10-K405

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 10-K

(Mark one)
[X]	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
	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 No.:  1-8467

BMC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

Minnesota	41-0169210
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Meridian Crossings, Suite 850, Minneapolis, MN	55423
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code: (952) 851-6000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Name of each exchange on which registered
Common Stock	New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
(Title of class)

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    

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10–K.  [X]

The aggregate market value of the registrant’s common stock (its only voting stock) held by non-affiliates of the registrant, based on the closing sales price for the registrant’s common stock as reported on the New York Stock Exchange on March 23, 2001, was approximately $145.9 million. As of March 23, 2001, there were 27,449,463 shares of common stock of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Parts I, II and IV of this report on Form 10-K incorporate by reference information, to the extent specific pages are referred to herein, from the registrant’s annual report to stockholders for the year ended December 31, 2000.  Part III of this report on Form 10-K incorporates by reference information, to the extent specific sections are referred to herein, from the registrant’s proxy statement for its annual meeting of stockholders to be held May 17, 2001.

TABLE OF CONTENTS

PART I.
Item 1.	Business
Item 2.	Properties
Item 3.	Legal Proceedings
Item 4.	Submission of Matters to a Vote of Security Holders
Item 4A.	Executive Officers of the Registrant
PART II.
Item 5.	Market for Registrant’s Common Equity and Related Stockholder Matters
Item 6.	Selected Financial Data
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk
Item 8.	Financial Statements and Supplementary Data
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III.
Item 10.	Directors and Executive Officers of the Registrant
Item 11.	Executive Compensation
Item 12.	Security Ownership of Certain Beneficial Owners and Management
Item 13.	Certain Relationships and Related Transactions
PART IV.
Item 14.	Exhibits, Financial Statement Schedules and Reports on Form 8-K
	Signatures

PART I

             Certain statements contained in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the Safe Harbor provisions created by the statutes.  These statements relate to our current views with respect 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 - such as those discussed in the section entitled “Factors That May Affect Future Results” below - that could cause actual results to differ materially from those expressed or forecasted.  You should not rely on these forward-looking statements, which reflect only our opinion as of the date of this 10-K.  These factors also should not be considered an exhaustive list.  We do not undertake the responsibility to update any forward-looking statement that may be made from time to time by us or on our behalf.

Item 1.  Business

(a)         General Development of Business.

BMC Industries, Inc., a Minnesota corporation (“BMC,” “we,” “our” or “us”), is a multinational manufacturer and distributor of a variety of products that has two reportable segments: Buckbee-Mears and Optical Products, which operates under the Vision-Ease trade name.  Buckbee-Mears is comprised of Mask Operations and Micro-Technology Operations (formerly known as Buckbee-Mears St. Paul or BMSP).  Mask Operations produces aperture masks, a critical component of color television and computer monitor picture tubes.  Micro-Technology Operations is the leading producer of precision photo-etched metal and electroformed components.  Micro-Technology Operations produces a variety of component parts used in the medical, electronic, telecommunication, automotive and filtration market segments.  In February 2000, we combined Mask Operations and Micro-Technology Operations into one operating unit to leverage the high volume production capabilities and cost competitiveness of Mask Operations and the market access and value-added processes of Micro-Technology Operations.  We changed the name of BMSP to Micro-Technology Operations in March 2001 to reflect the broad capabilities resident in this operation’s core technology.  Optical Products designs, manufactures and distributes polycarbonate, glass and hard-resin plastic ophthalmic lenses.  In January 2000, Optical Products purchased a laboratory outside Paris, France as part of its strategy to drive polycarbonate sales in Europe.  During 2000, we also began moving production of polycarbonate lenses to our low cost lens production facility in Jakarta, Indonesia.

(b)         Financial Information About Industry Segments.

Financial information about our operating segments for the three most recent fiscal years is contained on pages 28-30 of our annual report to stockholders for the year ended December 31, 2000, and is incorporated herein by reference.

(c)         Narrative Description of Business.

Buckbee-Mears

Products and Marketing.  Buckbee-Mears has manufacturing operations in Cortland, New York, Müllheim, Germany and St. Paul, Minnesota, all of which are ISO 9002 certified, which is a critical prerequisite to supplying a broad base of customers.  Buckbee-Mears also operates a mask inspection facility in Tatabanya, Hungary. The Cortland and Müllheim facilities primarily manufacture aperture masks.  There is also a Micro-Technology production line located in Cortland and Müllheim.  The St. Paul facility is primarily dedicated to research and development activities and small batch or specialty manufacturing, including precision photo-etched metal parts, specialty printed circuits, precision electroformed components and precision etched and filled glass products. Two customers each accounted for more than 10% of our total consolidated revenues for 2000. Samsung Display Co., Ltd., of South Korea accounted for approximately 18% of our 2000 consolidated revenues.  Thomson, S.A. of France, including its U.S. based operations, accounted for approximately 16% of our 2000 consolidated revenues.  Thomson produces televisions in North America and Europe under various trademarks, including RCA and GE.

Aperture masks are photo-chemically etched fine screen grids found in color television and computer monitor picture tubes and consist of thousands of precise, conically shaped holes designed to focus the electron beam on the proper phosphor color stripe to produce a crisp image.  Aperture masks are made from steel or invar, a nickel and iron alloy, and range in size from 6-inch to 40-inch diagonal dimensions.  We manufacture aperture masks ranging from 14-inch to 36-inch diagonal dimensions.  Our facilities employ an automated continuous photochemical etching process that we originally developed.  We sell aperture masks directly to color television and computer monitor tube manufacturers in North America, Europe, India and Asia through an in-house sales organization.  Sales of aperture masks comprised 55%, 55% and 54% of our consolidated total revenues in 2000, 1999 and 1998, respectively.

