<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to ________
Commission file number 1-7006
BRUSH WELLMAN INC.
(Exact name of Registrant as specified in charter)
Ohio 34-0119320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17876 ST. CLAIR AVENUE, CLEVELAND, OHIO 44110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 216-486-4200
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of November 1, 1996 there were 16,262,544 shares of Common Stock,
par value $1 per share, outstanding.
<PAGE> 2
PART I FINANCIAL INFORMATION
BRUSH WELLMAN INC. AND SUBSIDIARIES
Item 1. Financial Statements
- ----------------------------
The consolidated financial statements of Brush Wellman Inc. and its subsidiaries
for the quarter ended September 27, 1996 are as follows:
Consolidated Statements of Income -
Nine months ended September 27, 1996 and September 29, 1995
Consolidated Balance Sheets -
September 27, 1996 and December 31, 1995
Consolidated Statements of Cash Flows -
Nine months ended September 27, 1996 and September 29, 1995
Notes to consolidated Financial Statements
1
<PAGE> 3
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Third Quarter Ended Nine Months Ended
(Dollars in thousands except share and Sept 27, Sept 29, Sept 27, Sept 29,
per share amounts) 1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $ 88,312 $ 89,361 $ 286,462 $ 285,555
Cost of sales 64,584 66,729 206,292 208,310
------------ ----------- ------------ -----------
Gross Profit 23,728 22,632 80,170 77,245
Selling, administrative
and general expenses 15,967 15,327 48,415 46,590
Research and development expenses 1,933 2,119 6,094 5,934
Other-net (230) 725 (693) 1,104
------------ ----------- ------------ -----------
Operating Profit 6,058 4,461 26,354 23,617
Interest expense 334 331 1,015 1,192
------------ ----------- ------------ -----------
Income before income taxes 5,724 4,130 25,339 22,425
Income taxes 1,159 799 7,475 5,628
------------ ----------- ------------ -----------
Net Income $ 4,565 $ 3,331 $ 17,864 $ 16,797
============ =========== ============ ===========
Per Share of Common Stock: $ 0.28 $ 0.20 $ 1.11 $ 1.02
============ =========== ============ ===========
Cash dividends per common share $ 0.11 $ 0.10 $ 0.31 $ 0.26
Weighted average number
of common shares outstanding 16,076,202 16,518,151 16,102,470 16,423,947
</TABLE>
2
See notes to consolidated financial statements.
<PAGE> 4
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
Sept. 27, Dec. 31,
(Dollars in thousands) 1996 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 21,294 $ 29,553
Accounts receivable 56,344 52,532
Inventories 91,862 92,727
Prepaid expenses and other
current assets 16,975 16,935
-------- --------
Total Current Assets 186,475 191,747
Other Assets 18,095 18,912
Property, Plant and Equipment 394,167 374,367
Less allowances for depreciation,
depletion and impairment 270,433 253,173
-------- --------
Property, Plant and Equipment - net 123,734 121,194
-------- --------
$328,304 $331,853
======== ========
Liabilities and Shareholders' Equity
Current Liabilities
Short-term debt $ 19,866 $ 22,757
Accounts payable 3,700 8,772
Other liabilities and accrued
items 23,044 23,734
Dividends payable 1,621
Income taxes 9,756 9,707
-------- --------
Total Current Liabilities 56,366 66,591
Other Long-Term Liabilities 4,916 4,148
Retirement and Post-Employment Benefits 42,274 41,297
Long-Term Debt 15,400 16,996
Deferred Income Taxes 1,490 2,519
Shareholders' Equity 207,858 200,302
-------- --------
$328,304 $331,853
======== ========
</TABLE>
3
See notes to consolidated financial statements.
