over the prior year quarter.
Jeffrey J. Hattara, BMC's Chief Financial Officer, stated "Mask Operations is
taking the necessary steps to respond to the current difficult market
conditions. As previously announced, Mask Operations has idled three mask
production lines (two television and one monitor) at its Cortland, New York
facility to bring current inventory levels in line with demand. The Company
anticipates these lines will be idled for most of the third quarter. However,
actual shutdown time will depend upon customer order levels. Secondly,
employment has been reduced by approximately 430 permanent and 150 temporary
employees due to this shutdown. Finally, Mask Operations is consolidating the
inspection of computer monitor masks at its Tatabanya, Hungary location to
capitalize on the efficiencies of the inspection process at that location, and
plans to move the inspection of additional masks to Hungary before the end of
the year. These steps will reduce Mask Operations' ongoing production costs."
Buckbee-Mears St. Paul (BMSP) achieved excellent financial results, posting a
20% increase in revenue over the prior year quarter and an 18% increase in
operating profits. BMSP is continuing to find high demand for precision etched
and electroformed parts.
Including the impact of the Orcolite acquisition which was completed in May,
BMC's Optical Products operation achieved sales growth of 34% over the prior
year, while profits grew 20%. Excluding the Orcolite impact, sales of the
Vision-Ease base business grew 10% over the prior year quarter. The increased
revenue and profitability were driven by the continued strong sales of high-end
products (polycarbonate, high-index, progressive and polarizing sun lenses)
which grew 83% over the prior year quarter, including the addition of the
Orcolite lens operation. Excluding Orcolite, high-end sales grew 34%. Market
acceptance of the new Tegra-Registered Trademark- premium polycarbonate lens has
been excellent and sales continue to grow.
Transfer of the polycarbonate manufacturing operations to the new production
facility in Ramsey, Minnesota was completed as scheduled in the second quarter.
Benefits of improved yields and productivity from this new facility are
anticipated in the remainder of 1998.
Statements made in this press release which are not historical, including
statements regarding future performance, are forward looking statements and as
such are subject to a number of risks, including integration of the Orcolite
acquisition, lower demand for televisions and computer monitors, further mask
price declines, inability to penetrate the lead frame market, higher operating
expenses and lower yields associated with production start-up, foreign currency
fluctuations, successful customer part qualifications and the effect of economic
uncertainty in Asia. These and other risks and uncertainties are detailed in
the Company's Form 10-K for the year ended December 31, 1997.
Also, in order to improve the communication process with the investing community
and our shareholders, all press releases and more detailed company information
will be posted on BMC's corporate website at www.bmcind.com. Because of this
change, the Company will no longer be sending out quarterly shareholders'
letters.
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BMC is one of the world's largest manufacturers of aperture masks for color
television picture tubes and computer monitors. The Company is also a leading
producer of polycarbonate, glass and plastic eyewear lenses. The common stock
of the Company is traded on the New York Stock Exchange under the symbol "BMC".
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BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30 June 30
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1998 1997 1998 1997
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Revenues $ 84,941 $ 80,257 $165,025 $ 157,384
Cost of products sold 82,080 58,398 150,535 119,543
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Gross Margin 2,861 21,859 14,490 37,841
Selling 3,914 2,737 7,203 5,574
Administrative 1,529 1,089 2,859 2,628
Impairment of long-lived assets 42,800 - 42,800 -
Acquired research and development 11,000 - 11,000 -
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Income from Operations (56,382) 18,033 (49,372) 29,639
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Other Income and (Expense)
Interest expense (4,318) (160) (5,701) (304)
Interest income 45 56 77 98
Other income (expense) (389) (33) (533) 229
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Earnings before Income Taxes (61,044) 17,896 (55,529) 29,662
Income Taxes (22,962) 5,907 (21,256) 9,790
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Net Earnings $ (38,082) $ 11,989 $(34,273) $ 19,872
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Net Earnings Per Share:
Basic $ (1.42) $ 0.44 $ (1.27) $ 0.72
Diluted (1.42) 0.42 (1.27) 0.70
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Number of Shares Included in Per Share Computation:
Basic 26,905 27,463 26,949 27,437
Diluted 26,905 28,496 26,949 28,477
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BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)
June 30 December 31
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1998 1997
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ASSETS
Cash and cash equivalents $ 2,969 $ 2,383
Trade accounts and notes receivable, net 45,077 29,824
Inventories 95,881 70,111
Deferred income taxes 8,724 5,881
Other current assets 9,775 13,595
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Total Current Assets 162,426 121,794
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Property, Plant and Equipment 271,775 283,070
Less Accumulated Depreciation 110,381 100,688
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Property, plant and equipment, net 161,394 182,382
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Deferred income taxes 19,099 1,429
Other assets, net 77,114 13,802
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TOTAL ASSETS $ 420,033 $ 319,407
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Short-term borrowings $ 979 $ 1,139
Accounts payable 24,458 25,623
Income taxes payable 415 2,830
Accrued expenses and other current liabilities 25,955 17,288
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Total Current Liabilities 51,807 46,880
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Long-term debt 219,164 73,426
Other liabilities 17,570 17,718
Deferred income taxes 3,757 2,631
Stockholders' equity
Common stock 46,543 62,263
Retained earnings 83,613 118,693
Cumulative translation adjustment (1,350) (1,217)
Other (1,071) (987)
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TOTAL STOCKHOLDERS' EQUITY 127,735 178,752
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 420,033 $ 319,407
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