In 1997, we established a dedicated, low-cost inspection facility in Tatabánya to inspect computer monitor masks manufactured in Müllheim.  This facility allows us to provide quick response to the Müllheim facility’s Asian and European customers.  Starting in 1998, the Tatabánya facility also began inspecting entertainment masks manufactured at the Müllheim facility and monitor masks manufactured at the Cortland facility.

We continue to dedicate significant resources to the development of automation systems for the back end of our manufacturing process.  We have installed automatic inspection equipment on both of our monitor mask production lines and began installing automatic inspection equipment on our entertainment mask production lines in 2000, with automatic inspection equipment installed on the majority of our entertainment lines by January 2001.

Micro-Technology Operations manufactures a variety of precision photo-etched metal and electroformed components.  We sell these components through both an in-house sales organization and manufacturer representatives to customers in the medical, electronics, automotive, telecommunications and filtration market segments.  Micro-Technology Operations’ products currently include switch contacts, ignition components, medical device components, reusable filtration devices and precision sorting sieves.  Over the past few years, Micro-Technology Operations has pursued a strategy of leveraging its high-volume precision technologies and production capabilities to attract large end-product manufacturers for joint research and product development projects.  These efforts have produced new technology and customers with significant future revenue opportunities, including agreements with Visteon Corporation and Cordis Corporation, a wholly-owned unit of Johnson & Johnson, which were signed in March 2001.  Pursuant to these agreements with Visteon and Cordis, Micro-Technology Operations has technology rights and/or production opportunities in the circuit board and implantable stent markets.

In addition to the research and development projects at Micro-Technology Operations, we are engaged in ongoing efforts to develop future manufacturing and technical expertise in a variety of new mask products, including high definition television (“HDTV”), multimedia, widescreen (16 x 9) and pure flat mask products.  We have made significant process capability gains on advanced mask products, particularly in entertainment masks with success in qualifying masks in the flat, widescreen and HDTV categories.  We began commercial production of these masks during 2000.

Raw Materials. Buckbee-Mears procures raw materials from multiple suppliers.  Our Cortland facility imports all of its steel and invar requirements from Japan and Germany.  Our Müllheim facility obtains a majority of its steel and invar raw material from Germany, but obtains a portion of its raw material from Japan.  Importation of steel into the United States is subject to certain restrictions imposed by U.S. federal trade legislation and regulations, but we have successfully challenged these restrictions in the past, including obtaining a separate harmonized tariff classification for the steel used in aperture masks.  We do not anticipate difficulty in obtaining steel or any other raw materials.  Our inability to obtain these materials, however, could have a material adverse effect on production and results of operations.

Intellectual Property.  We have a number of patents and license rights that are important to the success of our Buckbee-Mears operations.  These patents range in their expiration dates from 2001 to 2019.  We believe that the loss of any single patent would not have a material adverse effect on our business as a whole.  We believe that improvement of existing products and processes and a reliance on trade secrets and unpatented proprietary know-how are as important as patent protection in establishing and maintaining our competitive position.  At the same time, we continue to seek patent protection for our products and processes on a selective basis.  There can be no assurance, however, that any issued patents will provide substantial protection or commercial value.  We require our consultants and employees to agree in writing to maintain the confidentiality of our information and, within certain limits, to assign to us any inventions, and any patent or other intellectual property rights, relating to our business.

Seasonality.  Buckbee-Mears’ revenues and earnings are generally lower in the first and third quarters due to maintenance shutdowns at the Cortland and Müllheim facilities.  The seasonality of end product in this business segment, televisions and computer monitors, also affects our annual earnings pattern.

Competition.  The precision etched metal and electroformed parts business is intensely competitive, with no one competitor dominating the market. We are one of five independent mask manufacturers in the world and the only independent mask manufacturer with production facilities in the United States.  Our primary mask competitors operate in Japan and Korea.   In addition, several color picture tube manufacturers operate captive mask production facilities and two state directed ventures operate in China.  Independent mask manufacturers supply approximately 79%of the global mask market, with BMC among the largest at an estimated 14% of the combined television and monitor mask market share.  We supplied approximately 19% of the worldwide demand for television masks and 6% of the demand for monitor masks in 2000.  In addition to competition from other mask manufacturers, Mask Operations competes against rival technologies such as LCD monitors, plasma displays and projection televisions.  Products made with rival technologies, however, are expensive and have not, to date, captured a significant portion of the relevant market.

Many producers compete in the market for precision photo-etched and electroformed metal parts that are produced by Micro-Technology Operations, including some that also manufacture aperture masks.  There is no clear market share leader in this fragmented industry.  We compete principally on the basis of price, product quality and product availability.   We also attempt to build preferred supplier and research and development arrangements with customers to best meet their current and new product requirements.  In order to remain competitive on pricing, we engage in ongoing cost reduction measures, including the development of automated processes.  There can be no assurance, however, that these efforts will be successful or that our competitors will not attract our customer base through new products or processes that are more effective or less expensive than our products and processes.  In addition, there can be no assurance that customers will not vertically integrate to meet their component requirements through captive supply.  Our customer, Philips Components B.V. announced in November 2000 that it was merging with one of Buckbee-Mears’ competitors, L G. Electronics of South Korea.  If completed, this transaction will result in vertical integration of LG’s mask production into a captive supply arrangement with Philips’ operations.

Backlog.  As of December 31, 2000, the firm backlog of Buckbee-Mears sales orders was $19.7 million, compared with $18.9 million as of December 31, 1999.  We expect that all of the December 31, 2000 backlog orders will be filled within the current fiscal year.