<PAGE> 5
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(Unaudited) Nine Months Ended
Sept 27, Sept 29,
(Dollars in thousands) 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income $ 17,864 $ 16,797
Adjustments to Reconcile Net Income to Net Cash
Provided From Operating Activities:
Depreciation, depletion and amortization 14,574 14,739
Amortization of mine development 4,427 2,166
Decrease (Increase) in accounts receivable (4,764) (8,862)
Decrease (Increase) in Inventory 919 1,944
Decrease (Increase) in prepaid and other current assets (225) (986)
Increase (Decrease) in accounts payable and accrued expenses (5,018) (3,518)
Increase (Decrease) in interest and taxes payable (96) 2,128
Increase (Decrease) in deferred income tax (1,030) (1,521)
Increase (Decrease) in other long-term liabilities 1,846 1,794
Other - net (6) (305)
-------- --------
Net Cash Provided From Operating Activities 28,491 24,376
Cash Flows from Investing Activities:
Payments for purchase of property, plant and equipment (20,754) (15,471)
Payments for mine development (529) (674)
Proceeds from (Payments for)other investments 1,212 947
-------- --------
Net Cash Provided From (Used in) Investing Activities (20,071) (15,198)
Cash Flows from Financing Activities:
Proceeds from issuance of short-term debt 1,219 3,866
Repayment of short-term debt (3,449) (5,776)
Proceeds from issuance of long-term debt (768) (776)
Repayment of long-term debt (800)
Issuance of Common Stock under stock option plans 1,248 1,291
Purchase of Common Stock for treasury (6,655)
Payments of dividends (6,503) (5,504)
-------- --------
Net Cash Provided From ( Used in) Financing Activities (15,708) (6,899)
Effects of Exchange Rate Changes (971) 533
-------- --------
Net Change in Cash and Cash Equivalents (8,259) 2,812
Cash and Cash Equivalents at Beginning of Period 29,553 20,441
-------- --------
Cash and Cash Equivalents at End of Period $ 21,294 $ 23,253
======== ========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
Notes to Consolidated Financial Statements
(unaudited)
September 27, 1996
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 September 27, 1996 and December 31, 1995 and the results of
operations for the nine months ended September 27, 1996 and September 29, 1995.
Note B - Inventories
<TABLE>
<CAPTION>
Sept. 27, Dec. 31,
(Dollars in thousands) 1996 1995
- -------------------------------------------------------------
<S> <C> <C>
Principally average cost:
Raw materials and supplies $ 23,964 $ 19,719
In Process 50,943 57,012
Finished 42,748 42,223
-------- --------
117,655 118,954
Excess of average cost over
LIFO inventory value 25,793 26,227
-------- --------
$ 91,862 $ 92,727
======== ========
</TABLE>
Note C - Subsequent Events
In October 1996, the Company entered into a lease agreement with the
Toledo-Lucas County Port Authority pursuant to which the Company shall lease an
alloy manufacturing facility to be constructed by the Port adjacent to the
Company's Elmore, Ohio facility. The initial term of the lease commenced as of
October 1, 1996 and continues until May 1, 2011. The lease contains three
additional five year renewal terms exercisable at the option of the Company.
Lease payments are to begin in December 1997. Payments under the lease
commitment are (in thousands) $120 in 1997; $1,818 in 1998; $1,996 in 1999;
$1,998 in 2000; $1,999 in 2001; and $19,180 thereafter. The lease will be
accounted for as an operating lease. In connection with the construction of the
facility, the Company has granted a security interest in certain equipment with
a value of approximately $5.0 million to secure a loan to the Port from the
Director of Development of the State of Ohio acting on behalf of the State of
Ohio.
5
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Third quarter sales were $88.3 million, a 1% decrease from the third quarter
1995 sales of $89.4 million. Beryllium Products, Precious Metal Products and
domestic Alloy shipments increased; however, international sales, were $24.5
million or 28% of total sales in the third quarter 1996, a decline from $29.9
million or 33% of third quarter 1995 sales.
