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Brush Engineered Materials Inc. Reports Second Quarter Results

08/01/2008

CLEVELAND, Aug 01, 2008 (BUSINESS WIRE) -- Brush Engineered Materials Inc. (NYSE:BW) today reported operating results for the second quarter of 2008 that were ahead of the Company's expectations and announced that its Board of Directors has authorized the Company to repurchase up to 1.0 million, or approximately 5% of the Company's outstanding shares of common stock.

SECOND QUARTER RESULTS

Sales for the second quarter of 2008 were $246.6 million and net income was $7.2 million or $0.35 per share diluted. Stronger demand for the Company's materials, especially from the consumer electronics and heavy industrial-related markets, as well as improved margins, led to the stronger than expected sales and earnings for the quarter. Second quarter earnings were negatively affected by the previously announced significant decline in the market price of ruthenium, an important material for the Company's products for the media market. The decline in the ruthenium market price led to non-cash lower of cost or market inventory charge in the quarter of approximately $6.0 million pretax or $0.18 per share after tax. Excluding this factor, the operating run rate for the quarter was $0.53 per share.

In the prior year, the Company reported a sizable benefit from the sale of product that included a gain related to a significant increase in the market price of ruthenium that had been purchased earlier at a much lower cost. The amount of the gain was approximately $4.5 million pretax or $0.14 per share after tax in the second quarter and approximately $23.0 million pretax or $0.72 per share after tax for the year.

The prior year second quarter sales were $233.6 million. The largest factor in the $13.0 million increase in second quarter 2008 sales compared to the prior year was metal prices passed on to customers. This, plus stronger demand from the cell phone handset market for the Company's Advanced Material Technologies and Services' products, greater demand for the Company's Specialty Engineered Alloys' materials for the industrial markets and increased demand for the Engineered Material Systems' disk drive arm products helped to offset the previously disclosed significant decline in the sale of ruthenium-based materials for the media market.

The prior year second quarter net income was $7.9 million or $0.38 per share diluted. Earnings comparisons to the prior year are affected by the non-cash lower of cost or market inventory charge of $6.0 million pre-tax or $0.18 per share after tax, noted above, as well as a $4.0 million pre-tax or $0.13 per share after tax non-cash lower of cost or market ruthenium inventory charge in the prior year second quarter. In addition, the prior year second quarter included the $4.5 million pre-tax or $0.14 per share after tax gain explained above.

STOCK REPURCHASE PLAN

The Company's Board of Directors has authorized the Company to repurchase up to 1.0 million shares, or approximately 5%, of the Company's outstanding shares of common stock. The primary purpose of the repurchase program is to offset the dilution created through shares issued under company stock-based compensation plans. The authorization provides the Company the flexibility to use its strong balance sheet to repurchase shares while at the same time maintaining an appropriate level of liquidity to support the Company's primary strategic goals, which include utilizing available capital for organic growth and strategic acquisition opportunities. The plan to repurchase shares does not represent a deviation from the Company's strategic focus and the Company does not see any change in its growth expectations and acquisition opportunities.

The stock repurchases will be made from time to time through brokers on the New York Stock Exchange. The repurchase program may be suspended or discontinued at any time.

OUTLOOK

The Company is updating the previously provided guidance for the year. At this time, the Company expects earnings for the full year to be in the range of $1.45 to $1.70 per share. This includes the negative affect of the charges taken in the first and second quarters of the year. Excluding the charges, the operating run rate is in the range of $1.75 to $2.00 per share, up as much as 18% compared to the prior year. The guidance assumes that a significant macro-economic downturn does not develop during the second half.

In the media market, shipments strengthened as the second quarter developed and as re-qualifications of ruthenium-based products progressed. The Company is also seeing stronger demand thus far in the third quarter and expects to see progressively higher shipments of perpendicular media materials in the third and fourth quarters of the year. Steady progress is also being made in the qualification of materials for other layers.

The Company has seen and expects to continue to see strong demand from the cell phone handset market for Advanced Material Technologies and Services' products, as well as stronger demand for the Company's products from the medical, oil and gas, and heavy equipment markets throughout the second half.

It is important to continue to reiterate though that the Company's earnings estimates are subject to significant variability. Metal price changes, metal supply conditions, fluctuations in demand levels driven by such factors as customer inventory swings, product qualifications rates, and new product ramp-up rates in critical markets such as the media market can and have had a significant effect on actual results. The outlook for the year is based on the Company's best estimates at this time and is subject to significant fluctuations due to these as well as other factors.