Environmental.  The chemical etching of metals, which is performed by all Buckbee-Mears operations, requires the utilization of chemical substances that must be handled in accordance with federal, state, local and foreign environmental and safety laws and regulations.  The etching processes also generate wastewater and wastes, some of which are classified as hazardous under applicable environmental laws and regulations.  The wastewater is treated using on-site wastewater treatment systems.  We employ systems for either disposing of wastes in accordance with applicable laws or regulations or recycling the chemicals we use through the manufacturing process.  Environmental and other government agencies monitor the wastes and the wastewater treatment systems to ensure compliance with applicable standards.  Environmental regulations place responsibility for waste on the generator even after proper disposal.   There can be no assurance, therefore, that we will not incur future liability for waste disposal despite our best efforts to dispose of all wastes properly.  As of March 23, 2001, we were involved in a total of eight (8) environmental investigations and/or remedial actions in which final settlement had not been reached, of which one (1) relates to a discontinued operation, five (5) relate to Buckbee-Mears operations and two (2) relate to Optical Products operations.

To the extent possible with the amount of information available at this time, we have evaluated our responsibility for costs and related liability with respect to these investigations/remedial actions, have recorded accruals for our estimated liability in accordance with generally accepted accounting principles, and are of the opinion that our liability with respect to these matters should not have a material adverse effect on our financial position or the results of our operations.  In arriving at this conclusion, we have considered, among other things, any payments that have been made with respect to these matters in the past; the factors, such as volume and relative toxicity, ordinarily applied to allocated defense and remedial costs; the probable costs to be paid by the other potentially responsible parties; total projected remedial costs, if known; existing technology; and currently applicable laws and regulations.  A portion of the costs and related liability for certain matters has been or will be covered by insurance or third parties.

We estimate that Buckbee-Mears incurred approximately $5.4 million in 2000 and $5.6 million in 1999 on expenditures, including capital expenditures, related to efforts to comply with applicable laws and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.  In addition, we estimate that Buckbee-Mears will spend approximately $5.0 million in 2001 and $2.2 million in 2002 on capital expenditures for environmental control facilities and response costs.

Employees.  As of December 31, 2000, Buckbee-Mears had approximately 1,923 employees in the United States and Europe.  The majority of these employees are not represented by labor unions.  Labor relations are considered to be good and there have been no significant labor disputes in the past ten years.

Optical Products

Products and Marketing.  Optical Products, operating under the Vision-Ease trade name, designs, manufactures and distributes ophthalmic lenses. The group’s headquarters is located in Brooklyn Park, Minnesota. Vision-Ease has lens manufacturing operations in Azusa, California; Ramsey, Minnesota; St. Cloud, Minnesota; and Jakarta, Indonesia. Vision-Ease also has laboratory operations in Europe and five lens distribution centers in the U.S., Canada and England.  We manufacture ophthalmic lenses from three principal materials:  polycarbonate, glass and hard-resin plastic.  Within each of these lens materials, we offer single-vision lenses, which have a constant corrective power at all points; multi-focal lenses, which have two or more distinct areas of different corrective power; progressive lenses, which are a type of multi-focal lens with a continuous gradient of different corrective power without the line or “jump” generally associated with other multi-focal lenses; and prescription and non-prescription lenses that are used primarily for sunwear.  We also produce these lenses with anti-reflective and scratch-resistant coatings to meet increasing demand for value-added products.

We sell semi-finished lenses to wholesale optical laboratories or retail outlets with on-site laboratories, which then finish the lens by grinding and polishing the inside surface of the lens according to the prescription provided by the optometrist or ophthalmologist.  After processing, the lens is edged and inserted into a frame by either the wholesale laboratory or a retail optical dispenser.  We sell finished single-vision lenses to wholesale laboratories and retail outlets.  These finished lenses are ready to be edged and inserted into the frame without laboratory surfacing.  We sell non-prescription polarizing lenses to manufacturers of sun lenses.  Vision-Ease sells its products to wholesale laboratories through independent sales representatives and to chain retail outlets through an in-house sales staff.

Vision-Ease has pursued a strategy of manufacturing and distributing lenses made from polycarbonate, the world’s fastest growing lens material.  Polycarbonate lenses account for the majority of our lens sales. Polycarbonate lens sales in North America grew approximately 20% in 2000 and in excess of 15% on a compound basis for the last 15 years. We divide manufacturing responsibility for polycarbonate lenses between the Azusa, Ramsey and Jakarta facilities.  Vision-Ease also uses the Ramsey facility for centralized distribution and research and development.

In 2000, Optical Products began leveraging its lens laboratory network in Europe.  This network is made up of administration/customer service in Müllheim, Germany and a processing facility in Brou, France.  The Brou laboratory specializes in grinding, edging and applying anti-reflective coatings to polycarbonate lenses for sale in the European market.  Over the course of the year 2000, we pursued a strategy to qualify our polycarbonate products and laboratory processing capabilities with a broad cross-section of the retailers in Europe.  Our efforts in this pursuit will continue in 2001.

We continue to experience diminishing sales of lenses made from glass as the lens market continues to move toward polycarbonate and hard-resin plastic lenses.  We produce semi-finished glass multi-focal and finished and semi-finished single-vision glass lenses at our Jakarta facility, along with specialty glass products at our St. Cloud facility. By the end of first quarter 2001, however, all glass manufacturing at the St. Cloud facility will be transferred to the Jakarta facility.  We source hard-resin plastic lenses through supply arrangements with low cost manufacturers in Mexico and Southeast Asia. Under our supply arrangement with the Mexican manufacturer, we supply the equipment and materials needed to produce our ongoing product requirements.  Our Mexican partner supplies the facility and employees.  These sourcing arrangements allow Vision-Ease to focus manufacturing capabilities on higher-margin products while offering a complete line of lens products at cost competitive prices.

We invest significant resources in process and product research and development, particularly in polycarbonate lens development and other higher margin products.  These investments resulted in the successful introduction in 2000 of several new product coatings and lens designs.  Vision-Ease has ongoing efforts to develop a lamination system that uses proprietary technology to produce quality, thin, multi-focal lenses equivalent to those produced by a laboratory. We intend to continue making significant investments in product and process design and development for all lens materials and new non-optical markets.

No single customer of Optical Products accounted for more than 10% of our total revenues on a consolidated basis in 2000.

