-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IosSrdKxluqVr7T5+PcvmA8ouhE/AG0tR774cRrx2Ill6Fl+C1HkipsUbFnyXUZo ZCcDZ6iT0AiiYU11IaTYAw== 0001047469-99-020561.txt : 19990517 0001047469-99-020561.hdr.sgml : 19990517 ACCESSION NUMBER: 0001047469-99-020561 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMC INDUSTRIES INC/MN/ CENTRAL INDEX KEY: 0000215310 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 410169210 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-08467 FILM NUMBER: 99623284 BUSINESS ADDRESS: STREET 1: ONE MERIDIAN CROSSING STREET 2: SUITE 850 CITY: MINNEAPOLIS STATE: MN ZIP: 55423 BUSINESS PHONE: 6128516000 MAIL ADDRESS: STREET 1: ONE MERIDIAN CROSSING STREET 2: SUITE 850 CITY: MINNEAPOLIS STATE: MN ZIP: 55423 FORMER COMPANY: FORMER CONFORMED NAME: BUCKBEE MEARS CO/MN DATE OF NAME CHANGE: 19830517 10-Q 1 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ---- EXCHANGE ACT OF 1934. For the Quarterly Period ended March 31, 1999. TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - ---- EXCHANGE ACT OF 1934. For the transition Period from N/A to . --- -------- Commission File No. 1-8467 BMC INDUSTRIES, INC. (Exact Name of Registrant as Specified in its Charter) MINNESOTA 41-0169210 (State of Incorporation) (IRS Employer Identification No.) ONE MERIDIAN CROSSINGS, SUITE 850, MINNEAPOLIS, MINNESOTA 55423 (Address of Principal Executive Offices) (Zip Code) (612) 851-6000 (Registrant's Telephone Number, Including Area Code) Indicate by check mark whether 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 at least the past 90 days. X Yes No ---- ---- BMC Industries, Inc. has outstanding 27,259,271 shares of common stock as of May 6, 1999. There is no other class of stock outstanding. Exhibit Index Begins at Page 13 PART I: FINANCIAL INFORMATION BMC INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands) Item 1: Financial Statements
MARCH 31 December 31 1999 1998 - -------------------------------------------------------------------------------------------------------------------------- ASSETS Current Assets Cash and cash equivalents $ 1,976 $ 1,028 Trade accounts receivable, net of allowances 43,015 39,163 Inventories 83,684 82,853 Deferred income taxes 14,617 14,603 Other current assets 15,203 14,347 - -------------------------------------------------------------------------------------------------------------------------- Total Current Assets 158,495 151,994 - -------------------------------------------------------------------------------------------------------------------------- Property, Plant and Equipment 273,491 276,630 Less Accumulated Depreciation 115,511 114,036 ------------- ------------ Property, Plant and Equipment, Net 157,980 162,594 ------------- ------------ Deferred Income Taxes 4,712 5,431 Intangible Assets, Net 72,291 73,178 Other Assets 7,541 6,268 - -------------------------------------------------------------------------------------------------------------------------- Total Assets $ 401,019 $ 399,465 - -------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY - -------------------------------------------------------------------------------------------------------------------------- Current Liabilities Short-term borrowings $ 1,861 $ 1,929 Accounts payable 31,521 28,315 Income taxes payable 4,541 3,375 Accrued expenses and other liabilities 27,115 23,404 - -------------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 65,038 57,023 - -------------------------------------------------------------------------------------------------------------------------- Long-term Debt 179,816 187,266 Other Liabilities 17,892 18,372 Deferred Income Taxes 4,604 3,547 Stockholders' Equity Common stock 47,756 47,714 Retained earnings 89,219 86,436 Accumulated other comprehensive income (loss) (1,317) 1,113 Other (1,989) (2,006) - -------------------------------------------------------------------------------------------------------------------------- Total Stockholders' Equity 133,669 133,257 - -------------------------------------------------------------------------------------------------------------------------- Total Liabilities and Stockholders' Equity $ 401,019 $ 399,465 - -------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Condensed Consolidated Financial Statements. BMC INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands, except per share amounts)
Three Months Ended March 31 ---------------------------------- 1999 1998 - --------------------------------------------------------------------------------------------------------------------------- Revenues $ 84,645 $ 80,084 Cost of products sold 71,078 68,455 - --------------------------------------------------------------------------------------------------------------------------- Gross margin 13,567 11,629 Selling 4,365 3,289 Administration 1,233 1,330 - --------------------------------------------------------------------------------------------------------------------------- Income from Operations 7,969 7,010 - --------------------------------------------------------------------------------------------------------------------------- Other Income and (Expense) Interest expense (3,463) (1,383) Interest income 5 32 Other income (expense) 390 (144) - --------------------------------------------------------------------------------------------------------------------------- Earnings before Income Taxes 4,901 5,515 Income Taxes 1,710 1,706 - --------------------------------------------------------------------------------------------------------------------------- Net Earnings $ 3,191 $ 3,809 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Net Earnings Per Share: Basic $ 0.12 $ 0.14 Diluted 0.12 0.14 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Number of Shares Included in Per Share Computation: Basic 27,201 26,994 Diluted 27,405 27,644 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Dividends Declared Per Share $ 0.015 $ 0.015 - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Condensed Consolidated Financial Statements. BMC INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
