Press Release Details

Brush Engineered Materials Reports Record Sales for 2000 and Fourth Quarter; Earnings in Line With Analyst Expectations

January 25, 2001

Brush Engineered Materials Reports Record Sales for 2000 and Fourth Quarter; Earnings in Line With Analyst Expectations

CLEVELAND--Jan. 25, 2001--Brush Engineered Materials Inc. (NYSE:BW) today reported sales for 2000 of $563.7 million; the highest annual sales in the Company's history, and a 24% increase over 1999 annual sales of $455.7 million. Sales for the fourth quarter were a record $147.2 million, a 23% increase over sales of $120.1 million for the fourth quarter of 1999. Fourth quarter sales represents the fifth consecutive record quarterly sales level. The record sales growth continues to be fueled by strong global demand from telecommunications, computers, optical media and automotive electronics.

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 -0- *T

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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