Intellectual Property.   We have several patents protecting certain products and manufacturing processes of our Vision-Ease operations.  These patents have expiration dates ranging from 2001 to 2019.  We believe the loss of any single patent would not have a material adverse effect on our business as a whole.  We believe that improvement of existing products and processes, the development of new lens products and a reliance on trade secrets and unpatented proprietary know-how are as important as patent protection in establishing and maintaining our competitive position.  At the same time, we continue to seek patent protection for our products and processes on a selective basis.  There can be no assurance, however, that any issued patents will provide substantial protection or commercial value.  We require our consultants and employees to agree in writing to maintain the confidentiality of our information and, within certain limits, to assign to us any inventions, and any patent or other intellectual property rights, relating to our business.  We also have several trademarks, including SunRxÒ, TegraÒ, DiamonexÒ, VividÒ, OutlookÔ and SunSportÔ.  As part of our marketing strategy to build sales of branded products, we have increased our use of trademarks.  Although there are no assurances as to the strength or scope of our trademarks, we believe that these trademarks have been and will be useful in developing and protecting market recognition for our products.

Competition.  The ophthalmic lens industry is highly competitive.  We compete principally on the basis of product offerings, pricing, product quality and customer service.  Vision-Ease is the third largest ophthalmic lens manufacturer and distributor in North America, with a substantially smaller share of the global lens market.  Our largest competitors are Essilor International and Sola International Inc., who have a combined share of approximately 70% of the ophthalmic lens sales in North America and 50% of the world-wide lens market.  Many of our competitors, particularly Essilor and Sola, have greater financial resources than Vision-Ease to fund research, development and capital expenditures.  Some competitors also have vertically integrated wholesale laboratories.  In order to successfully compete in this market, we employ a strategy of combined marketing, product development, customer service and cost reduction efforts.  Through the establishment of low-cost operations and sourcing arrangements in Southeast Asia and Mexico, we have maintained competitiveness on low-margin lens products.  At the same time, we have increased the breadth of product offerings, including value-added lenses, to meet the total lens requirements of our customers.  Building upon our leadership position in polycarbonate lenses, we have dedicated a substantial portion of our process and product development efforts toward product offerings in this fast growing segment. Vision-Ease has established laboratory operations in Europe to drive polycarbonate sales into Europe.  There can be no assurance, however, that we will succeed in developing competitive new products, leveraging our polycarbonate strength into growth in other lens materials and product offerings, maintaining our polycarbonate leadership position or converting brand equity into increased sales.

In addition to direct competition with other manufacturers of eyeglass lenses, we compete indirectly with manufacturers of contact lenses and providers of medical procedures for the correction of visual impairment.  Contact lenses are not, however, perfect substitutes for lenses because of the difficulty of developing progressive or bifocal contact lenses for presbyopia.  In addition, contact lens wearers also tend to own eyeglasses or sunwear.  A number of companies have developed, or are developing, surgical equipment or implants used to correct refractive error, including myopia, hyperopia and astigmatism.  These procedures are ineffective at correcting presbyopia, which affects the vast majority of people above the age of 45, and is a major cause of demand for Vision-Ease’s progressive and other multifocal lenses.  There can be no assurance, however, that current medical procedures, or ones developed in the future, will not materially impact demand for our lenses.

Supplies.  Vision-Ease procures raw materials from multiple suppliers.   We obtain the majority of our hard-resin plastic lenses through sourcing arrangements in Southeast Asia and Mexico.   Although we have limited in-house manufacturing capabilities for hard-resin plastic lenses, we have not established alternative sources for large volumes of these lenses.  In addition, the importation of raw materials and final products into and out of these foreign territories is subject to certain trade restrictions imposed by foreign and United States trade regulations that could result in the disruption of supply.  Although we do not anticipate any disruption to our supply of hard-resin plastic lenses, our inability to obtain these or other materials could have a material adverse effect on Vision-Ease’s operations.

Backlog and Inventory.  Due to the importance in the ophthalmic lens industry of rapid turnaround time from order to shipment, the backlog of sales orders is not material.  We maintain a significant amount of inventory, however, in order to satisfy the rapid response time and complete product offerings in glass, hard resin plastic and polycarbonate demanded by our customers.

Environmental.   As part of our lens manufacturing process, we use hazardous chemical substances that must be handled in accordance with applicable federal, state, local and foreign environmental and safety laws and regulations.  The lens manufacturing processes also generate wastewater and wastes, some of which are classified as hazardous under applicable environmental laws and regulations.  We employ systems for either disposing of wastes in accordance with applicable laws and regulations or recycling the chemicals we use through the manufacturing process.  Environmental and other government agencies monitor the wastes and the wastewater treatment systems to assure compliance with applicable standards.  Environmental regulations place responsibility for waste on the generator even after proper disposal.  There can be no assurance, therefore, that we will not incur future liability for waste disposal despite our best efforts to dispose of all wastes properly.  As of March 23, 2001, we were involved in a total of eight (8) sites where environmental investigations were occurring and final settlement had not been reached, of which one (1) relates to a discontinued operation, five (5) relate to Buckbee-Mears operations and two (2) relate to Optical Products operations.

To the extent possible with the amount of information available at this time, we have evaluated our responsibility for costs and related liability with respect to the investigations that are ongoing, have recorded accruals for our estimated liability in accordance with generally accepted accounting principles, and are of the opinion that our liability with respect to these matters should not have a material adverse effect on the financial position or the results of our operations.  In arriving at this conclusion, we have considered, among other things, payments that have been made in the past; the factors, such as volume and relative toxicity, ordinarily applied to allocated defense and remedial costs; the probable costs to be paid by the other potentially responsible parties; total projected remedial costs, if known; existing technology; and currently applicable laws and regulations.  A portion of the costs and related liability for certain matters has been or will be covered by insurance or third parties.