Domestic sales of Alloy Products increased in the third quarter 1996 over the
third quarter 1995. The rate of increase slowed from previous quarters this year
due to mix shifts in strip products and a seasonal slowdown in recreation and
leisure markets. Strip sales into the automotive market continue to out-perform
the comparable prior quarter. The pass-through effect of lower commodity prices,
primarily copper, negatively impacted sales as compared to the year-ago period,
but with no loss in gross profits. International sales of Alloy Products
declined as a result of softer demands in the European and Asian markets. The
stronger dollar had an unfavorable impact on the translated value of foreign
currency sales as well.
Sales of Beryllium Products showed good growth in the third quarter 1996 as
compared to the year-ago period, primarily due to growing demand for AlBeMet(R)
products from the commercial and defense/aerospace markets. Order income also
improved during the quarter.
As previously reported in Part II, Item 7, of the Company's Form 10-K for the
fiscal year ended December 31, 1995, the Company filed a petition before the
U.S. Department of Commerce, International Trade Administration and the U.S.
International Trade Commission on March 14, 1996, requesting the imposition of
anti-dumping duties on imports of beryllium metal from Kazakhstan. On April 3,
1996, the U.S. Department of Commerce decided to initiate an anti-dumping
investigation, and on April 29, 1996, the U.S. International Trade Commission
found
6
<PAGE> 8
that there was a reasonable indication that imported beryllium from
Kazakhstan caused material injury to the U.S. beryllium industry. In September
1996, the International Trade Commission announced the scheduling of the final
phase of the anti-dumping investigation as a result of an affirmative
preliminary determination by the Department of Commerce that imports of
beryllium from Kazakhstan are being, or are likely to be, sold in the United
States at less than fair value within the meaning of Section 733 of the Tariff
Act of 1930. A final determination is expected in the first quarter 1997.
Ceramic sales declined from the third quarter 1995. Excess inventory levels at
several major customers contributed to the shortfall as a result of weaker
demand for beryllia packages from the cellular industry.
Specialty Metal Systems sales were less in the current quarter versus the
comparable period last year as demand from the semiconductor and computer
markets softened. Automotive and telecommunications' demand remained strong.
Sales of Precious Metal Products improved in the third quarter 1996 over the
third quarter 1995. Sales of vapor deposition targets grew as a result of
continued penetration into the CD-R market and market share gains from
broadening the product and service offerings. Braze materials and refining
services, while not as significant, showed modest growth. The rapidly declining
frame lid assembly market has become even more competitive as the remaining
suppliers are using aggressive pricing strategies to gain market share.
Gross profit of $23.7 million or 27% of sales in the third quarter 1996 rose
from $22.6 million or 25% of sales in the third quarter 1995. Productivity gains
and operating efficiencies generated at several facilities, along with an
increase in sales of certain high margin products, contributed to the
improvement.
7
<PAGE> 9
Sales of $286.5 million for the first nine months of 1996 were essentially flat
with the first nine months of 1995. Domestic sales of Alloy Products and Clad
Metal Products increased while sales of Beryllium Products, Ceramics and
Precious Metal Products declined. For the first nine months, International sales
were $79.8 million accounting for 28% of total sales as compared to $103.1
million or 36% of sales in 1995. Gross margin improved to 28% from 27%. The
factors affecting the third quarter margins also apply to the first nine months'
results.
Selling, administrative and general expenses were $16.0 million or 18% of sales
in the third quarter 1996 compared to $15.3 million or 17% of sales in the third
quarter 1995. Year-to-date expenses are $48.4 million as compared to $46.6
million in 1995. A newly reorganized function responsible for sales and
production planning contributed to the increase as did certain commission
expenses.
Research and Development expenses were $1.9 million in the third quarter 1996
and $6.1 million for the nine months compared to $2.1 million and $5.9 million
for the respective periods in 1995. The increase is primarily due to development
work on lower cost, higher quality copper-based alloys.
