Net income for 2000 was $14.2 million or $0.86 diluted earnings
per share, more than double the 1999 net income performance of
$6.4 million or $0.40 diluted earnings per share. Fourth quarter 2000
net income of $3.9 million, or $0.23 per share diluted, is up 209%
over net income of $1.3 million, or $0.08 per share diluted, for the
same period last year and was in line with analyst expectations of
$0.17-$0.25 diluted per share.
Earnings for the fourth quarter and year, as compared to 1999,
were positively affected by the double-digit sales growth, operating
improvements resulting in higher gross margin as a percent of sales,
and tax credits associated with foreign operations. Earnings for the
fourth quarter and year were negatively impacted by foreign currency
translation rates which were partially offset by currency hedge gains,
an increase in administrative expense including reorganization costs,
litigation defense expense and reserves related to chronic beryllium
disease, incentive compensation and inventory valuation adjustments,
portions of which are non-recurring.
Metal Systems Group
The Metal Systems Group consists of Alloy Products, Technical
Materials, Inc. (TMI) and Beryllium Products.
The Metal Systems Group's 2000 sales of $378.2 million were up 24%
from 1999 sales of $306.1 million. Operating profit for 2000 was
$36.6 million, up 125% versus $16.3 million for 1999. Fourth quarter
sales grew 27% to $98.7 million from $77.6 million in the fourth
quarter of 1999. Fourth quarter operating profits were $11.2 million,
an increase of $7.6 million versus $3.6 million for the fourth quarter
of 1999.
Despite supply constraints in strip form products, Alloy Product
2000 sales were up 29% and 23% respectively over the fourth quarter
and 1999. The demand from telecommunications, computers and automotive
electronics product applications continues to outpace the ramp up of
the new alloy strip mill at the Company's Elmore, Ohio facility by
approximately 20%. These high-tech product applications include
internet infrastructure equipment, cellular base stations,
amplification systems, data storage arrays and handsets. Alloy strip
product sales represent approximately one third of the Company's total
sales. On average, production in the new strip mill increased
approximately 25% over 1999. Elmore strip shipments and production set
a record high in the month of November, which helped fill the void
created at the end of the third quarter caused by equipment related
problems. Alloy bulk products also experienced double-digit growth
during 2000 fueled partially by telecommunication applications.
TMI had a record year for sales and operating profits with sales
growth up 32% in 2000 and 21% for the fourth quarter. Throughout the
year TMI had experienced strong demand from telecommunications,
computers and automotive electronic market applications.
Beryllium Products' sales were up 31% and 7% respectively for the
year 2000 and fourth quarter as compared to the same period last year.
As expected, Beryllium Products was profitable during the second half
of the year.
Metal Systems Group
Microelectronics Group
The Microelectronics Group includes Williams Advanced Materials
Inc. (WAM) and Electronic Products.
Microelectronics' sales grew 27% to $179.1 million in 2000
compared with $140.6 million in 1999. Fourth quarter sales grew 18% to
$47.5 million as compared to $40.1 million in 1999. Operating profit
was $11.4 million for 2000 unchanged versus 1999 and $1.2 million
versus $3.6 million for the fourth quarter of 1999. Fourth quarter
profits for 2000 compared to last year were adversely affected by the
elimination of a product line at Electronics Products, and inventory
valuation adjustments.
WAM sales grew 25% for the year 2000 and 14% for the quarter as
compared to the same period last year. Approximately 28% of the
increased sales for the year and 21% for the quarter were due to
higher precious metal prices.
WAM's precious metal and metal alloy physical vapor deposition
(PVD)/vacuum cast materials had exceptional growth throughout the year
driven by demand for DVD discs and wafer fabrication of compound
semiconductor devices for wireless and photonic technology. The number
of PVD targets manufactured for DVD disc applications has more than
quadrupled since 1998. WAM's Pure Tech products experienced a 127%
increase in sales for the year, the most significant growth coming
from the MR/GR market and photonics used to enhance fiberoptic
capacity. Sales progress has also continued in WAM's new specialty
alloy products including braze alloys and high purity nickel alloys
used in electron tube and aerospace applications.
Electronic Products' sales were up 33% for the year and fourth
quarter as compared to 1999. Strong demand for beryllium ceramic
products and RF packages for wireless telecommunications and
high-performance circuitry for fiberoptics and defense applications
continued through the fourth quarter. Operating profit for the year
was up 278% but down 40% for the fourth quarter as compared to 1999.