Three Months Ended March 31 ------------------------------------- 1999 1998 - ------------------------------------------------------------------------------------------------------------------------------ Net Cash Provided by (Used in) Operating Activities Net earnings $ 3,191 $ 3,809 Depreciation and amortization 5,647 5,002 Changes in operating assets and liabilities 1,847 (10,990) - ------------------------------------------------------------------------------------------------------------------------------ Total 10,685 (2,179) - ------------------------------------------------------------------------------------------------------------------------------ Net Cash Used in Investing Activities Additions to property, plant and equipment (2,504) (3,958) - ------------------------------------------------------------------------------------------------------------------------------ Total (2,504) (3,958) - ------------------------------------------------------------------------------------------------------------------------------ Net Cash (Used in) Provided by Financing Activities Increase in short-term borrowings 248 114 Increase (decrease) in long-term debt (7,000) 22,270 Common stock issued (repurchased), net 42 (15,905) Cash dividends paid (408) (417) Other 17 (63) - ------------------------------------------------------------------------------------------------------------------------------ Total (7,101) 5,999 - ------------------------------------------------------------------------------------------------------------------------------ Effect of Exchange Rate Changes on Cash and Cash Equivalents (132) (7) - ------------------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Cash and Cash Equivalents 948 (145) Cash and Cash Equivalents at Beginning of Period 1,028 2,383 - ------------------------------------------------------------------------------------------------------------------------------ Cash and Cash Equivalents at End of Period $ 1,976 $ 2,238 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------
See accompanying Notes to Condensed Consolidated Financial Statements. BMC INDUSTRIES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (in thousands, except per share amounts) 1. Financial Statements In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of March 31, 1999, and the results of operations and the cash flows for the periods ended March 31, 1999 and 1998. Such adjustments are of a normal recurring nature. Certain items in the financial statements for the period ended March 31, 1998 have been reclassified to conform to the presentation for the period ended March 31, 1999. The results of operations for the three-month period ended March 31, 1999 are not necessarily indicative of the results to be expected for the full year. The balance sheet as of December 31, 1998 is derived from the audited balance sheet as of that date. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. 2. Inventories
MARCH 31, 1999 DECEMBER 31, 1998 -------------- ----------------- Raw materials $ 23,054 $ 24,845 Work in process 12,008 9,047 Finished goods 48,622 48,961 ------------ ------------ $ 83,684 $ 82,853 ------------ ------------ ------------ ------------
3. Derivative Financial Instruments Derivative financial instruments are used by the Company to reduce foreign exchange and interest rate risks. Interest Swap Agreements - In March 1997, the Company entered into an interest rate swap agreement that allowed the Company to swap a variable interest rate for a fixed interest rate of 6.365% on $15,000 of notional debt for a period of two years ended in March 1999. In August 1998, the Company entered into additional multiple interest rate swap agreements for a total of $100 million of notional debt which provide for the Company to swap a variable interest rate for fixed interest rates ranging from 5.74% to 5.76% plus a specified spread depending on the swap involved (7.12% to 7.14% including current spread of 1.375%). These swaps expire at various dates ranging from July 1999 to August 2000. The notional amount of debt is not a measure of the Company's exposure to credit or market risks and is not included in the condensed consolidated balance sheet. Fixing the interest rate minimizes the Company's exposure to the uncertainty of floating interest rates during this two-year period. Amounts to be paid or received under the interest rate swap agreement are accrued and recorded as an adjustment to Interest Expense during the term of the interest rate swap agreements. Cross-Currency Swap Agreement - In January 1999, the Company entered into a cross-currency swap which provided for the Company to swap $10,000 of notional debt for the equivalent amount of Japanese yen-denominated debt. This swap also effectively swapped a U.S. dollar-based interest rate of 5.1% for a Japanese yen-based interest rate of 1.05%. This Japanese yen-based debt derivative is accounted for under mark-to-market accounting and expires in January 2002. The Company recorded as other income a gain of $341 in the quarter ended March 31, 1999 related to this swap. 4. Comprehensive Income The components of comprehensive income, net of related tax, for the three-month periods ended March 31, 1999 and 1998 are as follows:
1999 1998 ---- ---- Net earnings $ 3,191 $ 3,809 Foreign currency translation adjustments (2,430) (477) --------- --------- Comprehensive income $ 761 $ 3,332 --------- --------- --------- ---------
Foreign currency translation adjustment for 1999 is primarily due to the change in cumulative translation adjustment resulting from the strengthening of the U.S. dollar against the DM/Euro during the quarter ended March 31, 1999. 5. Business Acquisition On May 15, 1998, the Company, through a wholly owned subsidiary, acquired the Orcolite business unit of the Monsanto Company (Orcolite) for the cash purchase price of $101,000. For financial statement purposes, the acquisition has been accounted for under the purchase method of accounting with the excess of the purchase price over the fair value of the net tangible assets acquired recorded as intangible assets which are being amortized over periods ranging from seven to 30 years. In addition, in accordance with generally accepted accounting principles, the independently appraised value of acquired in-process research and development purchased in conjunction with the acquisition was written-off as a charge of $9,500 (pre-tax) during the second quarter of 1998. The appraised value represents the estimated fair value of in-process R&D based on risk-adjusted cash flows related to the in-process R&D projects. At the date of the acquisition, the development of these projects had not reached technological feasibility, and these projects had no alternative future uses. There is no assurance that the in-process projects, which remain in progress, will be completed, or that they will meet either technological or commercial success. The consolidated statements of operations reflect the operations of Orcolite after May 15, 1998. The following unaudited pro forma information presents a summary of consolidated results of operations of the Company and the Orcolite business unit as if the acquisition had occurred at the beginning of fiscal 1998, with pro forma adjustments to give effect to amortization of goodwill and other intangible assets, depreciation expense on the fair value of property, plant and equipment and interest expense on acquisition debt, together with the related income tax effects. The pro forma adjustments do not include the $9,500 write-off of acquired in-process research and development discussed above.