BUSINESS SEGMENT REPORTING

Advanced Material Technologies and Services

The Advanced Material Technologies and Services' segment sales for the second quarter of 2008 were up 3% to $125.4 million compared to $121.3 million in the second quarter of the prior year. Sales for the first six months of 2008 were $246.1 million, down 7% versus the same period last year. Operating profit for the second quarter was $4.8 million versus $4.9 million for the second quarter of 2007. Operating profit year to date was $10.1 million versus $36.8 million for the first six months of last year.

The operating profit for the second quarter of 2008 was negatively impacted by a $6.0 million lower of cost or market charge related to ruthenium inventory. Subsequent to the charge, the value of the Company's ruthenium inventory potentially subject to future lower of cost or market adjustments is approximately $14.0 million. In the second quarter of the prior year, operating profit was negatively affected by a similar lower of cost or market charge of approximately $4.0 million. Operating profit for the second quarter and year to date 2007 were positively affected by a non-repeat benefit of $4.5 million and $21.4 million respectively from the sale of product that included a gain related to a significant increase in the market price of ruthenium inventory that had been purchased earlier at a much lower cost.

Excluding the aforementioned ruthenium lower of cost or market charges and the first and second quarter 2007 benefit related to the increased ruthenium market price that occurred then, the operating profit for the second quarter of 2008 was $10.8 million versus $4.4 million in the prior year and the operating profit for the first half was $16.1 million versus $19.4 million in the prior year.

Absent the impact of ruthenium prices, sales for media applications declined by approximately $22.7 million in the second quarter and $79.7 million for the first half versus the same periods last year. Approximately 57% or $12.9 million of the second quarter decline in media sales is related to manufacturing ruthenium products using customer supplied material versus our own material. For the first half of the year, the shift to customer-supplied material accounted for 28% or $22.5 million of the decline in media sales.

Strong growth in sales from the handset, photonics including LED applications for traditional lighting, automotive, medical and back lighting for LCD televisions and wireless product applications offset a portion of the decline in media sales for both the second quarter and first half of 2008.

Although, as expected, the segment experienced a decline in media sales for the second quarter and first half of 2008 as compared to the same periods last year, the media volume shipped in the second quarter increased as compared to the first quarter of 2008. Re-qualification of ruthenium materials following a specification change at a major customer that occurred in the fourth quarter of 2007 is complete and shipments to this customer have resumed. In addition, qualifications for the oxide, soft underlayer and new innovative ruthenium products for the perpendicular media market continued to progress during the second quarter. It is anticipated that the media market volume will increase in the third quarter over the second quarter with a stronger ramp up in the fourth quarter of 2008 and through 2009.

Operating profit during the second quarter was negatively impacted by the lower cost of market charge related to ruthenium inventory noted above and the reduced volume in the media business.

Specialty Engineered Alloys

Specialty Engineered Alloys' sales for the second quarter were $83.0 million, up approximately 10%, or $7.5 million, compared to the second quarter of 2007. Year-to-date sales of $154.3 million were up $8.4 million or 6% compared to the first half of 2007. Operating profit for the second quarter was $4.8 million versus $1.4 million for the second quarter of 2007. Operating profit for the first half of 2008 was $5.5 million compared to the first half of 2007 operating profit of $6.7 million.

The increase in sales in both the second quarter and the first half is primarily due to metal price pass throughs, higher selling prices and a favorable translation effect on foreign sales. Specialty Engineered Alloys has continued to experience strong demand from the oil and gas, heavy equipment, telecommunications infrastructure, and appliance markets. Shipments to the wireless handset market, which began to decline in the first quarter of 2007 due to weaker demand from a major customer, have now leveled off. Sales of ToughMet(R) for oil and gas applications, for use in directional drilling, artificial lift equipment and offshore well head control equipment have experienced a compounded growth of over 40% over the last three years.

Operating profit for the second quarter of 2008 benefited from a favorable product mix, foreign currency rates, improved yields and improved pricing.

Beryllium and Beryllium Composites

Beryllium and Beryllium Composites' sales for the second quarter of 2008 were $14.7 million compared to second quarter 2007 sales of $16.5 million. For the first six months of the year sales were $28.1 million compared to $31.7 million for the same period last year. Operating profit for the second quarter was $2.3 million versus $2.4 million for the second quarter of 2007. Operating profit for the first six months of 2008 was $2.6 million compared to $4.6 million for the first half of 2007.