We estimate that Vision-Ease incurred approximately $0.1 million in 2000 and $0.4 million in 1999 on expenditures, including capital expenditures, related to efforts to comply with applicable laws and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.  In addition, we estimate that Vision-Ease will make approximately $0.1 million in capital expenditures for environmental control facilities during each of 2001 and 2002.

Seasonality.  Earnings are generally lower in the first quarter due to the seasonality of eyewear, the end product of our lenses.

Employees.  As of December 31, 2000, Vision-Ease had approximately 1,632 employees in the United States, Europe and Indonesia.  None of the employees in the United States are represented by labor unions.  In compliance with local laws, production employees in Europe and Indonesia are represented by labor unions.  Labor relations are considered to be good at all operations and there have been no significant labor disputes in this group’s history of operations.

(d)         Financial Information About Geographic Areas.

Financial information about our operations in different geographic areas for the three most recent fiscal years is contained on page 29-30 of our annual report to stockholders for the year ended December 31, 2000, and is incorporated herein by reference.

Factors That May Affect Future Results

New Product Development and Introduction.  Each of our operations invests significantly in new product development.  Vision-Ease has invested substantial resources toward new lens offerings in all lens materials:  polycarbonate, glass and hard-resin plastic.  These efforts have resulted in many new products that have experienced success to date, including our TegraÒ high-performance polycarbonate product line, OutlookÔ progressive lenses, and polarizing sunwear. Buckbee-Mears continues its efforts to develop new high-volume product opportunities, particularly with development efforts underway at Micro-Technology Operations with multiple partners.  In addition, Buckbee-Mears will continue to dedicate resources towards development of HDTV and multimedia masks.  We must develop these and other new products and technologies at competitive prices and quality in order to compete in each of the markets we serve.  There are no assurances, however, that we will succeed in these efforts, that competitors will not develop better quality and less expensive products or that we will develop or introduce new products within our anticipated time schedule.

Litigation.  We are subject to the normal risks of litigation and other proceedings that affect business operations, including environmental liability for past or present environmental practices, product liability, workers’ compensation and personal injury.  Although we do not anticipate that any claims will result in liability that could have a materially adverse effect on our financial condition and results of operations, there are no assurances that we will not incur such liability in the future given the uncertainty of litigation.

Pricing and Margins.  Many market and economic factors have adversely affected, and could continue to affect, our financial performance and projected future results. Since each of our operations supply components to manufacturers of end products, imbalances in supplies and demand at all levels of product distribution could have, and in some instances have had, a significant impact on our pricing and margins.  Capacity expansions by aperture mask manufacturers helped create this type of imbalance in the mask market a few years ago, which resulted in pricing pressures that continue to affect pricing.  In addition, margins are affected by the need to develop new technology. Our ability to meet the market demand for new products in a timely fashion requires the investment of resources, which, coupled with pricing pressures, decrease our margins. To offset these pressures and costs, we have pursued sales of higher margin products and have taken major steps to reduce our fixed and variable costs in all of our operations, including the transfer of additional lens manufacturing to our Jakarta facility.  There can be no assurance, however, that these efforts will be sufficient to offset further pricing pressures.

Sources of Supply.  The primary raw material used to produce a mask is steel.  The primary raw materials used to manufacture optical products are glass blanks and polycarbonate and plastic resins. Significant changes in the markets for these materials, including pricing and availability, could have a material adverse impact on our financial results.   In addition, since Optical Products obtains the majority of its hard-resin plastic and glass lenses from foreign supply arrangements and operations, factors affecting these suppliers’ ability to meet our demand for these products could adversely impact our results of operation.

Foreign Currency.  We transact business in currencies other than U.S. dollars.  The primary currencies used include the German mark, the euro, Japanese yen, British pound, Canadian dollar, Hungarian forint and Indonesian rupiah.  Our primary competitors in the mask market are located in Japan.  Changes in the currency exchange rates between the U.S. dollar and the German mark compared to the Japanese yen affect Mask Operations’ pricing competitiveness.  Although we take steps to reduce this risk through cross-currency swaps and other hedging transactions, we are subject to the risk of adverse fluctuations in currency exchange rates, which may result, and have resulted, in pricing pressures and reductions in profitability due to currency conversion or translation.

International Markets. Buckbee-Mears has a manufacturing facility located in Müllheim, Germany and an aperture mask inspection facility in Tatabánya, Hungary. Vision-Ease has optical lens laboratory operations in Europe, supply arrangements with hard-resin plastic lens manufacturers in Southeast Asia and Mexico, and a joint venture in Indonesia for glass and polycarbonate lens manufacturing.  In addition, we have many international customers and are dedicating significant resources to increase business with international customers at all of our operations.  Our international operations and sales could be adversely affected by governmental regulations, political instability, economic changes or instability and competitive conditions in other countries in which, and with which, we conduct business.  The economic difficulty experienced in Asia during the past few years is an example of international conditions that could adversely affect financial performance.  Similar downturns in other areas of the world, such as South America, could affect our operations without advance warning.  Further, there are no assurances that our efforts to grow our business, such as penetration of polycarbonate lens sales in Europe through laboratory operations, will be successful.

Item 2.  Properties

The following table sets forth certain information regarding our principal production facilities:

Location		Principal Use	Approximate Square Feet of Space
Owned:
	Müllheim, Germany	Buckbee-Mears  - Manufacturing of aperture masks and precision photo-etched metal and electroformed products	170,000
	Cortland, NY	Buckbee-Mears  - Manufacturing of aperture masks and precision photo-etched metal and electroformed products	363,000
	Tatabanya, Hungary	Buckbee-Mears - Inspection of aperture masks	45,000
	Ramsey, MN	Optical Products  - Manufacturing of polycarbonate lenses,  centralized distribution and research and  development	150,000
	Jakarta, Indonesia	Optical Products - Manufacturing of glass and polycarbonate lenses	66,000
Leased:
	St. Paul, MN	Buckbee-Mears - Manufacturing of precision photo-etched metal and electroformed parts	131,000
	St. Cloud, MN	Optical Products  - Customer service, administrative services and distribution	82,000
	Azusa, CA	Optical Products - Manufacturing of polycarbonate lenses and distribution	120,000

We lease approximately 11,000 square feet in suburban Minneapolis, Minnesota for our corporate headquarters.  We lease approximately 10,939 square feet in Brooklyn Park, Minnesota for our Vision-Ease headquarters.  Our lease in St. Paul expires in February 2004.   We believe our existing facilities are sufficient to meet our current and foreseeable production and other needs.