Three Month Period Ended March 31, 1998 --------------------------------------- Revenues $ 89,092 Net earnings 2,731 Diluted earnings per share 0.10
The unaudited pro forma condensed combined financial information above is not necessarily indicative of what actual results would have been had the acquisition occurred at the date indicated. Also, the anticipated financial impact resulting from business synergies has not been reflected in the above pro forma financial information. Such synergies include the following: consolidation of selling, marketing, distribution, customer service and administrative functions; consolidation of research and development and technical services functions; optimization of combined production capacity; and improved purchasing leverage. 6. Segment Information The Company has two operating segments which manufacture and sell a variety of products: Precision Imaged Products (PIP) and Optical Products. PIP manufactures principally aperture masks which are photochemically etched fine mesh grids used in the manufacture of color television tubes and computer monitors. Optical Products manufactures ophthalmic lenses. The following is a summary of certain financial information relating to the two segments:
Three Months Ended March 31 --------------------------------------------------------------------------------------- Precision Image Products Optical Products Consolidated -------------------------- -------------------------- --------------------------- 1999 1998 1999 1998 1999 1998 ----------- ----------- ----------- ----------- ----------- ----------- Revenues $ 49,999 $ 55,272 $ 34,646 $ 24,812 $ 84,645 $ 80,084 Cost of Products Sold 45,089 50,065 25,989 18,390 71,078 68,455 ------------------------------------------------------------------------------------------------------------------ Gross Margin 4,910 5,207 8,657 6,422 13,567 11,629 Gross Margin % 9.8% 9.4% 25.0% 25.9% 16.0% 14.5% Selling 1,357 1,133 3,008 2,156 4,365 3,289 Unallocated Corporate Administration - - - - 1,233 1,330 ----------------------------------------------------------------------------------------------------------------- Income from Oper. $ 3,553 $ 4,074 $ 5,649 $ 4,266 $ 7,969 $ 7,010 ---------------------------------------------------------- ---------------------------------------------------------- Operating Income % 7.1% 7.4% 16.3% 17.2% 9.4% 8.8% Interest and Other Income (Expense), net (3,068) (1,495) ------------ ----------- Earnings Before Income Taxes $ 4,901 $ 5,515 ------------ ----------- ------------ -----------
7. New Accounting Standards In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivatives and Similar Financial Instruments and for Hedging Activities." The new Statement will significantly change how companies account for derivatives and hedging activities. The Company is currently evaluating the impact of adoption of this Statement which is required for the Company no later than first quarter 2000. 8. Legal Matters During the quarter ended March 31, 1999, no significant new legal proceedings or environmental matters arose and there were no material changes in the status of the legal proceedings or environmental matters described in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. BMC INDUSTRIES, INC. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS COMPARISON OF THREE MONTHS ENDED MARCH 31, 1999 AND 1998 Total revenues for the first quarter of 1999 increased by $4.6 million, or 6%, from the first quarter of 1998. Revenues of the Optical Products group generated sales of $34.6 million in the first quarter of 1999, up 40%, or $9.8 million, over the prior year quarter due mainly to growth in sales of high-end products (polycarbonate, progressive and polarizing sun lenses) resulting from the acquisition of Orcolite in May 1998. Sales of high-end products increased 98% in first quarter 1999 over first quarter 1998 and accounted for 54% of total Optical Products group revenue in first quarter 1999 compared to 38% in first quarter 1998. First quarter 1999 Optical Products group revenues were up 2.4% compared to the pro forma combined Vision-Ease/Orcolite 1998 revenues for the same period. The growth in pro forma revenue was dampened by year-on-year declines in glass and plastic lens sales as growth in the ophthalmic lens market continues to shift towards polycarbonate. In the first quarter of 1999, Optical Products group sales of high-end products (including polycarbonate) increased 9% over the pro forma combined Vision-Ease/Orcolite 1998 revenues for the same period. Revenues of the Precision Imaged Products (PIP) group for the first quarter decreased 10% from the prior year quarter due primarily to a previously anticipated temporary slowdown of BMSP and a decline in sales of AK steel entertainment masks attributable to both volume and price reductions. Increased sales of invar entertainment masks and monitor masks largely offset the decline in sales of AK steel entertainment masks. Sales of invar entertainment masks in first quarter 1999 increased 20% over first quarter 1998 and sales of monitor masks increased 29% over the comparable quarter last year. The monitor mask line in Cortland, which had been shut down all of the second half of 1998, was restarted near the end of January 1999 in response to increased demand for monitor masks from a broadened customer base. However, only a limited amount of monitor masks sold in first quarter 1999 were produced at the Company's Cortland facility. The Company currently expects significant incremental sales of monitor masks as the restarted Cortland monitor mask line reaches full production. Cost of products sold were 84% of net sales for the first quarter of 1999, compared to 85.5% in the same period of 1998. The decreased cost of products sold percentage was due primarily to the increased mix of higher-margin optical product sales versus lower-margin PIP sales. The PIP gross margin percentage is up slightly from 1998. The 1999 PIP gross margin percentage reflects the heavier mix of high-margin invar entertainment sales and the impact of cost reduction initiatives, offset by overall lower pricing within the Mask business, particularly within the monitor segment; lower profitability at BMSP; and costs associated with the restart of the Cortland, New York monitor mask line during first quarter 1999, which had a significant negative impact on first quarter 1999 results. The 1998 PIP gross margin percentage reflects the significant costs associated with the original start-up of the Cortland monitor mask line in late 1997/early 1998. The Optical Products gross margin percentage decreased slightly from first quarter 1998 reflecting increased amortization expense related to the Orcolite acquisition, partially offset by an increase in mix of high-end product sales. Selling expenses were $4.4 million, or 5.2%, of revenues and $3.3 million, or 4.1%, of revenues for the first quarter of 1999 and 1998, respectively. The increase is primarily due to higher selling costs associated with the Optical Products group, principally for expanded sales and marketing efforts associated with high-end products and incremental costs associated with the Orcolite acquisition. Interest expense in the first quarter of 1999 increased $2.1 million over the prior year quarter. This increase is primarily due to the increased debt level to fund the cash purchase of Orcolite for $101 million in May of 1998. The provision for income taxes was 35% and 31% of pre-tax income in the first quarter of 1999 and 1998, respectively. This increase was primarily due to a decrease in the tax benefit associated with dividends projected to be paid by the Company's German operation to the Parent Company which reduce the Company's effective tax rate. MARKET RISK There were no significant changes in market risks from those disclosed in the Company's Form 10-K for the year ended December 31, 1998. FINANCIAL POSITION AND LIQUIDITY Debt decreased approximately $7 million during the first three months of 1999 primarily due to cash flow from operations and limited investing activity. Working capital was $93.5 million at March 