The decline in sales for the second quarter and first half compared to the prior year is primarily due to the impact of the completion, in the prior year, of two large science projects, the Joint European Torus nuclear fusion project and NASA's James Webb Space Telescope. These projects accounted for $1.2 million of sales in the second quarter and $1.8 million of sales in the first half of 2007. Sales to the defense market began to strengthen during the second quarter and are expected to remain strong for the remainder of the year.

The Company recently announced that its wholly-owned subsidiary, Brush Wellman Inc., entered into a Phase II Technology Investment Agreement with the U.S. Department of Defense for the construction and start up of a $90.4 million primary beryllium facility to be used for strategic defense and growing commercial product applications.

Operating profit for the second quarter and the first half was negatively impacted by the lower sales volume.

Engineered Material Systems

Engineered Material Systems' sales for the second quarter of 2008 were $19.6 million, up $2.7 million or 16% compared to the second quarter of 2007 sales. Sales for the first six months of 2008 were $37.3 million, up $3.7 million or 11% compared to the first half of 2007. Operating profit in the second quarter was $2.0 million compared to an operating profit of $0.7 million for the second quarter of 2007. Operating profit for the first six months of 2008 was $3.4 million, an increase of $2.1 million compared to the first half 2007.

The stronger sales for the second quarter and the first half are due to higher sales of materials for disk drive arms, sales of new products to the energy market and continued strength from automotive electronics.

The higher sales volume, plus improved yields and productivity from operations led to the improved operating profit for the quarter and the first six months of 2008.

CHAIRMAN'S COMMENTS

Richard Hipple, Chairman, President, and CEO, stated, "I am encouraged by the continuing strong conditions in our key markets and the margin improvements noted in our key segments. Our execution in the media market will be critical as we move through the second half of the year. We have also maintained a strong balance sheet and continue to generate strong cash flows which allow us the flexibility to support our organic growth, continue to pursue niche acquisitions and, now with the Board authorization, repurchase shares when appropriate, all of which contribute to strengthening shareholder value."

CONFERENCE CALL

Brush Engineered Materials' quarterly earnings conference call will be held today at 11:00 a.m. Eastern Time. The conference call will be available via webcast through the Company's website at www.beminc.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0782, callers outside the U.S. can dial (201) 689-8567.

NON-GAAP FINANCIAL MEASURES

We have presented in this release operating results both including the impact of ruthenium metal pricing and other factors, as required by generally accepted accounting principles, and excluding that effect. Management considers the presentation of operating results excluding the effects of ruthenium metal pricing, including its effect on sales from our products that include a gain or loss related to an increase or reduction in the market price of ruthenium inventory and other factors to be a better representation of our baseline business. A reconciliation of the Non-GAAP financial measures follows.

                    Reconciliation of Non-GAAP Financial Measures
               -------------------------------------------------------
                     Second Quarter                First Half
               --------------------------- ---------------------------
               For the three For the three For the six   For the six
               months ended  months ended  months ended  months ended
               June 29, 2007 June 27, 2008 June 29, 2007 June 27, 2008
               ------------- ------------- ------------- -------------
 GAAP Diluted
  EPS            $  0.38      $       0.35   $     1.50   $       0.57
 Gain on sale
  of ruthenium
  inventory        (0.14)             0.00        (0.66)          0.00
 Lower of cost
  or market
  ruthenium
  inventory
  charge            0.13              0.18         0.13           0.18
 Loss on sale
  of a
  subsidiary        0.00              0.00         0.02           0.00
 Accounts
  receivable
  correction
  related to
  the prior
  year 2007         0.00              0.00         0.00           0.09
 Change in
  deferred tax
  valuation         0.00              0.00         0.00           0.02
 Non-recurring
  purchase
  accounting
  costs             0.00              0.00         0.00           0.02
               ------------- ------------- ------------- -------------
 Non-GAAP
  Operating
  Run Rate       $  0.37      $       0.53   $     0.99   $       0.88

FORWARD-LOOKING STATEMENTS

Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned herein:

-- The global and domestic economies;

-- The condition of the markets which we serve, whether defined geographically or by segment, with the major market segments being telecommunications and computer, data storage, aerospace and defense, automotive electronics, industrial components, appliance and medical;

-- Changes in product mix and the financial condition of customers;

-- Actual sales, operating rates and margins for the year 2008;

-- Our success in developing and introducing new products and new product ramp up rates, especially in the media market;