In addition to the properties listed above, we operate other smaller domestic and international warehouse, distribution, laboratory and administrative offices. For additional information concerning our leased properties, see Note 8 to Notes to Consolidated Financial Statements on page 23 of our annual report to stockholders for the year ended December 31, 2000.

Item 3.  Legal Proceedings

With regard to certain environmental and other legal matters, see Item 1(c) “Narrative Description of Business - “Buckbee-Mears - Environmental” and “Optical Products - Environmental” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Other than as noted above, there are no material pending or threatened legal, governmental, administrative or other proceedings to which we are a party or of which any of our property is subject.

Item 4.  Submission of Matters to a Vote of Security Holders

No matter was submitted to a vote of security holders during the fourth quarter of the fiscal year covered by the report.

Item 4A.  Executive Officers of the Registrant

The names and ages of our executive officers, all of whose terms expire in May 2001, the year first elected or appointed as an executive officer and the offices held as of March 23, 2001 are listed below:

Name (Age)	Date First Elected or Appointed as an Executive Officer	Title
Paul B. Burke (45)	August 1985	Chairman of the Board and Chief Executive Officer
Bradley D. Carlson (36)	September 1999	Treasurer
Jon A. Dobson (34)	December 1997	Vice President, Human Resources, General Counsel and Secretary
Kathleen P. Pepski (46)	April 2000	Senior Vice President and Chief Financial Officer
Benoit Y. Pouliquen (39)	November 1999	President and Chief Operating Officer
Kevin E. Roe (35)	October 1999	Acting Corporate Controller

There are no family relationships between or among any of the executive officers.  Executive officers are elected by the Board of Directors for one-year terms, commencing with their election at the first meeting of the Board of Directors immediately following the annual meeting of stockholders and continuing until the next such meeting of the Board of Directors.

Except as indicated below, the executive officers have not changed their principal occupations or employment during the past five years.

Mr. Burke is also a director of BMC.  Mr. Burke joined BMC as Associate General Counsel in June 1983, and became Vice President, Secretary and General Counsel in August 1985.  In November 1987, he was appointed Vice President, Ft. Lauderdale Operations of the Vision-Ease division and in May 1989, he was appointed President of Vision-Ease.  In May 1991, Mr. Burke was elected President and Chief Operating Officer of BMC, and in July 1991, he became President and Chief Executive Officer.  Mr. Burke was appointed Chairman of the Board in May 1995.  Following the appointment of Mr. Pouliquen as President and Chief Operating Officer in November 1999, Mr. Burke became Chairman and Chief Executive Officer.

Mr. Carlson joined BMC in September 1999 as Treasurer.  From July 1992 to September 1999, Mr. Carlson held various positions with Northwest Airlines, Inc., a commercial air travel carrier, most recently as Director of Corporate Finance.  Mr. Carlson served as an Associate with Kidder Peabody, Inc., an investment banking firm, in 1991 and as a Corporate Finance Analyst with Dain Rauscher Incorporated, an investment banking firm, from December, 1987 to June, 1990.

Mr. Dobson joined BMC in April 1995 as Director of Legal Services.  In December 1997, he was appointed General Counsel and Secretary.  In November 1999, Mr. Dobson was appointed Vice President of Human Resources, General Counsel and Secretary.  Prior to joining BMC, Mr. Dobson was an associate with Lindquist & Vennum PLLP, a Minneapolis law firm, practicing exclusively in corporate and securities law.

Ms. Pepski joined BMC in April 2000 as Senior Vice President and Chief Financial Officer.  From November 1994 to April 2000, she served as Vice President and Controller at Valspar Corporation, a manufacturer of paints and coatings.

Mr. Pouliquen joined BMC in November 1999 as President and Chief Operating Officer.  From August 1988 to November 1999, Mr. Pouliquen held various positions with Johnson Matthey, a specialty chemicals company, most recently as President of Johnson Matthey Electronics.  Following the acquisition of Johnson Matthey by Allied Signal in August 1999, Mr. Pouliquen served as Vice President and General Manager of Advanced Circuits, a supplier of high-density interconnect products, until he joined BMC.

Mr. Roe joined BMC in June 1994 as Corporate Financial Analyst.  He served as Finance/Accounting Manager from July 1995 to January 1996 and Assistant Controller from January 1996 to October 1999, at which time he was appointed Acting Corporate Controller.  Prior to joining BMC, Mr. Roe served in a variety of financial positions at ADC Telecommunications, Inc., a supplier of transmission and networking systems, from April 1992 to June 1994 and in several audit positions with the accounting firm of Deloitte & Touche LLP from January 1988 to April 1992.

Part II

Item 5.  Market for Registrant’s Common Stock and Related Stockholder Matters

“Price Range of Common Stock” on page 31 of our annual report to stockholders for the year ended December 31, 2000 is incorporated herein by reference.

We expect to continue our policy of paying regular cash dividends, although there is no assurance as to future dividends because they are dependent on future earnings, capital requirements, financial condition and subject to certain restrictions in our revolving domestic credit facility.

Item 6.  Selected Financial Data

“Historical Financial Summary” on page 7 of our annual report to stockholders for the year ended December 31, 2000 is incorporated herein by reference.

Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Management’s Discussion and Analysis” on Pages 8-14 of our annual report to stockholders for the year ended December 31, 2000 is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk

“Management’s Discussion and Analysis” on pages 11-12 of our annual report to stockholders for the year ended December 31, 2000 is incorporated herein by reference.

Item 8.  Financial Statements and Supplementary Data

Our consolidated financial statements and related notes on pages 15-30 and the Report of our Independent Auditors on page 30 of our annual report to stockholders for the year ended December 31, 2000 are incorporated herein by reference, as is the unaudited information under the caption “Selected Quarterly Data” on page 31.

Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Part III

Item 10.  Directors and Executive Officers of the Registrant

(a)         Directors of the Registrant

             The information under the caption “Election of Directors” on pages 2-5 of our proxy statement for the annual meeting of stockholders to be held May 17, 2001 is incorporated herein by reference.

(b)        Executive Officers of the Registrant

             Information concerning our executive officers is included in this report under Item 4A, “Executive Officers of the Registrant.”

(c)         Compliance with Section 16(a) of the Exchange Act

             The information under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” on page 17 of our proxy statement for the annual meeting of stockholders to be held May 17, 2001 is incorporated herein by reference.

Item 11.  Executive Compensation

The information contained under the caption “Executive Compensation” on pages 9-11 and 13-16, and “Election of Directors - Information About the Board and Its Committees” on pages 4-6 of our proxy statement for the annual meeting of stockholders to be held May 17, 2001 is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The information contained under the caption “Security Ownership of Certain Beneficial Owners and Management” on pages 7-8 of our proxy statement for the annual meeting of stockholders to be held May 17, 2001 is incorporated herein by reference.

Item 13.  Certain Relationships and Related Transactions

The information contained under the caption “Certain Transactions” on page 17 of our proxy statement for the annual meeting of stockholders to be held May 17, 2001 is incorporated herein by reference.

PART IV.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)         1.          Financial Statements

             The following items are incorporated herein by reference from the pages indicated in our annual report to stockholders for the year ended December 31, 2000.

Consolidated Financial Statements:	Page
Consolidated Statements of Operations for the Years Ended December 31, 2000, 1999 and 1998	15
Consolidated Balance Sheets as of December 31, 2000 and 1999	16
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2000, 1999 and 1998	17
Consolidated Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998	18
Notes to Consolidated Financial Statements	19-30
Price Range of Common Stock	31
Report of Independent Auditors	30
Selected Quarterly Financial Data (unaudited)	31

2.          Financial Statement Schedule:

The following financial statement schedule is included herein and should be read in conjunction with the consolidated financial statements referenced above:

	Page:
II  - Valuation and Qualifying Accounts	17

Schedules other than the one listed above are omitted because of the absence of the conditions under which they are required or because the information required is included in the consolidated financial statements or the notes thereto.

             3.          Exhibits:

                           Reference is made to the Exhibit Index contained on pages 19-27 of this Form 10-K.

A copy of any of the exhibits listed or referred to herein will be furnished at a reasonable cost to any person who was a BMC stockholder as of March 23, 2001, upon receipt from any such person of a written request for any exhibit. Requests should be sent to Investor Relations Department, BMC Industries, Inc., One Meridian Crossings, Suite 850, Minneapolis, MN  55423.

The following is a list of each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K pursuant to Item 14(c):

a)          1984 Omnibus Stock Program, as amended effective December 19, 1989 (incorporated by reference to Exhibit 10.1 of the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 1-8467)).

b)          1999 Management Incentive Bonus Plan Summary (incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467)).

c)          2000 Management Incentive Bonus Plan Summary (incorporated by reference to exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467)).

d)          2001 Management Incentive Bonus Plan Summary (filed herewith as Exhibit   10. 4).

e)          Revised Executive Perquisite/Flex Policy (effective as of January 1, 1998) (incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467)).

f)           Restated and Amended Directors' Deferred Compensation Plan (incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 1-8467)).

g)          Form of Change of Control Agreement entered into between the Company and Mr. Burke (incorporated by reference to Exhibit 10.31 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1991 (File No 1-8467).

h)          Form of Change of Control Agreement entered into between the Company and Messrs. Carlson, Dobson and Pouliquen and Ms. Pepski (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467)).

i)           1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-8467)).

j)           Amendment No. 1 to the 1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 (File No. 1-8467)).

k)          Amendment No. 2 to the 1994 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (File No. 1-8467)).

l)           Restated and Amended 1994 Stock Incentive Plan, dated May 11, 2000 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 1-8467)).

 m)        Amendment No. 1 to the Restated and Amended 1994 Stock Incentive Plan, dated August 3, 2000 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31,2000 (File No. 1-8467)).

n)          BMC Stock Option Exercise Loan Program, as amended June 12, 1998 (incorporated herein by reference to Exhibit 10.4 of the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 1-8467)).

o)          Employment Agreement by and between the Company and Paul B. Burke, dated as of January 1, 1999 (incorporated by reference to Exhibit 10.25 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467)).

p)          Employment Agreement by and between the Company and Kathleen P. Pepski, dated April 19, 2000 (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 1-8467)).

q)          BMC Industries, Inc. Executive Benefit Plan, effective January 1, 1993 (incorporated by reference to Exhibit 10.22 of the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467)).

r)           First Declaration of Amendment, effective September 1, 1998, to the BMC Industries, Inc. Executive Benefit Plan (incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467)).

(b)         Reports on Form 8-K

We did not file any reports on Form 8-K during the quarter ended December 31, 2000.

(c)         Exhibits

The response to this portion of Item 14 is submitted as a separate section of this report.

(d)         Financial Statement Schedules

The response to this portion of Item 14 is submitted as a separate section of this report.