Other-net was $0.2 million income in the third quarter 1996 versus $0.7 million
expense in the third quarter 1995. For the year, other-net is $0.7 million
income in 1996 and $1.1 million expense in 1995. Currency translation and
exchange gains account for the difference.
Third quarter 1996 interest expense of $0.3 million was flat with the third
quarter 1995. The year-to-date expense has declined to $1.0 million from $1.2
million last year. Overall debt levels are lower in 1996 than 1995.
8
<PAGE> 10
Income before income taxes was $5.7 million in the third quarter 1996, a 39%
improvement over the $4.1 million earned in the third quarter 1995. While sales
declined slightly, the improved margins and an increase in other net income led
to the increased earnings. For the year, income before income taxes was $25.3
million compared to $22.4 million in 1995. Income taxes were provided for at
20.2% of pre-tax income in the third quarter 1996 and 29.5% for the first nine
months of 1996. For the first nine months of 1995, a rate of 25.1% was employed.
A lower rate was used in the third quarter 1996 as a result of an anticipated
increase in the depletion allowance for the year. Higher earnings and a decrease
in various book versus tax adjustments contributed to the higher rate used for
the first nine months 1996 as compared to the first nine months 1995. Earnings
per share were $0.28 for the third quarter and $1.11 for the first nine months
1996 as compared to $0.20 and $1.02 in the respective periods in 1995.
FINANCIAL CONDITION
- -------------------
Net cash provided from operating activities was $28.5 million during the first
nine months of 1996 compared to $24.4 million for the same period in 1995. The
cash balance at the end of the third quarter 1996 was $21.3 million.
Accounts receivable has grown 7% since year-end 1995, approximately the same
rate of growth in sales for the applicable periods. Inventory values have
declined slightly during 1996.
Capital expenditures for property, plant and equipment amount to $20.8 million
for the first nine months 1996 compared to $15.5 million for the first nine
months 1995. Initial progress payments were made in the third quarter 1996 on
major pieces of equipment to be acquired for the alloy modernization project at
the Company's Elmore, Ohio facility. It is anticipated that this project will
cost on the order of $110 million with funds expended over three years.
9
<PAGE> 11
Excavation work on a new bertrandite ore pit in Utah is planned to begin soon.
The Company also announced plans to construct a new facility by mid-1997 to
produce a family of specialty alloys in rod, bar and tube form at a cost in
excess of $10 million.
The Company purchased 359,000 shares of its Common Stock at a cost of $6.7
million during 1996 under a program approved by the Board of Directors late last
year. In May 1996, the Board of Directors withdrew the authority for additional
share re-purchases. Dividends paid were $6.5 million for the first nine months
of 1996. The dividend per share amount was recently increased to $0.11 by the
Board.
In October 1996, the Company entered into a lease agreement with the
Toledo-Lucas County Port Authority pursuant to which the Company shall lease an
alloy manufacturing facility to be constructed by the Port adjacent to the
Company's Elmore, Ohio facility. The initial term of the lease commenced as of
October 1, 1996 and continues until May 1, 2011. The lease contains three
additional five year renewal terms exercisable at the option of the Company.
Lease payments are to begin in December, 1997. See Note C of the Notes to
Consolidated Financial Statements.
In October 1996, the Company announced that it had executed a definitive
agreement to acquire Circuits Processing Technology, Inc., a San Diego-based
producer of thick film circuits. The acquisition is anticipated to be completed
during the fourth quarter 1996 for an amount that is not material to the
Company.
Total debt decreased $4.5 million during the first nine months of 1996.
Long-term debt as a percent of total capital was 7%.
Funds being generated by operations, plus the available borrowing capacity, are
believed adequate to support the Company's short-term and long-term capital
requirements which
10
<PAGE> 12
include operating requirements, capital expenditures, remediation projects,
dividends and small acquisitions. Excess cash, if any is invested in money
market instruments and other high quality investments.