-- Our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values;

-- Our success in integrating newly acquired businesses, including the recent acquisition of the assets of Techni-Met, Inc.;

-- Our success in implementing our strategic plans and the timely and successful completion of any capital projects;

-- The availability of adequate lines of credit and the associated interest rates;

-- Other financial factors, including cost and availability of raw materials (both base and precious metals), tax rates, interest rates, metal financing fees, exchange rates, pension and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, and the impact of the Company's stock price on the cost of incentive and deferred compensation plans;

-- The uncertainties related to the impact of war and terrorist activities;

-- Changes in government regulatory requirements and the enactment of new legislation that may impact our obligations; and

-- The conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects.

Brush Engineered Materials Inc. is headquartered in Cleveland, Ohio. The Company, through its wholly-owned subsidiaries, supplies worldwide markets with beryllium products, alloy products, electronic products, precious metal products, and engineered material systems.

                   Brush Engineered Materials Inc.

                          Digest of Earnings

                            June 27, 2008

                                                 2008         2007
                                             ------------ ------------

Second Quarter

   Net Sales                                 $246,584,000 $233,563,000

   Net Income                                  $7,158,000   $7,939,000

   Share Earnings - Basic                           $0.35        $0.39

   Average Shares - Basic                      20,399,000   20,351,000

   Share Earnings - Diluted                         $0.35        $0.38

   Average Shares - Diluted                    20,653,000   20,736,000


Year-to-date

   Net Sales                                 $472,931,000 $483,877,000

   Net Income                                 $11,754,000  $31,053,000

   Share Earnings - Basic                           $0.58        $1.53

   Average Shares - Basic                      20,394,000   20,254,000

   Share Earnings - Diluted                         $0.57        $1.50

   Average Shares - Diluted                    20,626,000   20,709,000

Consolidated Balance Sheets
(Unaudited)

                                            June 27,       Dec. 31,
(Dollars in thousands)                        2008           2007
----------------------------------------------------------------------
Assets
Current assets
   Cash and cash equivalents                 $  15,163   $      31,730
   Accounts receivable                         120,113          97,424
   Other receivables                                 0          11,263
   Inventories                                 181,089         165,189
   Prepaid expenses                             19,635          17,723
   Prepaid income taxes                            956               0
   Deferred income taxes                         5,979           6,107
                                           -----------  --------------
        Total current assets                   342,935         329,436

Other assets                                    32,781          11,804
Related-party notes receivable                      98              98
Long-term deferred income taxes                      0           1,139

Property, plant and equipment                  614,577         583,961
   Less allowances for depreciation,
    depletion and amortization                 414,606         397,786
                                               199,971         186,175

Goodwill                                        39,799          21,899
                                           -----------  --------------
                                             $ 615,584   $     550,551
                                           ===========  ==============


Liabilities and Shareholders' Equity
Current liabilities
   Short-term debt                           $  35,624   $      24,903
   Current portion of long-term debt               600             600
   Accounts payable                             34,991          27,066
   Other liabilities and accrued items          44,550          55,936
   Unearned revenue                                504           2,569
   Income taxes                                      0           2,109
                                           -----------  --------------
        Total current liabilities              116,269         113,183

Other long-term liabilities                     14,806          11,629
Retirement and post-employment benefits         59,381          57,511
Long-term income taxes                           4,327           4,327
Deferred income taxes                              553             182
Long-term debt                                  50,905          10,005

Shareholders' equity                           369,343         353,714
                                           -----------  --------------
                                             $ 615,584   $     550,551
                                           ===========  ==============


See notes to consolidated financial statements.

Consolidated Statements of Income
(Unaudited)

                         Second Quarter Ended     First Half Ended

(Dollars in thousands
 except share and per   June 27,    June 29,    June 27,    June 29,
 share amounts)           2008        2007        2008        2007
---------------------------------------------- -----------------------

Net sales              $   246,584 $   233,563 $   472,931 $   483,877
     Cost of sales         201,736     191,782     391,065     372,712
                       ----------- ----------- ----------- -----------
Gross margin                44,848      41,781      81,866     111,165
     Selling, general
      and
      administrative
      expense               28,503      26,564      55,292      55,234
     Research and
      development
      expense                1,644       1,275       3,141       2,601
     Other - net             3,089       1,325       3,850       3,858
                       ----------- ----------- ----------- -----------
Operating profit            11,612      12,617      19,583      49,472
     Interest expense
      - net                    649         571         985       1,254
                       ----------- ----------- ----------- -----------
Income before income
 taxes                      10,963      12,046      18,598      48,218