31, 1999 compared to $95 million at December 31, 1998. The current ratio was 2.4 at March 31, 1999 compared to 2.7 at December 31, 1998. The ratio of debt to capitalization was 0.58 at March 31, 1999 compared to 0.59 at December 31, 1998. There were no significant changes in the Company's credit facilities during the quarter ended March 31, 1999. The Company was in compliance with all covenants related to credit facilities at March 31, 1999. The Company continues to expect that the combination of present capital resources, internally-generated funds and unused financing sources will be adequate to meet the Company's financing requirements for 1999. ENVIRONMENTAL There were no material changes in the status of the legal proceedings and environmental matters described in the Company's Annual Report on Form 10-K for the year ended December 31, 1998. YEAR 2000 COMPLIANCE The Company has computer applications at the corporate level and at each of its operating divisions that require or have required modifications made necessary by the upcoming year 2000. If appropriate modifications are not made, or are not completed in a timely manner, the Y2K issue could have a material adverse impact on the operations of the Company. The Company has been addressing the Y2K issue using essentially the following four-phase approach: - Phase I - Identification of all significant computer systems within the Company with exposure to Y2K issues; - Phase II - For each system, assessment of Y2K issue(s) and required remediation; - Phase III - Remediation and testing of systems to be Y2K compliant; - Phase IV - Assessment of Y2K preparedness of significant third parties. Phase I was formally completed and summarized on a Company-wide basis in early 1998. Phase II is essentially completed for all information technology (IT) systems and is in process and estimated to be completed in the third quarter of 1999 for all non-IT systems. Non-IT systems are generally embedded technology, such as micro-controllers. Phase III is in various stages of completion depending on the systems involved. For IT systems, the most significant efforts of this phase currently involve the accelerated replacement of non-compliant IT systems within the Mask Operations group and the remediation and testing of important mainframe applications and operating systems within the Optical Products group. Y2K-compliant integrated IT systems from SAP are currently being implemented in the Mask Operations group in various phases beginning in early 1999 and continuing through the third quarter of 1999. Y2K remediation and testing within the Optical Products group is currently estimated to be completed by the third quarter of 1999. For non-IT systems, Phase III is currently scheduled to be completed in conjunction with Phase II by the end of third quarter 1999. For Phase IV, the Company is in the process of identifying and assessing the Y2K preparedness of significant third parties, including key vendors and service providers, and estimates that this phase will be ongoing during the remainder of 1999. The Company currently estimates that it will cost $3-4 million using both internal and external resources to address the Y2K issue as discussed above, including the cost of replacing the IT systems within the Mask Operations group. Through March 31, 1999, the Company had spent approximately $1.5 million of this total estimate. The Company's current most reasonably likely worst case Y2K scenario is the potential inability to obtain raw materials from suppliers in a timely manner or that modification work will not proceed on schedule, causing some increase to the total cost of achieving Y2K compliance. The impact on the Company's results of operations if the Company or its suppliers or customers are not fully Y2K compliant is not reasonably determinable. Since the Company is depending on its ability to execute modification plans and its vendors to continue material supply without interruption, there can be no assurance that unforeseen difficulties will not arise for the Company or its customers and that related costs will not thereby be incurred. Management believes it has planned appropriately to resolve the Y2K issue with respect to all material elements under the Company's direct control. A number of significant risks do exist, however, including the potential inability of the Company to obtain (or retain) the proper internal and external resources to fully address all Y2K exposures in the timeframes required and at the cost estimated, as well as the risk that key suppliers, customers or other significant third parties, including those in utilities, communications, transportation, banking and government are not prepared for the year 2000. The Company has not yet established a contingency plan relative to the Y2K issue but currently anticipates establishing such a plan later in 1999. CAUTIONARY STATEMENTS Certain statements included in this Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-Q by the Company or its representatives, as well as other communications, including reports to shareholders, news releases and presentations to securities analysts or investors, contain forward-looking statements made in good faith by the Company pursuant to the "Safe Harbor" provisions of the PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. These statements relate to non-historical information and include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from those presently anticipated or projected. The Company wishes to caution the reader not to place undo reliance on any such forward-looking statements, which reflect our opinion as of the date of this Form 10-Q. These statements are qualified by important factors listed separately in "Item 1 - Business" of the Company's Form 10-K for the year ended December 31, 1998, which in some cases have affected and in the future could adversely affect the Company's actual results and could cause the Company's actual financial performance to differ materially from that expressed in any forward-looking statement. These factors should not, however, be considered an exhaustive list. The Company does not undertake the responsibility to update any forward-looking statement that may be made from time to time by or on behalf of the Company. Part II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS With regard to legal proceedings and certain environmental matters, see "Management's Discussion and Analysis of Financial Condition and Results of Operations" which begins on page 9 and Note 8 of the "Notes to Condensed Consolidated Financial Statements" on page 8. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" on page 10. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS 10.1 Amendment No. 3 to Amended and Restated Credit Agreement, dated April 29, 1999, among the Company, Several Banks, Bankers' Trust Company as Agent and a Lender, NBD Bank as Documentation Agent and a Lender (filed herein). 10.2 First Declaration of Amendment, dated April 26, 1999, to the BMC Industries, Inc. Savings and Profit Sharing Plan (filed herein). 10.3 Second Declaration of Amendment, dated April 26, 1999, to the BMC Industries, Inc. Savings and Profit Sharing Plan (filed herein). 10.4 First Amendment, dated April 8, 1999, to the BMC Industries, Inc. Savings Trust (filed herein). 27. Financial Data Schedule (filed only in electronic format). 99.1 News Release, dated April 27, 1999, announcing the first quarter 1999 operating results (filed herein). 99.2 News Release, dated April 23, 1999, announcing the ITC ruling on the Antidumping Petition Against certain aperture masks from Japan and South Korea (filed herein). (b) REPORTS ON FORM 8-K. The Company did not file any reports on Form 8-K for the quarter ended March 31, 1999. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BMC INDUSTRIES, INC. /s/ STEVEN E. OPDAHL ----------------------------------------- Steven E. Opdahl Controller (Principal Accounting Officer) Dated: May 14, 1999 EX-10.1 2 EXHIBIT 10.1 EXHIBIT 10.1 THIRD AMENDMENT TO CREDIT AGREEMENT This Third Amendment to Credit Agreement (the "THIRD AMENDMENT") dated as of April 29, 1999 is by and among BMC Industries Inc., a Minnesota corporation (the "BORROWER"), Bankers Trust Company, a New York banking corporation, as administrative agent for the Lenders hereunder (in such capacity individually, the "AGENT") and as a Lender, The First National Bank of Chicago (as assignee of NBD Bank) as documentation agent and as a Lender and the several banks and other financial institutions signatory below. R E C I T A L S: WHEREAS, the Borrower, the Agents and various lending institutions (the "LENDERS") are parties to an Amended and Restated Credit Agreement dated as of June 25, 1998 (as heretofore and hereafter amended, restated, supplemented or otherwise modified, the "CREDIT AGREEMENT"), pursuant to which the Lenders have made and may hereafter make loans, advances and other extensions of credit to the Borrower; WHEREAS, the Borrower has requested that the Agents and the Majority Lenders delete SECTION 7.11 of the Credit Agreement (pursuant to which the Borrower affirmatively agreed to refinance, amend or otherwise modify that certain Credit Offer Letter between Buckbee-Mears Europe GmbH and Deutsche Bank AG (Stuttgart) dated September 30, 1994 such that the facility become an unsecured facility and to provide the related releases of security interests and Liens to the Agent) and amend the Credit Agreement in certain other respects as set forth herein and the Majority Lenders and the Agents are agreeable to the same, subject to the terms and conditions hereof; WHEREAS, this Third Amendment shall constitute a Loan Document and these Recitals shall be construed as part of this Third Amendment; NOW, THEREFORE, in consideration of the foregoing and the agreements, promises and covenants set forth below, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. Capitalized terms used but not otherwise defined in this Third Amendment shall have the meanings ascribed to them in the Credit Agreement. 2. AMENDMENT TO THE CREDIT AGREEMENT. Subject to the conditions of this Third Amendment, the Credit Agreement is hereby amended as follows: (a) DEFINITION OF SUBSIDIARY. The definition of "Subsidiary" contained in SECTION 1.1 of the Credit Agreement is amended by deleting such definition in its entirety and inserting in lieu thereof the following new definition of "Subsidiary": "SUBSIDIARY": as to any Person, any corporation, partnership (limited or general), limited liability company, trust or other entity of which a majority of the stock (or equivalent ownership or controlling interest) having voting power to elect a majority of the board of directors (if a corporation) or to select the trustee or equivalent controlling interest, shall, at the time such reference becomes operative, be directly or indirectly owned or controlled by such Person or one or more of the other subsidiaries of such Person or any combination thereof. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of Borrower. (b) SECTION 7.11. SECTION 7.11 of the Credit Agreement is amended by deleting such Section in its entirety and inserting in lieu thereof the following: "7.11 INTENTIONALLY OMITTED." 3. CONDITIONS PRECEDENT. Notwithstanding any other provision contained in this Third Amendment or any other document, the effectiveness of this Third Amendment is expressly conditioned upon the satisfaction of each matter set forth in this SECTION 3, all in form and substance acceptable to the Agent in its sole and absolute discretion: (a) THIRD AMENDMENT. The Agent shall have received a duly executed copy of this Third Amendment signed by the Borrower, the Agent and the Majority Lenders. (b) WARRANTIES AND REPRESENTATIONS. All of the warranties and representations of the Borrower contained in the Credit Agreement and in the other Loan Documents (including, without limitation, in this Third Amendment) shall be true and correct in all material respects on and as of the date first written above (except those representations and warranties made expressly as of a different date). The Borrower hereby represents and warrants that the execution, delivery and performance of this Third Amendment and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action and this Third Amendment is a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, except as the enforcement thereof may be subject to (i) the effect of any applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting creditors' rights generally and (ii) general principles of equity (regardless of whether such enforcement is sought in a proceeding in equity or at law). In furtherance of the foregoing, the Borrower hereby represents and warrants that as of the date first written above each of the conditions precedent contained in this SECTION 3 has been fully satisfied in accordance with the express terms thereof. (c) NO EVENT OF DEFAULT. Except as expressly waived herein, no Event of Default shall have occurred and be continuing as of the date first written above, or, will occur after giving effect to this Third Amendment in accordance with its terms. (d) NO LITIGATION. No litigation, investigation, proceeding, injunction, restraint or other action shall be pending or threatened against the Borrower or any Affiliate of the Borrower, or any officer, director, or executive of any thereof, which restrains, prevents or imposes adverse conditions upon, or which otherwise relates to, the execution, delivery or performance of this Third Amendment. 4. LIMITATION OF THIRD AMENDMENT. The parties hereto agree and acknowledge that nothing contained in this Third Amendment in any manner or respect limits or terminates any of the provisions of the Credit Agreement or any of the other Loan Documents other than as expressly set forth herein and further agree and acknowledge that the Credit Agreement (as amended hereby) and each of the other Loan Documents remain and continue in full force and effect and are hereby ratified and confirmed. Except to the extent expressly set forth herein, the execution, delivery and effectiveness of this Agreement shall not operate as a waiver of any rights, power or remedy of the Lenders or the Agent under the Credit Agreement or any other Loan Document, nor constitute a waiver of any provision of the Credit Agreement or any other Loan Document. No delay on the part of any Lender or the Agent in exercising any of their respective rights, remedies, powers and privileges under the Credit Agreement or any of the Loan Documents or partial or single exercise thereof, shall constitute a waiver thereof. None of the terms and conditions of this Third Amendment may be changed, waived, modified or varied in any manner, whatsoever, except in accordance with SECTION 11.1 of the Credit Agreement. 5. COSTS, EXPENSES AND TAXES. Pursuant to SECTION 11.4 of the Credit Agreement, the Borrower agrees to pay on demand all costs and expenses of the Lenders and the Agent in connection with the preparation, execution and delivery of this Third Amendment including the reasonable fees and out-of-pocket expenses of counsel to the Agent with respect thereto. 6. EXECUTION IN COUNTERPARTS. This Third Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same instrument. 7. GOVERNING LAW. THIS THIRD AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE INTERNAL CONFLICTS OF LAWS PROVISIONS THEREOF. 