11
<PAGE> 13
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
(a) BERYLLIUM EXPOSURE CLAIMS
RECENT DEVELOPMENTS RELATING TO PENDING CLAIMS SINCE THE END OF SECOND
QUARTER 1996. As previously reported in the Company's annual report on Form 10-K
for the year ended December 31, 1995, the Company and certain of its employees
were defendants in separate suits filed by nine Company employees and their
spouses against the Company and certain Company employees in the Superior Court
of Pima County, Arizona. The plaintiffs claimed that, during their employment
with the Company, they contracted chronic beryllium disease as a result of
exposure to beryllium and beryllium-containing products. The plaintiffs sought
compensatory and punitive damages of an unspecified amount based on allegations
that the Company intentionally misrepresented the potential danger of exposure
to beryllium and breached an agreement to pay certain benefits in the event the
plaintiffs contracted chronic beryllium disease. As previously reported in the
Company's quarterly report on Form 10-Q for the quarter ended June 28, 1996,
Rudy Gamez, an employee of the Company, filed a suit on July 5, 1996 against the
Company in the Superior Court of Pima County, Arizona, based on similar claims
and seeking similar relief. The Company successfully moved for summary judgment
in all of the nine cases reported in the Company's annual report on Form 10-K
for the year ended December 31, 1995, and judgments were entered on August 26,
1996. Counsel for the plaintiffs have filed notice of appeal from these
judgments with the Superior Court of Pima County, Arizona. The Company's motion
for summary judgment did not cover the GAMEZ case, which is currently pending.
Defense of all of these cases is being conducted by counsel retained by the
Company. The Company believes that resolution of these cases will not have a
material effect on the Company.
12
<PAGE> 14
In August 1994 and April 1995, the Company had notified the State
Compensation Fund, a workers' compensation fund in the State of Arizona, of
the filing of the above-mentioned employee suits and had requested that the
State Compensation Fund defend such suits pursuant to the Company's State
Compensation Fund policies. The State Compensation Fund had denied coverage and
defense of such suits, but after discussion, had indicated that it would defend
some of the employee lawsuits under a reservation of rights. Pursuant to that
commitment, the State Compensation Fund has reimbursed the Company for some
(but not all) of the costs that the Company has incurred in defending the
employee lawsuits.
In view of the dispute with respect to coverage, however, the State
Compensation Fund filed a declaratory judgment action against the Company and
certain of its employees in the Superior Court of Pima County, Arizona, for
which service of process on the Company occurred on August 21, 1995. This claim
was disclosed in the Company's annual report on Form 10-K for the year ended
December 31, 1995 and in the Company's quarterly report on Form 10-Q for the
quarter ended June 28, 1996. The Company filed an answer and counterclaim. On
May 13, 1996, the Court entered an order granting the State Compensation Fund's
motions for partial summary judgment, which, among other things, sought a
declaration of no duty to defend or indemnify the Company against claims for
breach of contract and claims for intentional tort. These rulings did not
completely dispose of the State Compensation Fund's claims, and did not address
the Company's counterclaim. As of September 1, 1996, the State Compensation Fund
refused to reimburse the Company for any further defense costs that it might
incur. It has also indicated that it plans to seek reimbursement of the defense
costs already paid. Defense of this case is being conducted by counsel retained
by the Company.
In September 1995 and January 1996, the Company had notified the
Argonaut Insurance Company that it was requesting the defense of two of the
aforementioned employee lawsuits. Argonaut agreed to defend the Company under
13
<PAGE> 15
a reservation of rights, but has not yet reimbursed the Company for any of
its defense costs. In view of the dispute with respect to coverage, Argonaut
filed a declaratory judgment action on April 22, 1996 against the Company
and certain of its employees in the Superior Court of Pima County, Arizona.