     Income taxes            3,805       4,107       6,844      17,165
                       ----------- ----------- ----------- -----------

Net income             $     7,158 $     7,939 $    11,754 $    31,053
                       =========== =========== =========== ===========

Per share of common
 stock: basic          $      0.35 $      0.39 $      0.58 $      1.53

Weighted average
 number of common
 shares outstanding     20,399,000  20,351,000  20,394,000  20,254,000


Per share of common
 stock: diluted        $      0.35 $      0.38 $      0.57 $      1.50

Weighted average
 number of common
 shares outstanding     20,653,000  20,736,000  20,626,000  20,709,000


See notes to consolidated financial statements.

Consolidated Statements of Cash Flows
(Unaudited)
                                                    First Half Ended
                                                   June 27,  June 29,
(Dollars in thousands)                               2008      2007
----------------------------------------------------------------------

Net income                                         $ 11,754  $ 31,053
Adjustments to reconcile net income to net cash
 provided from operating activities:
  Depreciation, depletion and amortization           17,271    11,928
  Amortization of deferred financing costs in
   interest expense                                     177       215
  Derivative financial instrument ineffectiveness       163       (72)
  Stock-based compensation expense                    2,460     1,932
  Decrease (increase) in accounts receivable        (15,152)  (27,752)
  Decrease (increase) in other receivables           11,263         -
  Decrease (increase) in inventory                   (9,710)  (12,859)
  Decrease (increase) in prepaid and other
   current assets                                    (1,455)     (999)
  Decrease (increase) in deferred income taxes           14    (3,672)
  Increase (decrease) in accounts payable and
   accrued expenses                                  (8,166)    2,069
  Increase (decrease) in unearned revenue            (2,065)    1,369
  Increase (decrease) in interest and taxes
   payable                                           (1,144)    7,960
  Increase (decrease) in other long-term
   liabilities                                        5,461       478
  Other - net                                          (566)     (202)
                                                   --------- ---------
                    Net cash provided from
                     operating activities            10,305    11,448

Cash flows from investing activities:
  Payments for purchase of property, plant and
   equipment                                        (14,637)  (11,156)
  Payments for mine development                        (152)   (6,195)
  Payments for purchase of business net of cash
   received                                         (87,462)        -
  Proceeds from sales of inventory to consignment    24,325         -
  Proceeds from sale of business                          -     2,150
  Proceeds from sale of property, plant and
   equipment                                              -        51
  Other investments - net                                66        42
                                                   --------- ---------
                    Net cash used in investing
                     activities                     (77,860)  (15,108)

Cash flows from financing activities:
  Proceeds from issuance of short-term debt          10,414     2,591
  Proceeds from issuance of long-term debt           40,900    15,747
  Repayment of long-term debt                             -   (25,793)
  Issuance of common stock under stock option
   plans                                                174     4,864
  Tax benefit from exercise of stock options             28     2,716
                                                   --------- ---------
                    Net cash provided from
                     financing activities            51,516       125
Effects of exchange rate changes                       (528)      (35)
                                                   --------- ---------
                    Net change in cash and cash
                     equivalents                    (16,567)   (3,570)
           Cash and cash equivalents at beginning
            of period                                31,730    15,644
                                                   --------- ---------
                    Cash and cash equivalents at
                     end of period                 $ 15,163  $ 12,074
                                                   ========= =========


See notes to consolidated financial statements.

Notes to Consolidated Financial Statements
(Unaudited)

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 June 27, 2008 and December 31, 2007 and the
 results of operations for the second quarter and first half ended
 June 27, 2008 and June 29, 2007. Sales and income before income taxes
 were reduced in the first quarter 2008 by $2.6 million to correct a
 billing error that occurred in 2007 that was not material to the 2007
 results. All other adjustments were of a normal and recurring nature.



