Press Release Details

Brush Engineered Materials Reports Strong Sales and Improved Earnings for the First Quarter 2001

April 26, 2001

Brush Engineered Materials Reports Strong Sales and Improved Earnings for the First Quarter 2001

CLEVELAND--April 26, 2001--Brush Engineered Materials Inc. (NYSE:BW) today reported first quarter sales of $145.5 million, the second highest quarterly sales in the Company's history and a 7.5% increase over 2000 first quarter sales of $135.4 million. The stronger dollar negatively affected sales growth by approximately 1.5%. During the first quarter the strong sales performance was driven by demand for telecommunications, computer and optical media product applications.

Net income for the first quarter 2001 was $6.2 million or $0.37 per share diluted, versus first quarter 2000 net income of $2.2 million or $0.14 cents per share diluted, an increase of $0.23 per share.

Gross margin for the first quarter 2001 as a percent of sales was 23.4% versus 20.9% for the same period last year, an improvement of 2.5 percentage points, primarily due to improved yield and productivity and increased prices in Alloy Products and overall favorable product mix. The margin growth was negatively affected by foreign currency. Selling, administrative and general expense as a percent of sales was down by over 1% compared to the first quarter of 2000.

Business Segment Reporting

The first quarter 2001 operating profit results for each segment include certain corporate and shared service allocated expense and other costs and expenses due to the reorganization of the Company's corporate and capital structure approved by shareholders on May 2, 2000 and completed on January 1, 2001. Financial results for each segment have been adjusted for the first quarter 2000 to reflect these changes.

Metal Systems Group

The Metal Systems Group consists of Alloy Products, Technical Materials, Inc. (TMI) and Beryllium Products.

The Metal Systems Group's first quarter sales of $98.6 million grew 8% over 2000 first quarter sales of $91.2 million. First quarter operating profits were $6.6 million, an increase of $7.3 million over the first quarter 2000 operating loss.

Alloy Product sales of $71.2 million were up 6% over 2000 first quarter sales and up 2% over fourth quarter sales of 2000. Margins were impacted favorably by improved yield and productivity across the Alloy strip manufacturing supply chain, product mix and price increases.

During the first quarter, equipment utilization rates associated with the alloy strip expansion project at Elmore, Ohio continued to improve. This progress, along with ongoing improvements at the Reading, Pennsylvania facility, is continuing to increase the finishing capacity across the Alloy strip supply chain.

The weaker economy began to impact strip sales, especially North America computer and telecommunications product applications, in the latter part of the quarter. It is anticipated that this slowdown will continue through the second quarter. Overall, Alloy strip international sales remained strong, driven particularly by demand in Europe and Southeast Asia. Alloy bulk products markets, including oil and gas, undersea and aerospace, remain strong and thus far have only moderately been affected by the economic slowdown. Alloy Products comprise approximately half of the Company's total sales.

Technical Materials, Inc.'s first quarter sales of $20.5 million grew 9% over the same period last year. Sales, however, were flat with fourth quarter 2000 sales. TMI is experiencing slowness in telecommunications, automotive electronics and computer/ semiconductor market applications. It is anticipated that this slowdown will continue through the third quarter of 2001.

Beryllium Products' first quarter sales of $6.9 million are up 32% over first quarter 2000 sales. Robust demand for aerospace/defense and medical market applications continued through the first quarter and order rates remain strong for the second quarter.

Microelectronics Group

The Microelectronics Group includes Williams Advanced Materials Inc. (WAM), and Electronic Products. (Electronic Products includes Zentrix Technologies Inc. and Brush Ceramic Products Inc.)

The Microelectronics Group's first quarter sales of $46.9 million were up 13% over first quarter 2000 sales of $41.6 million. Operating profit of $2.4 million was slightly over first quarter 2000 operating profit of $2.1 million.

WAM's first quarter sales of $35.4 million grew 11% over the same period last year. Absent precious metal prices, sales were up 8% compared to the first quarter of 2000. Strong sales continued to be fueled by demand for physical vapor deposition and packaging materials used for photonic devices and fiber optic components. WAM's improved performance in the first quarter resulted in record profits.

Electronic Products' sales of $11.5 million increased 18% over the same period last year, fueled by strong demand for circuitry and electronic package products for wireless base station and fiber optics. Electronic Products is, however, experiencing a slowdown in older and higher volume beryllia ceramic automotive electronic and wireless telecommunications product applications.

Outlook

Sales of $145.5 million for the first quarter of 2001 were slightly below the fourth quarter 2000 record sales of $147.2 million. Overall sales to the Company's major markets, including telecommunications, computers and optical media, were strong during most of the first quarter. However, the growth rate in several of these markets has slowed, particularly telecommunications and computer. Announcements from certain key demand generators in these markets have reported excess inventory positions and advised caution regarding their future revenue growth and earnings.

The length and magnitude of the U.S. economic slowdown will determine the extent of the impact on the Company's sales and earnings for the remainder of 2001. The Company anticipates, however, that the growth in revenue will continue to soften in the second quarter and that earnings are likely to fall short of analysts' current earnings estimates, which range from $0.32 to $0.35 per share for the second quarter. Our current expectation is for earnings for the second quarter of 2001 to be similar to the earnings of $0.24 per share in the second quarter of 2000.