Subsequently, in September 1996, Argonaut and the Company agreed that
Argonaut would dismiss its declaratory judgment action (with the right to
refile it later); that they would not litigate any coverage issues between
themselves until the State Compensation Fund's declaratory judgment action
has been completely resolved; and that both parties would be bound by the
resolution of the coverage issues in the State Compensation Fund's
declaratory judgment action.
As previously reported in the Company's annual report on Form 10-K for
the year ended December 31, 1995, the United States Magistrate Judge appointed
by the District Court in the HOUK and VANCE cases had issued a report
recommending that the Company's answer in these cases be stricken, that a
default judgment be entered against the Company, and that certain facts be taken
as established for purposes of these cases. These recommendations had resulted
from the plaintiffs' motion for sanctions against the Company for alleged
failure to fulfill discovery requests and failure to comply with certain Court
orders despite the Magistrate Judge's finding that the prior local counsel
retained by the Company's insurer had not reported the existence of these orders
to the Company. The Company filed objections to the Magistrate Judge's report.
On September 30, 1996, the District Court issued an order accepting in part and
modifying in part the report, and providing that the only sanction against the
Company will be a monetary payment of $175,000. The cases are now scheduled for
trial on March 3, 1997.
CLAIMS CONCLUDED SINCE THE END OF SECOND QUARTER 1996. As previously
reported in the Company's quarterly reports on Form 10-Q for the first two
quarters of 1996, the Company and certain of its present and past Directors were
defendants in a class action suit filed on April 2, 1996 in the Court of
14
<PAGE> 16
Common Pleas for Cuyahoga County, Ohio, by Christine A. Toth, a former
employee of the Company, and her husband on behalf of a putative class of
all current and former employees of the Company from 1949 to date of the
suit. On July 12, 1996, the Court granted the Company's motion to dismiss
the complaint. The time limit for filing an appeal from the Court's judgment
has expired.
In three cases brought by the Company's current employees and filed in
the Court of Common Pleas for Cuyahoga County, Ohio, on July 12, 1996, November
1, 1995 and August 1, 1995, respectively, the employees alleged that they
contracted chronic beryllium disease as a result of exposure to beryllium or
beryllium dust. The complaints included claims by the employees for employer
intentional tort, fraud and misrepresentation and claims by family members for
loss of consortium. The plaintiffs sought compensatory damages in excess of
$25,000 and punitive damages in excess of $25,000. While the cases filed on
November 1, 1995 and August 1, 1995, respectively, were disclosed in the
Company's annual report on Form 10-K for the year ended December 31, 1995, the
case filed on July 12, 1996 was disclosed in the Company's quarterly report on
Form 10-Q for the second quarter ended June 28, 1996. On October 4, 1996, the
plaintiffs in all three cases voluntarily dismissed their claims.
CLAIMS INITIATED SINCE THE END OF SECOND QUARTER 1996. On August 23,
1996, Ralph Whitaker and Richard Fillmore, both current employees of the
Company, and their spouses filed suit against the Company in the Court of
15
<PAGE> 17
Common Pleas for Cuyahoga County, Ohio, on behalf of a putative class of all
current and former employees of the Company from 1949 to date of the suit and
their family members. The plaintiffs claim, inter alia, that defendants
committed an intentional tort by misleading the Company's employees and the
public about the efficacy and adequacy of the standard adopted by the
Occupational Safety and Health Administration (OSHA) with respect to exposure
to airborne beryllium to protect employees from chronic beryllium disease and
by making misrepresentations to employees and the public about the risks of
such exposure in the work place. Plaintiffs also allege that defendants have
deliberately withheld or concealed material information about the effects of
such exposure to airborne beryllium. Plaintiffs seek compensatory damages in
the amount of $100 million and punitive damages in the amount of $200 million
together with certain injunctive relief. On October 4, 1996, the Company moved
for dismissal of the entire complaint or partial summary judgment
disposing of the claims of Mr. Fillmore. The motion remains pending.