8. HEADINGS. Section headings in this Third Amendment are included herein for convenience of reference only and shall not constitute a part of this Third Amendment for any other purposes. * * * * [Signature page follows] IN WITNESS WHEREOF, this Third Amendment has been duly executed as of the date first written above. BMC INDUSTRIES INC. By: /s/ Jeffrey J. Hattara Name: Jeffrey J. Hattara Title: Vice President of Finance and Administration, Chief Financial Officer BANKERS TRUST COMPANY, in its individual capacity and as Administrative Agent By: /s/ Robert R. Telesca Name: Robert R. Telesca Title: Assistant Vice President THE FIRST NATIONAL BANK OF CHICAGO, in its individual capacity and as Documentation Agent By: /s/ Jenny A. Gilpin Name: Jenny A. Gilpin Title: Vice President U.S. BANK NATIONAL ASSOCIATION By: /s/ David Shapiro Name: David Shapiro Title: Assistant Vice President NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION By: /s/ Mark H. Halldorson Name: Mark H. Halldorson Title: Officer HARRIS TRUST AND SAVINGS BANK By: /s/ Catherine C. Ciolek Name: Catherine C. Ciolek Title: Vice President WACHOVIA BANK, N.A. By: /s/ Frances W. Josephic Name: Frances W. Josephic Title: Vice President UNION BANK OF CALIFORNIA By: /s/ Susan D. Biba Name: Susan D. Biba Title: Vice President CREDIT AGRICOLE INDOSUEZ By: /s/ Raymond A. Falkenberg Name: Raymond A. Falkenberg Title: Vice President, Manager By: /s/ David Bouhl Name: David Bouhl Title: First Vice President, Managing Director EX-10.2 3 EXHIBIT 10.2 EXHIBIT 10.2 BMC INDUSTRIES, INC. SAVINGS AND PROFIT SHARING PLAN FIRST DECLARATION OF AMENDMENT Pursuant to the retained power of amendment contained in Section 11.2 of the BMC Industries, Inc. Savings and Profit Sharing Plan, the undersigned hereby amends Section 5.1(b) of the Plan to read as follows: (b) In addition to the investment funds maintained pursuant to Subsection (a), the Trustee will maintain, within the Trust, the BMC Common Stock Fund, which will be invested in shares of Company Stock except for such amounts of cash as the Committee determines to be necessary to satisfy short-term liquidity requirements and cash held pending acquisition of shares of Company Stock. The foregoing amendment is effective as of March 15, 1999 and applies to all Participants and Beneficiaries, including Participants who terminated employment before March 15, 1999 and Beneficiaries of Participants who died before March 15, 1999. IN WITNESS WHEREOF, the undersigned has caused this instrument to be executed this 26th day of April, 1999. BMC INDUSTRIES, INC. Attest: /s/ JON A. DOBSON By /s/ STEFAN K. PETERSON ----------------------- --------------------------------------- Secretary Director of Compensation, Benefits & HRIS EX-10.3 4 EXHIBIT 10.3 EXHIBIT 10.3 BMC INDUSTRIES, INC. SAVINGS AND PROFIT SHARING PLAN SECOND DECLARATION OF AMENDMENT Pursuant to the retained power of amendment contained in Section 11.2 of the BMC Industries, Inc. Savings and Profit Sharing Plan, the undersigned hereby amends Section 5.4(b)(ii) of the Plan to read as follows: (ii) Not more than once each calendar quarter, a Participant who is an Employee and is not eligible to make directions pursuant to Subsection (b)(i) may elect to transfer up to 25 percent of his or her Matching Contribution Account from the BMC Common Stock Fund to one or more of the investment funds maintained pursuant to Section 5.1 other than the BMC Common Stock Fund. A Participant may only make an election pursuant to this Subsection (b)(ii) if the portion of the Participant's Matching Contribution Account invested in the BMC Common Stock Fund equals or exceeds 20 percent of the aggregate balance of the Participant's Before-Tax Contribution Account, Matching Contribution Account, After-Tax Contribution Account and Rollover Account. The election must be made in accordance with and is subject to Plan Rules and will be effective as soon as administratively practicable after it is received by the Administrator or the Administrator's designate. All Matching Contributions credited to the Participant's Matching Contribution Account after the effective date of such direction will continue to be invested pursuant to Subsection (a). The foregoing amendment is effective as of September 1, 1998. IN WITNESS WHEREOF the undersigned has caused this instrument to be executed this 26th day of April, 1999. BMC INDUSTRIES, INC. Attest:/s/ JON A. DOBSON By /s/ STEFAN K. PETERSON - ---------------------------- --------------------------------------- Secretary Director of Compensation, Benefits & HRIS EX-10.4 5 EXHIBIT 10.4 EXHIBIT 10.4 FIRST AMENDMENT TO BMC INDUSTRIES, INC. SAVINGS TRUST BMC Industries, Inc. (the "Company") and Norwest Bank Minnesota, N.A. (the "Trustee") hereby amend the BMC Industries, Inc. Savings Trust Agreement between the Company and the Trustee as follows: 1. Section 1.1 of the Trust Agreement is amended to read as follows: 1.1 NAME OF TRUST. The name of the Trust evidenced by this Trust Agreement is the "BMC Industries, Inc. Savings and Profit Sharing Trust" (the "Trust"). 2. Section 3.1(f) of the Trust Agreement is amended to read as follows: (f) The Trustee will vote or, in connection with a public or private tender or exchange offer, tender and sell or exchange shares of the Company's common stock held in the Trust in accordance with the direction of the Committee or another named fiduciary pursuant to Section 4.4. 3. Section 4.1(a) of the Trust Agreement is amended to read as follows: (a) The Committee, acting as the named fiduciary, will direct the Trustee to establish at least three separate investment accounts within the Fund, each separate account being hereinafter referred to as an "Investment Fund." One such Investment Fund will be invested in shares of the Company's common stock except for such amounts of cash as the Committee determines to be necessary to satisfy short-term liquidity requirements and cash held pending acquisition of shares of the Company's common stock. The remaining Investment Funds may be invested in (i) shares of investment companies registered under the Investment Company Act of 1940, (ii) collective funds maintained by a bank or trust company, (iii) an insurance contract or contracts or pool or pools of insurance contracts and (iv) funds managed by a registered investment manager, bank or insurance company. The Trustee has no authority with respect to the selection of the Investment Funds, or for the investment management of these accounts, except as provided in Section 4.2 respecting a Trustee managed investment account, if any. The Trustee will transfer to each such Investment Fund such portion of the assets of the Fund as directed by the Administrator or directly by a participant or beneficiary, in such form as the Trustee may reasonably require. 4. Section 4.4 of the Trust Agreement is amended to read as follows: 4.4 VOTING AND TENDER OF COMPANY STOCK; VOTING OF OTHER SECURITIES. (a) Shares of the Company's common stock held in the Trust will be voted by the Committee in its discretion. In connection with any private or public tender or exchange offer for shares of the Company's common stock, the Committee will determine in its discretion whether to tender and sell or exchange shares of the Company's common stock held in the Trust. The Trustee has no discretion over the voting or tendering the Company's common stock held in the Trust, and its responsibility over such matters is limited to voting or tendering such stock as directed by the Committee. The Company may appoint another entity as a named fiduciary for the purpose of voting and/or tendering shares of the Company's common stock for any matter, and if so, the Company shall furnish the Trustee with written notice of such appointment and the appointee's acceptance. (b) Except as provided in Section 4.4(a), the voting of proxies for any securities held by the Trust is the responsibility of the Committee, acting as named fiduciary, unless the Trustee or an investment manager has investment management authority over the securities, in which case voting is the responsibility of the Trustee or investment manager. With respect to securities over which the Trustee does not have investment management authority, the Trustee will make its best effort to timely delivery proxies to the party which it reasonably believes to have investment management authority over such securities. The Trustee may use agents to effect such delivery. The Trustee is not responsible for ascertaining whether, or how, the proxies were subsequently voted or disposed of. In the event investment management authority over any securities is transferred from the Trustee to a named fiduciary or investment manager, such transfer of authority will include the transfer of the power and responsibility to vote proxies under the party's investment management authority unless the Trustee agrees in writing to retain investment management power and responsibility to vote proxies. This Amendment is effective March 15, 1999. The Company and the Trustee have caused this instrument to be executed this 8th day of April, 1999. BMC INDUSTRIES, INC. By /s/ JEFFREY J. HATTARA ------------------------------- NORWEST BANK MINNESOTA, N.A. By /s/ PORTIA RAMOS ------------------------------- EX-27 6 EXHIBIT 27