Outlook
Thus far in the first quarter of 2001, overall demand remains
strong and we are cautiously optimistic about the outlook for the
remainder of the year. We are seeing some signs of slower growth in
certain of the sectors we serve and thus do not expect 20% - 30%
growth in these sectors for 2001 overall. However, barring any
significant downturn in the worldwide economies or production issues
in the Alloy Products' supply chain we do expect to see continued
double-digit sales growth for the Company overall and continued
improvement in operating margins throughout the year. Rising energy
costs, foreign exchange rates and higher tax rates could also have an
impact on earnings.
Chairman's Comments
Commenting on the results, Gordon D. Harnett, Chairman, President
and Chief Executive Officer, said, "I am pleased to report the fifth
consecutive record sales quarter for the Company and substantial
earnings improvement over 1999. Demand throughout 2000 was strong
across the majority of our business lines. We made significant
progress this year in increasing our production capability in the ramp
up of the new cast shop and strip mill. We look forward to our
continued growth and profit improvement in 2001."
Forward-looking Statements
Any forward-looking statements in this announcement are based on
current expectations. The Company's performance may differ from that
contemplated by the forward-looking statements as a result of a
variety of factors including the global and domestic economy,
manufacturing yields and operating performances at the Company's
various facilities, changes in product mix, the timely and successful
completion of pending capital expansions, tax rates, exchange rates
and energy costs.
Brush Engineered Materials Inc., is headquartered in Cleveland,
Ohio. The Company and its subsidiaries supply worldwide markets with
Beryllium Products, Alloy Products, Electronic Products, Precious
Metal Products, and Engineered Material Systems.
For further information, please contact:
Michael C. Hasychak
Vice President, Treasurer and Secretary
Brush Engineered Materials Inc.
17876 St. Clair Ave.
Cleveland, Ohio 44110
(216) 383-6823
http://www.BEMinc.com
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Brush Engineered Materials Inc.
Digest of Earnings
January 25, 2001
2000 1999
------------ ------------
Fourth Quarter
Net Sales $147,158,000 $120,079,000
Net Income $3,934,000 $1,271,000
Share Earnings - Basic $0.24 $0.08
Average Shares - Basic 16,423,524 16,204,067
Share Earnings - Diluted $0.23 $0.08
Average Shares - Diluted 16,622,117 16,272,190
Year-to-date
Net Sales $563,690,000 $455,707,000
Net Income $14,165,000 $6,439,000
Share Earnings - Basic $0.87 $0.40
Average Shares - Basic 16,292,431 16,198,885
Share Earnings - Diluted $0.86 $0.40
Average Shares - Diluted 16,448,667 16,279,591
Consolidated Balance Sheets
Dec. 31, Dec. 31,
(Dollars in thousands) 2000 1999
----------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents $4,314 $99
Accounts receivable 92,334 79,772
Inventories 115,643 110,570
Prepaid expenses 8,525 7,204
Deferred income taxes 29,263 26,610
---------- ----------
Total Current Assets 250,079 224,255
Other Assets 31,967 33,212
Property, Plant and Equipment 449,697 440,234
Less allowances for depreciation,
depletion and impairment 279,237 269,295
---------- ----------
170,460 170,939
---------- ----------
$452,506 $428,406
---------- ----------
---------- ----------
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $25,435 $34,687
Accounts payable 34,714 27,731
Other liabilities and accrued items 39,021 29,869
Dividends payable 1,987 1,959
Income taxes 5,535 5,178
---------- ----------
Total Current Liabilities 106,692 99,424
Other Long-Term Liabilities 15,878 14,407
Retirement and Post-employment Benefits 39,576 39,430
Long-term Debt 43,305 42,305
Deferred Income Taxes 17,148 12,202
Shareholders' Equity 229,907 220,638
---------- ----------
$452,506 $428,406
---------- ----------
---------- ----------
See notes to consolidated financial statements.