Chairman's Comments

Commenting on the results, Gordon D. Harnett, Chairman, President and Chief Executive Officer, said, "I am delighted with the strong sales and substantial earnings improvement we had during the first quarter. I am particularly pleased with the yield and productivity improvement and progress with equipment reliability that we experienced with the Alloy Products' strip expansion. Although we are experiencing some of the effects of the weakness in the U.S. economy, I am convinced, long-term, that our major target markets including telecommunications, computer, automotive electronics and optical media are the right place to be for the future growth of the Company."

Forward-looking Statements

Any forward-looking statements in this announcement, including those in the Outlook Section, 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, though its wholly-owned subsidiaries, supplies worldwide markets with Beryllium Products, Alloy Products, Electronic Products, Precious Metal Products, and Engineered Material Systems. -0- *T FOR FURTHER INFORMATION, PLEASE CONTACT:

Investors:

Michael C. Hasychak Brush Engineered Materials Inc. 17876 St. Clair Ave. Cleveland, OH 44110 216/383-6823

Media:

Patrick S. Carpenter Brush Engineered Materials Inc. 17876 St. Clair Ave. Cleveland, OH 44110 216/383-6835

http://www.BEMinc.com

                    Brush Engineered Materials Inc.

                          Digest of Earnings

                            March 30, 2001

                                 2001                2000
                              -----------         ------------
First Quarter
   Net Sales                  $145,524,000        $135,424,000


   Net Income                   $6,206,000          $2,249,000


   Share Earnings  - Basic           $0.38               $0.14

   Average Shares - Basic       16,467,368          16,206,038

   Share Earnings  - Diluted         $0.37               $0.14

   Average Shares - Diluted     16,677,767          16,314,518

Year-to-date

   Net Sales                  $145,524,000        $135,424,000


   Net Income                   $6,206,000          $2,249,000


   Share Earnings  - Basic           $0.38               $0.14

   Average Shares - Basic       16,467,368          16,206,038

   Share Earnings  - Diluted         $0.37               $0.14

   Average Shares - Diluted     16,677,767          16,314,518



Consolidated Balance Sheets

                                      Mar. 30,   Dec. 31,
(Dollars in thousands)                  2001       2000
----------------------------------------------------------
Assets
Current Assets
   Cash and cash equivalents             $2,912    $4,314
   Accounts receivable                   93,804    92,334
   Inventories                          128,279   115,643
   Prepaid expenses                       7,638     8,525
   Deferred income taxes                 30,082    29,263
                                      ---------- ---------
        Total Current Assets            262,715   250,079

Other Assets                             32,825    31,967

Property, Plant and Equipment           456,375   449,697
   Less allowances for depreciation,
     depletion and impairment           284,081   279,237
                                      ---------- ---------
                                        172,294   170,460
                                      ---------- ---------
                                       $467,834  $452,506 
                                      ========== =========
Liabilities and Shareholders' Equity
Current Liabilities
   Short-term debt                      $29,068   $25,435
   Accounts payable                      28,487    34,714
   Other liabilities and accrued
     items                               38,089    39,021
   Dividends payable                      1,986     1,987
   Income taxes                           9,356     5,535
                                      ---------- ---------
        Total Current Liabilities       106,986   106,692

Other Long-Term Liabilities              18,287    15,878
Retirement and Post-employment Benefits  39,579    39,576
Long-term Debt                           51,305    43,305

Deferred Income Taxes                    18,009    17,148

Shareholders' Equity                    233,668   229,907
                                      ---------- ---------
                                       $467,834  $452,506 
                                      ========== =========

See notes to consolidated financial statements.




Consolidated Statements of Income
(Unaudited)

                                      First Quarter Ended
(Dollars in thousands except          March 30,    March 31,
share and per share amounts)            2001         2000
------------------------------------------------------------

Net sales                           $   145,524  $   135,424
     Cost of sales                      111,490      107,129
                                    -----------  -----------
Gross Margin                             34,034       28,295
     Selling, administrative
      and general expenses               21,506       21,818
     Research and development
      expenses                            1,692        2,014
     Other-net                              802          228
                                    -----------  -----------
Operating Profit                         10,034        4,235
     Interest expense                       974        1,120
                                    -----------  -----------
Income before income taxes                9,060        3,115
     Income taxes                         2,854          866
                                    -----------  -----------
Net Income                          $     6,206  $     2,249
                                    ===========  ===========
Per Share of Common Stock:  Basic   $      0.38  $      0.14

Weighted average number
     of common shares outstanding    16,467,368   16,206,038


Per Share of Common Stock: Diluted  $      0.37  $      0.14

Weighted average number
     of common shares outstanding    16,677,767   16,314,518


Cash dividends per common share     $      0.12  $      0.12


See notes to consolidated financial statements.