5 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1,969 7 47,034 4,019 83,684 158,495 273,491 115,511 401,019 65,038 0 0 0 47,756 85,913 401,019 84,645 84,645 71,078 5,598 (390) 0 3,463 4,901 1,710 3,191 0 0 0 3,191 0.12 0.12
EX-99.1 7 EXHIBIT 99.1 EXHIBIT 99.1 Contact: Jeffrey J. Hattara (NYSE-BMC) (612) 851-6030 FOR IMMEDIATE RELEASE BMC REPORTS FIRST QUARTER 1999 EARNINGS April 27, 1999 -- Minneapolis, Minnesota - BMC Industries, Inc. reported net income of $3.2 million, or $.12 per diluted share, for the quarter ended March 31, 1999. This compares to net earnings of $3.8 million, or $0.14 per diluted share, in the first quarter of 1998. Total first quarter revenues increased 6% from $80.1 million in 1998 to $84.6 million in 1999. Paul B. Burke, BMC's Chairman and Chief Executive Officer, stated, "We are pleased with BMC's first quarter results which were achieved despite the impact of additional costs associated with restarting our monitor mask line in Cortland, New York. During the first quarter, we increased revenues by 6% and improved income from operations by 14% over the prior year quarter. We believe this quarter's performance reflects the benefits from the integration of the Orcolite acquisition and the solid progress we have made in returning the mask business to profitability. We are also pleased with further progress on our cash generation and debt reduction efforts while continuing our investments in ongoing strategic initiatives. With the Cortland monitor mask line back in production, new initiatives beginning to show progress and debt levels continuing to drop, we anticipate both further revenue and earnings growth over the balance of 1999 and into 2000." BMC's Optical Products group generated sales of $34.6 million in the first quarter of 1999, up 40%, or $9.8 million, over the prior year quarter due mainly to growth in sales of high-end products (polycarbonate, progressive and polarizing sun lenses) resulting from the acquisition of Orcolite in May 1998. Sales of high-end products increased 98% in first quarter 1999 over first quarter 1998 and accounted for 54% of total Optical Products group revenue in first quarter 1999 compared to 38% in first quarter 1998. First quarter 1999 Optical Products group revenues were up 2.4% compared to the pro forma combined Vision-Ease/Orcolite 1998 revenues for the same period. This growth in revenue was dampened by year-on-year declines in glass and plastic lens sales as growth in the ophthalmic lens market continues to shift towards polycarbonate. In the first quarter of 1999, Optical Products group sales of high-end products (including polycarbonate) increased 9% over the pro forma combined Vision-Ease/Orcolite 1998 revenues for the same period. Driven by high-end product sales growth, the Optical Products group's operating earnings increased 34% during the first quarter of 1999 over the prior year quarter. Vision-Ease achieved this improvement in earnings despite the impact of additional amortization expense related to the Orcolite acquisition and increased sales and marketing expenses of approximately $1 million over the prior year quarter. Vision-Ease devoted considerable resources (including the sales and marketing investment noted above) to the expansion of market acceptance of its key high-end products, including the new Outlook(TM) progressive lens. The Outlook(TM) lens has been specificalLy designed for the polycarbonate material and to accommodate a broad range of frame types, including today's popular small frame sizes. Vision-Ease engaged in qualifying and testing procedures with a number of large potential retail users of this product and is encouraged by the wide acceptance of this lens and the prospects for future sales. In addition, considerable promotional expenditures were made in support of sales of the SunRx(R) polarized prescription polycarbonate lens in advance of the peak sun lens season. Finally, considerable effort and expense was devoted to the further testing and enhancement of Vision-Ease's proprietary lens lamination system which makes it possible for dispensers to provide premium anti-reflective coated multi-focal polycarbonate lenses to consumers on a same-day basis. Based upon test results to date, Vision-Ease is on schedule for the roll-out of this system in the second half of the year. Taken as a whole, Vision-Ease's branded proprietary, high-end products are expected to be the engine for Vision-Ease sales growth in the second quarter and beyond. First quarter revenues from the Precision Imaged Products group ("PIP", which includes both the Mask Operations and Buckbee-Mears St. Paul) decreased 10% from $55.3 million in first quarter 1998 to $50.0 million in first quarter 1999, primarily due to the previously anticipated temporary slowdown at BMSP and a decline in sales of AK steel entertainment masks attributable to both volume and price reductions. Despite these recent declines, sales of AK steel entertainment masks continue to account for more than 50% of total mask revenues. Increased sales of invar entertainment masks and monitor masks largely offset the decline in sales of AK steel entertainment masks. Sales of invar entertainment masks in first quarter 1999 increased 20% over first quarter 1998 and sales of monitor masks increased 29% over the comparable quarter last year. Because only a limited amount of monitor masks sold in first quarter 1999 were produced at our Cortland facility, we expect significant incremental sales of monitor masks as the restarted Cortland monitor mask line reaches full production. The monitor mask line in Cortland was restarted near the end of January 1999 in response to increased demand for monitor masks from a broadened customer base. The line start-up had a significant negative impact on first quarter results. However, the line experienced substantial yield improvement by the end of the quarter and BMC is optimistic regarding the line's future earnings potential. As previously anticipated, BMSP experienced a reduction in sales and profitability in the first quarter of 1999 compared to prior year first quarter results due to what we believe are temporary disruptions in the ordering patterns of certain major customers. BMSP currently expects these economic conditions to improve as 1999 progresses. Moreover, multiple new product sales initiatives are underway and some are now beginning to reach realization. The slow start, however, is expected to also slightly impact the second quarter of 1999 compared to second quarter 1998, with stronger performance expected during the second half of 1999. This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which are intended to be covered by the safe harbors created thereby. Statements made in this press release which are not strictly historical, including statements regarding future performance, are forward-looking statements and as such are subject to a number of risks and uncertainties, including, among others, lower demand for televisions and computer monitors; further mask price declines and imbalances of supply and demand; successful customer part qualifications; liability and other claims asserted against BMC; continued slowdown at BMSP; successful new product development, introduction and acceptance; successful cost reduction and reorganization efforts; higher operating expenses and lower yields associated with any additional production shutdowns or start-ups; negative foreign currency fluctuations, including adverse fluctuations affecting cross-currency swaps; inability to partner with new BMSP customers; the impact of Y2K information systems issues; the effect of the economic uncertainty in Asia; and a potential economic slowdown in other parts of the world such as South America. These and other risks and uncertainties are detailed in BMC's Annual Report and Form 10-K for the year ended December 31, 1998. BMC Industries, Inc. is a leading producer of polycarbonate, glass and plastic eyewear lenses. BMC is also one of the world's largest manufacturers of aperture masks for color picture tubes used in televisions and computer monitors. BMC's common stock is traded on the New York Stock Exchange under the symbol BMC. - more - BMC INDUSTRIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited) (in thousands, except per share amounts)