Note B - Inventories

                                                   June 27,  Dec. 31,
(Dollars in thousands)                               2008      2007
                                                  ---------- ---------

Principally average cost:
  Raw materials and supplies                       $ 37,385  $ 30,338
  Work in process                                   156,534   156,789
  Finished goods                                     66,110    54,530
                                                  ---------- ---------
    Gross inventories                               260,029   241,657

Excess of average cost over LIFO inventory value     78,940    76,468
                                                  ---------- ---------
    Net inventories                                $181,089  $165,189
                                                  ========== =========


Note C - Pensions and Other Post-retirement Benefits

                              Pension Benefits       Other Benefits
                            --------------------  --------------------
                             Second Quarter Ended Second Quarter Ended
                             June 27,   June 29,   June 27,  June 29,
(Dollars in thousands)         2008       2007       2008      2007
                            ----------- --------  ---------- ---------

Components of net periodic
 benefit cost

Service cost                   $ 1,270  $ 1,161    $     76  $     75
Interest cost                    1,976    1,851         532       477
Expected return on plan
 assets                         (2,180)  (2,156)          -         -
Amortization of prior
 service cost                     (161)    (164)         (9)       (9)
Amortization of net loss           294      436           -         -
                            ----------- --------  ---------- ---------
Net periodic benefit cost      $ 1,199  $ 1,128    $    599  $    543
                            =========== ========  ========== =========

                              Pension Benefits       Other Benefits
                            --------------------  --------------------
                              First Half Ended      First Half Ended
                             June 27,   June 29,   June 27,  June 29,
(Dollars in thousands)         2008       2007       2008      2007
                            ----------- --------  ---------- ---------

Components of net periodic
 benefit cost

Service cost                   $ 2,540  $ 2,314    $    152  $    150
Interest cost                    3,952    3,689       1,063       955
Expected return on plan
 assets                         (4,360)  (4,297)          -         -
Amortization of prior
 service cost                     (322)    (327)        (18)      (18)
Amortization of net loss           589      869           -         -
                            ----------- --------  ---------- ---------
Net periodic benefit cost      $ 2,399  $ 2,248    $  1,197  $  1,087
                            =========== ========  ========== =========

Notes to Consolidated Financial Statements
(Unaudited)


Note D - Segment Reporting


                                 Advanced
                                  Material  Specialty   Beryllium and
                               Technologies Engineered    Beryllium
(Dollars in thousands)         and Services   Alloys     Composites
----------------------------------------------------------------------
Second Quarter 2008
-------------------------------
Revenues from external
 customers                      $  125,350  $ 83,029      $   14,711

Intersegment revenues                1,724     1,125             170

Operating profit (loss)              4,751     4,750           2,346


Second Quarter 2007
-------------------------------
Revenues from external
 customers                      $  121,277  $ 75,546      $   16,480

Intersegment revenues                1,172      (381)            236

Operating profit                     4,855     1,390           2,425


First Half 2008
-------------------------------
Revenues from external
 customers                      $  246,054  $154,326      $   28,075

Intersegment revenues                3,354     3,194             293

Operating profit (loss)             10,077     5,454           2,573

Assets                             246,554   255,384          43,981


First Half 2007
-------------------------------
Revenues from external
 customers                      $  264,934  $145,910      $   31,658

Intersegment revenues                2,473     3,068             543

Operating profit                    36,830     6,692           4,558

Assets                             187,819   237,841          37,891


                              Engineered
                               Material                All
(Dollars in thousands)          Systems    Subtotal   Other     Total
----------------------------------------------------------------------
Second Quarter 2008
------------------------------
Revenues from external
 customers                      $  19,574 $ 242,664 $  3,920  $246,584

Intersegment revenues                 416     3,435        1     3,436

Operating profit (loss)             2,003    13,850   (2,238)   11,612


Second Quarter 2007
------------------------------
Revenues from external
 customers                      $  16,864 $ 230,167 $  3,396  $233,563

Intersegment revenues                 675     1,702       12     1,714

Operating profit                      726     9,396    3,221    12,617


First Half 2008
------------------------------
Revenues from external
 customers                      $  37,260 $ 465,715 $  7,216  $472,931

Intersegment revenues                 751     7,592        8     7,600

Operating profit (loss)             3,365    21,469   (1,886)   19,583

Assets                             28,117   574,036   41,548   615,584


First Half 2007
------------------------------
Revenues from external
 customers                      $  33,613 $ 476,115 $  7,762  $483,877

Intersegment revenues               1,465     7,549       12     7,561

Operating profit                    1,306    49,386       86    49,472

Assets                             27,136   490,687   42,900   533,587

SOURCE: Brush Engineered Materials Inc.

Brush Engineered Materials Inc.
Investors:
Michael C. Hasychak, 216-383-6823
or
Media:
Patrick S. Carpenter, 216-383-6835
http://www.beminc.com

Copyright Business Wire 2008

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