Consolidated Statements of Cash Flows
Year Ended
Dec. 31, Dec. 31,
(Dollars in thousands) 2000 1999
----------------------------------------------------------------------
Net Income $14,165 $6,439
Adjustments to Reconcile Net Income
to Net Cash
Provided From Operating Activities:
Depreciation, depletion and
amortization 20,878 20,779
Amortization of mine development 1,786 6,258
Decrease (Increase) in accounts
receivable (15,453) (16,833)
Decrease (Increase) in inventory (6,312) (7,641)
Decrease (Increase) in prepaid and
other current assets (1,062) (6,487)
Increase (Decrease) in accounts
payable and accrued expenses 16,291 16,080
Increase (Decrease) in interest
and taxes payable 2,159 1,041
Increase (Decrease) in deferred
income taxes 435 6,684
Increase (Decrease) in other
long-term liabilities (3,307) (39)
Impairment of fixed assets and
related intangibles - -
Other - net 5,846 (1,806)
------- -------
Net Cash Provided From
Operating Activities 35,426 24,475
Cash Flows from Investing Activities:
Payments for purchase of property,
plant and equipment (21,306) (16,758)
Payments for mine development (332) (288)
Proceeds from sale of property,
plant and equipment 600 -
Proceeds from (Payments for) other
investments - 37
------- -------
Net Cash Provided From (Used in)
Investing Activities (21,038) (17,009)
Cash Flows from Financing Activities:
Proceeds from issuance/(repayment)
of short-term debt (6,694) (17,684)
Proceeds from issuance of
long-term debt 23,000 36,000
Repayment of long-term debt (22,000) (20,000)
Issuance of Common Stock under
stock option plans 3,691 188
Purchase of Common Stock for
treasury - -
Payments of dividends (7,867) (7,843)
------- -------
Net Cash Provided From ( Used in)
Financing Activities (9,870) (9,339)
Effects of Exchange Rate Changes (303) 34
------- -------
Net Change in Cash and Cash
Equivalents 4,215 (1,839)
Cash and Cash Equivalents at
Beginning of Period 99 1,938
------- -------
Cash and Cash Equivalents at
End of Period 4,314 99
------- -------
------- -------
Consolidated Statements of Income
(Unaudited)
Fourth Quarter Ended Year Ended
December 31, December 31, December 31, December 31,
(Dollars in
thousands
except share
and per
share amounts) 2000 1999 2000 1999
----------------------------------------------------------------------
Net sales $ 147,158 $ 120,079 $ 563,690 $ 455,707
Cost of sales 115,039 96,215 444,951 363,773
--------- --------- --------- ---------
Gross Margin 32,119 23,864 118,739 91,934
Selling,
administrative
and general
expenses 23,512 17,641 87,577 70,561
Research and
development
expenses 1,867 2,299 7,437 8,506
Other-net 425 2,023 739 2,309
--------- --------- --------- ---------
Operating Profit 6,315 1,901 22,986 10,558
Interest expense 1,244 1,476 4,652 4,173
--------- --------- --------- ---------
Income before
income taxes 5,071 425 18,334 6,385
Income taxes 1,137 (846) 4,169 (54)
--------- --------- --------- ---------
Net Income $ 3,934 $ 1,271 $ 14,165 $ 6,439
--------- --------- --------- ---------
--------- --------- --------- ---------
Per Share of Common
Stock: Basic $ 0.24 $ 0.08 $ 0.87 $ 0.40
Weighted average
number of common
shares
outstanding 16,423,524 16,204,067 16,292,431 16,198,885
Per Share of Common
Stock: Diluted $ 0.23 $ 0.08 $ 0.86 $ 0.40
Weighted average
number of common
shares
outstanding 16,622,117 16,272,190 16,448,667 16,279,591
Cash dividends
per common share $ 0.12 $ 0.12 $ 0.48 $ 0.48
See notes to consolidated financial statements.
Note N - Segment Reporting and Geographic Information
(Dollars in Thousands)
Selected financial data by business segment as prescribed by SFAS No.
131, "Disclosures about Segments of an Enterprise and Related
Information," for 2000, 1999 and 1998 are as follows:
Metal Micro- Total All
2000 Systems Electronics Segments Other Total
---- ------- ----------- -------- ----- -----
Revenues from
external
customers $378,178 $179,111 $557,289 $6,401 $563,690
Intersegment
revenues 311 1,376 1,687 - 1,687
Depreciation,
depletion and
amortization 13,048 2,859 15,907 6,757 22,664
Profit (loss)
before interest
and taxes 36,630 11,420 48,050 (25,064) 22,986
Assets 300,490 70,995 371,485 81,021 452,506
Expenditures
for long-lived
assets 12,802 5,917 18,719 2,919 21,638
1999
----
Revenues from
external
customers $306,118 $140,566 $446,684 $ 9,023 $455,707
Intersegment
revenues 276 1,560 1,836 - 1,836
Depreciation,
depletion and
amortization 13,437 2,305 15,742 11,295 27,037
Profit (loss)
before interest
and taxes 16,300 11,380 27,680 (17,122) 10,558
Assets 280,868 61,298 342,166 82,325 424,491
Expenditures
for long-lived
assets 11,410 3,437 14,847 2,199 17,046
1998
----
Revenues from
external
customers $295,705 $106,347 $402,052 $ 7,840 $409,892
Intersegment
revenues 482 1,145 1,627 - 1,627
Special charge - - - 22,572 22,572
Depreciation,
depletion and
amortization 15,716 2,283 17,999 6,590 24,589
Profit (loss)
before interest
and taxes 27,897 2,120 30,017 (40,330) (10,313)
Assets 262,847 51,052 313,899 89,791 403,690
Expenditures for
long-lived
assets 21,054 7,432 28,486 8,679 37,165
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