Three Months Ended March 31 -------------------- 1999 1998 - ------------------------------------------------------------------------------------------------------------------------- Revenues $ 84,645 $ 80,084 Cost of Products Sold 71,078 68,455 - ---------------------------------------------------------------------------------------------------------------------------- Gross Margin 13,567 11,629 Selling 4,365 3,289 Administrative 1,233 1,330 - ------------------------------------------------------------------------------------------------------------------------- Income from Operations 7,969 7,010 - ---------------------------------------------------------------------------------------------------------------------------- Other Income and (Expense) Interest expense (3,463) (1,383) Interest income 5 32 Other income (expense) 390 (144) - ---------------------------------------------------------------------------------------------------------------------------- Earnings before Income Taxes 4,901 5,515 Income Taxes 1,710 1,706 - ---------------------------------------------------------------------------------------------------------------------------- Net Earnings $ 3,191 $ 3,809 - ---------------------------------------------------------------------------------------------------------------------------- Net Earnings Per Share: Basic $ 0.12 $ 0.14 Diluted 0.12 0.14 - ---------------------------------------------------------------------------------------------------------------------------- Number of Shares Included in Per Share Computation: Basic 27,201 26,994 Diluted 27,405 27,644 - ----------------------------------------------------------------------------------------------------------------------------
- more - BMC INDUSTRIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands)
MARCH 31 December 31 1999 1998 - ---------------------------------------------------------------------------------------------------------------------------------- Assets Cash and cash equivalents $ 1,976 $ 1,028 Trade accounts receivable, net 43,015 39,163 Inventories 83,684 82,853 Deferred income taxes 14,617 14,603 Other current assets 15,203 14,347 - ---------------------------------------------------------------------------------------------------------------------------------- Total Current Assets 158,495 151,994 - ---------------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment 273,491 276,630 Less accumulated depreciation 115,511 114,036 - ---------------------------------------------------------------------------------------------------------------------------------- Property, plant and equipment, net 157,980 162,594 - ---------------------------------------------------------------------------------------------------------------------------------- Deferred income taxes 4,712 5,431 Intangibles and other assets, net 79,832 79,446 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS $ 401,019 $ 399,465 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Liabilities and Stockholders' Equity - ---------------------------------------------------------------------------------------------------------------------------------- Short-term borrowings $ 1,861 $ 1,929 Accounts payable 31,521 28,315 Income taxes payable 4,541 3,375 Accrued expenses and other current liabilities 27,115 23,404 - ---------------------------------------------------------------------------------------------------------------------------------- Total Current Liabilities 65,038 57,023 - ---------------------------------------------------------------------------------------------------------------------------------- Long-term debt 179,816 187,266 Other liabilities 17,892 18,372 Deferred income taxes 4,604 3,547 Stockholders' equity Common stock 47,756 47,714 Retained earnings 89,219 86,436 Accumulated other comprehensive income (1,317) 1,113 Other (1,989) (2,006 ) - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL STOCKHOLDERS' EQUITY 133,669 133,257 - ---------------------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 401,019 $ 399,465 - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
- more - BMC INDUSTRIES, INC. SEGMENT INFORMATION (Unaudited) (in thousands)
Three Months Ended March 31 ------------------------------------------------------------------------------------------------------ Precision Imaged Products Optical Products Consolidated -------------------------------------------------------------------------------------- 1999 1998 1999 1998 1999 1998 - ------------------------------------------------------------------------------------------------------------------- Revenues $ 49,999 $ 55,272 $ 34,646 $ 24,812 $ 84,645 $ 80,084 Cost of Products Sold 45,089 50,065 25,989 18,390 71,078 68,455 - ------------------------------------------------------------------------------------------------------------------- Gross Margin 4,910 5,207 8,657 6,422 13,567 11,629 Gross Margin % 9.8% 9.4% 25.0% 25.9% 16.0% 14.5% Selling 1,357 1,133 3,008 2,156 4,365 3,289 Unallocated Corporate Administration - - - - 1,233 1,330 - ------------------------------------------------------------------------------------------------------------------- Income from Operations $ 3,553 $ 4,074 $ 5,649 $ 4,266 $ 7,969 $ 7,010 - ------------------------------------------------------------------------------------------------------------------- Operating Income % 7.1% 7.4% 16.3% 17.2% 9.4% 8.8% Capital Spending $ 2,504 $ 3,958 Depreciation and Amortization $ 5,647 $ 5,002 EBITDA $ 14,006 $ 11,868 EBITDA % 16.5% 14.8%
-30- EX-99.2 8 EXHIBIT 99.2 EXHIBIT 99.2 Contact: Jeffrey J. Hattara (NYSE-BMC) (612) 851-6030 FOR IMMEDIATE RELEASE BMC INDUSTRIES, INC. ANNOUNCES THE ITC RULING ON ITS ANTIDUMPING PETITION AGAINST CERTAIN APERTURE MASKS FROM JAPAN AND SOUTH KOREA April 23, 1999 - Minneapolis, Minnesota - BMC Industries, Inc. announced that the United States International Trade Commission ("ITC") ruled 4-2 against proceeding with BMC's antidumping duty petition filed against Japanese and South Korean aperture mask manufacturers. Although the Department of Commerce initially determined that BMC made sufficient allegations of below cost pricing to support its dumping claim, the ITC could not beyond a reasonable doubt connect the dumping to BMC's financial injury. Jeffrey J. Hattara, BMC's Chief Financial Officer, stated, "We believe that certain internal and external market conditions that affected BMC's 1998 financial performance clouded the ITC panel's ability to connect the dumping activities to injury to our financial performance. As we resolve those internal issues and market factors change, however, we believe we would have the ability to more directly connect any below cost pricing to financial injury. We will continue to monitor competitor pricing and take further action, if necessary, to combat any dumping activities." This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are intended to be covered by the safe harbors created thereby. Statements made in this press release which are not strictly historical, including statements regarding future performance, are forward-looking statements and as such are subject to a number of risks and uncertainties. Other risks and uncertainties are detailed in BMC's Form 10-K for the year ended December 31, 1998. BMC Industries, Inc. is one of the world's largest manufacturers of aperture masks for color picture tubes used in televisions and computer monitors. BMC is also a leading producer of polycarbonate, glass and plastic eyewear lenses. BMC's common stock is traded on the New York Stock Exchange under the symbol BMC. -30- + -----END PRIVACY-ENHANCED MESSAGE-----