Consolidated Statements of Cash Flows
                                       Three Months Ended
                                       March 30,  March 31,
(Dollars in thousands)                   2001       2000
-----------------------------------------------------------

Net Income                             $  6,206   $  2,249
Adjustments to Reconcile
 Net Income to Net Cash
  Provided From Operating
   Activities:
  Depreciation, depletion
   and amortization                       5,520      6,331
  Decrease (Increase) in
   accounts receivable                      412    (11,385)
  Decrease (Increase) in
   inventory                            (13,170)     8,414
  Decrease (Increase) in
   prepaid and other
   current assets                           276        327
  Increase (Decrease) in
   accounts payable and
   accrued expenses                     (10,785)     2,741
  Increase (Decrease) in
   interest and taxes payable             4,467        968
  Increase (Decrease) in
   deferred income taxes                   (131)       (62)
  Increase (Decrease) in
   other long-term liabilities            2,574      1,060
  Other - net                            (1,238)      (280)
                                       --------   --------
            Net Cash Provided From
             (Used in) Operating
             Activities                  (5,869)    10,363


Cash Flows from Investing Activities:
  Payments for purchase of property,
   plant and equipment                   (7,415)    (3,480)
  Payments for mine development             (76)       (70)
  Proceeds from (Payments for)
   other investments                       --         --
                                       --------   --------
            Net Cash Provided From
             (Used in) Investing
             Activities                  (7,491)    (3,550)

Cash Flows from Financing Activities:
  Proceeds from issuance/ (repayment
   of) short-term debt                    5,146     (5,665)
  Proceeds from issuance of
   long-term debt                        15,500      9,000
  Repayment of long-term debt            (7,500)    (6,000)
  Issuance of Common Stock
   under stock option plans                 950          5
  Purchase of Common Stock
   for treasury                            --         --
  Payments of dividends                  (1,987)    (1,959)
                                       --------   --------
            Net Cash Provided From
            (Used in) Financing
            Activities                   12,109     (4,619)
Effects of Exchange Rate Changes           (151)      (134)
                                       --------   --------
            Net Change in Cash
             and Cash Equivalents        (1,402)     2,060
            Cash and Cash Equivalents
             at Beginning of Period       4,314         99
                                       --------   --------
            Cash and Cash Equivalents
             at End of Period          $  2,912   $  2,159
                                       ========   ========

See notes to consolidated financial statements.



Notes to Consolidated Financial Statements

Note A - Accounting Policies

In management's opinion, the accompanying consolidated financial
statements contain all adjustments necessary to present fairly the
financial position as of March 30, 2001 and December 31, 2000 and the
results of operations for the first quarter ended March 30, 2001 and
March 31, 2000.


Note B - Inventories
                                  Mar. 30,  Dec. 31,
(Dollars in thousands)              2001      2000
----------------------------------------------------

Principally average cost:
  Raw materials and supplies      $ 17,799  $ 19,458
  In process                       101,940    88,956
  Finished goods                    34,877    33,202
                                  --------  --------
      Gross inventories            154,616   141,616

Excess of average cost over LIFO
   Inventory value                  26,337    25,973
                                  --------  --------
      Net inventories             $128,279  $115,643
                                  ========  ========

Note C - Comprehensive Income

During the first quarter 2001 and 2000, comprehensive income amounted
to $5,616,039 and $1,847,763 respectively. The difference between net
income and comprehensive income is the cumulative translation
adjustment for the periods presented.


Note D - Segment Reporting

As a result of the recent corporate restructuring, the Company changed
how costs flowed between its businesses. Certain costs that were
previously included in the "All Other" column in the segment
disclosures are being charged to Metal Systems and Microelectronics
beginning in the first quarter 2001. Beginning in 2001, the "All
Other" column includes the operating results of BEM Services Inc. and
Brush Resources Inc., two wholly-owned subsidiaries of the Company, as
well as the parent company's operating expenses. BEM Services charges
a management fee for the services provided to the other businesses
within the Company on a cost-plus basis. Brush Resources may sell
beryllium hydroxide, produced from its mine and extraction mill in
Utah, to outside customers and to businesses within the Metal Systems
Group. Segment results from the prior year have been restated to
reflect these changes on a pro forma basis.

                        Metal     Micro-    Total      All
                       Systems Electronics Segments   Other     Total
                       --------  --------  --------  -------  --------
(Dollars in thousands)
First Quarter 2001
-----------------------

Revenues from
 external customers    $ 98,629  $ 46,895  $145,524  $     0  $145,524
Intersegment revenues     1,586       829     2,415    4,847     7,262
Segment profit (loss)
  before interest
  and taxes               6,560     2,418     8,978    1,056    10,034


First Quarter 2000
-----------------------

Revenues from
 external customers      91,175    41,607   132,782    2,642   135,424
Intersegment revenues     1,554       286     1,840    5,267     7,107
Segment profit (loss)
 before interest
 and taxes                 (739)    2,121     1,382    2,853     4,235
*T
Contact: Brush Engineered Materials Inc., Cleveland
  Michael C. Hasychak, 216/383-6823 (Investors)
  Patrick S. Carpenter, 216/383-6835 (Media)
  http://www.BEMinc.com