16
<PAGE> 18
(b) ASBESTOS EXPOSURE CLAIMS
A subsidiary of the Company (the "Subsidiary") is a co-defendant in
twenty-nine cases making claims for asbestos-induced illness allegedly relating
to the former operations of the Subsidiary, then known as The S.K. Wellman Corp.
Twenty-two of these cases have been reported in prior filings with the S.E.C. In
all but a small portion of these cases, the Subsidiary is one of a large number
of defendants in each case. The plaintiffs seek compensatory and punitive
damages, in most cases of unspecified sums. Each case has been referred to a
liability insurance carrier for defense. With respect to those referrals on
which a carrier has acted to date, a carrier has accepted the defense of the
actions, without admitting or denying liability. Two hundred thirty-one similar
cases previously reported have been dismissed or disposed of by pre-trial
judgment, one by jury verdict of no liability and twelve others by settlement
for nominal sums. In one pending case, a Delaware subsidiary of the Subsidiary,
formerly known as The S.K. Wellman Company, is a defendant along with several
other defendants. The Company believes that resolution of the pending cases
referred to above will not have a material effect upon the Company.
17
<PAGE> 19
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11. Statement re: computation of per share earnings.
27. Financial Data Schedule.
(b) REPORTS ON FORM 8-K
There have been no reports on Form 8-K during the quarter
ended September 27, 1996.
18
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BRUSH WELLMAN INC.
Dated: November 14, 1996
/s/ CARL CRAMER
----------------------------
Carl Cramer
Vice President Finance and
Chief Financial Officer
19
<PAGE> 1
EXHIBIT 11
<TABLE>
BRUSH WELLMAN INC. AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
<CAPTION>
THIRD QUARTER ENDED NINE MONTHS ENDED
----------------------------------- -----------------------------------
September 27 September 29 September 27 September 29
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Primary:
Average shares outstanding 15,879,424 16,234,035 15,901,463 16,193,815
Dillutive stock options based
on the treasury stock method
using average market price 196,286 284,097 183,607 225,276
--------------- ---------------- --------------- ----------------
TOTALS 16,075,710 16,518,132 16,085,070 16,419,091
=============== ================ =============== ================
Net Income $4,565,000 $3,332,000 $17,864,000 $16,797,000
Per share amount $0.28 $0.20 $1.11 $1.02
=============== ================ =============== ================
Fully diluted:
Average shares outstanding 15,879,424 16,234,035 15,901,463 16,193,815
Dillutive stock options based
on the treasury stock method
using average market price 196,778 284,116 201,007 230,132
--------------- ---------------- --------------- ----------------
TOTALS 16,076,202 16,518,151 16,102,470 16,423,947
=============== ================ =============== ================
Net Income $4,565,000 $3,332,000 $17,864,000 $16,797,000
Per share amount $0.28 $0.20 $1.11 $1.02
=============== ================ =============== ================
</TABLE>
20
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-27-1996
<CASH> 21,294
<SECURITIES> 0
<RECEIVABLES> 56,344
<ALLOWANCES> 997
<INVENTORY> 91,862
<CURRENT-ASSETS> 186,475
<PP&E> 394,167
<DEPRECIATION> 270,433
<TOTAL-ASSETS> 328,304
<CURRENT-LIABILITIES> 56,366
<BONDS> 15,400
<COMMON> 21,772
0
0
<OTHER-SE> 186,086
<TOTAL-LIABILITY-AND-EQUITY> 328,304
<SALES> 286,462
<TOTAL-REVENUES> 286,462
<CGS> 206,292
<TOTAL-COSTS> 260,801
<OTHER-EXPENSES> (737)
<LOSS-PROVISION> 44
<INTEREST-EXPENSE> 1,015
<INCOME-PRETAX> 25,339
<INCOME-TAX> 7,475
<INCOME-CONTINUING> 17,864
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,864
<EPS-PRIMARY> $1.11
<EPS-DILUTED> $1.11
</TABLE>