Schedule II
Valuation and Qualifying Accounts
Years Ended December 31

(in thousands)

	Balance Beginning of Year	Additions Charged to Costs and Expenses	Deductions	Translation Adjustment and Other	Balance End of Year
2000
Allowance for doubtful accounts	$1,828	$1,388	$1,783	$0	$1,433
Allowance for merchandise returns	1,546	583	483	(216)	1,430
	$3,374	$1,971	$2,266	($216)	$2,863
Inventory reserves	$15,317	($3,021)	$1,201	($426)	$10,669
1999
Allowance for doubtful accounts	$1,266	$1,132	$570	$0	$1,828
Allowance for merchandise returns	1,358	1,076	474	(414)	1,546
	$2,624	$2,208	$1,044	($414)	$3,374
Inventory reserves	$12,791	$4,100	$1,145	($429)	$15,317
1998
Allowance for doubtful accounts	$891	$438	$69	$6	$1,266
Allowance for merchandise returns	1,227	1,856	1,735	10	1,358
	$2,118	$2,294	$1,804	$16	$2,624
Inventory reserves	$7,421	$9,691	$4,494	$173	$12,791

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on March 30, 2001, on its behalf by the undersigned, thereunto duly authorized.

BMC INDUSTRIES, INC.

By:  _/s/ Kathleen P. Pepski_______

             Kathleen P. Pepski

             Senior Vice President and

             Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on March 30, 2001, by the following persons on behalf of the registrant and in the capacities indicated.

Signature	Title
/s/ Paul B. Burke	Chairman of the Board and Chief
Paul B. Burke	Executive Officer (Principal Executive Officer)
/s/ Kathleen P. Pepski	Senior Vice President and Chief Financial
Kathleen P. Pepski	Officer (Principal Financial Officer)
/s/ Kevin E. Roe	Acting Corporate Controller (Principal
Kevin E. Roe	Accounting Officer)
/s/ John W. Castro	Director
John W. Castro
/s/ H. Ted Davis	Director
H. Ted Davis
/s/ Joe E. Davis	Director
Joe E. Davis
/s/ Harry A. Hammerly	Director
Harry A. Hammerly
/s/ James M. Ramich	Director
James M. Ramich

BMC Industries, Inc.
Exhibit Index to Annual Report on Form 10-K
For the Year Ended December 31, 2000

Exhibit No.		Exhibit Method of Filing
2.1	Asset Purchase Agreement, dated as of March 25, 1998, between Monsanto Company and VIS-ORC, Inc.	Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K dated March 25, 1998 and filed with the Commission on April 3, 1998 (File No. 1-8467).
2.2	Amendment No. 1 to the Asset Purchase Agreement, dated as of May 15, 1998, between Monsanto Company and Vision-Ease Lens Azusa, Inc., f/k/a VIS-ORC, Inc.	Incorporated by reference to the Company’s Current Report on Form 8-K dated May 15, 1998 and filed with the Commission on May 29, 1998 (File No. 1-8467).
3.1	Second Restated Articles of Incorporation of the Company, as amended.	Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8467).
3.2	Amendment to the Second Restated Articles of Incorporation, dated May 8, 1995.	Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8467).
3.3	Amendment to the Second Restated Articles of Incorporation, dated October 30, 1995.	Incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 1995 (File No. 1-8467).
3.4	Amendment to the Second Restated Articles of Incorporation, dated August 7, 1998.	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
3.5	Articles of Correction to the Second Restated Articles of Incorporation, dated November 22, 1999.	Incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
3.6	Restated Bylaws of the Company, as amended.	Incorporated by reference to Exhibit 3.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8467).
3.7	Amendment to the Restated Bylaws of the Company.	Incorporated by reference to Exhibit 3.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-8467).
3.8	Amendment to the Restated Bylaws of the Company, dated February 20, 1998.	Incorporated by reference to Exhibit 3.7 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467) .
4.1	Specimen Form of the Company's Common Stock Certificate.	Incorporated by reference to Exhibit 4.3 to the Company's Registration Statement on Form S-2 (File No. 2-83809).
4.2	Form of Share Rights Agreement, dated as of June 30, 1998, between the Company and Norwest Bank, National Association, as Rights Agent.	Incorporated by reference to Exhibit 1 to the Company’s Registration Statement on Form 8-A, dated July 14, 1998.
10.1	1984 Omnibus Stock Program, as amended effective December 19, 1989.	Incorporated by reference to Exhibit 10.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 1-8467).
10.2	1999 Management Incentive Bonus Plan Summary.	Incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.3	2000 Management Incentive Bonus Plan.	Incorporated by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.4	2001 Management Incentive Bonus Plan.	Filed electronically herewith.
10.5	Revised Executive Perquisite/Flex Policy (effective as of January 1, 1998).	Incorporated by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.6	BMC Savings and Profit Sharing Plan, restated, effective September 1, 1998.	Incorporated by reference to Exhibit 10.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.7	First Declaration of Amendment, dated April 26, 1999, to the BMC Industries, Inc. Savings and Profit Sharing Plan.	Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-8467).
10.8	Second Declaration of Amendment, dated April 26, 1999 to the BMC Industries, Inc. Savings and Profit Sharing Plan.	Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-8467).
10.9	Third Declaration of Amendment, dated July 7, 1999, to the BMC Industries, Inc. Savings and Profit Sharing Plan.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-8467).
10.10	Restated and Amended Directors' Deferred Compensation Plan.	Incorporated by reference to Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1996 (File No. 1-8467).
10.11	1994 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.12 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-8467).
10.12	First Declaration of Amendment to the BMC Industries, Inc. 1994 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1996 (File No. 1-8467).
10.13	Second Declaration of Amendment, dated August 8, 1997, to the BMC Industries, Inc. 1994 Stock Incentive Plan.	Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (File No. 1-8467).
10.14	Restated and Amended 1994 Stock Incentive Plan, effective May 11, 2000.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 1-8467).
10.15	Amendment No. 1 to the Restated and Amended 1994 Stock Incentive Plan, dated August 3, 2000.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000 (File No. 1-8467).
10.16	BMC Stock Option Exercise Loan Program, as amended June 12, 1998.	Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 1-8467).
10.17	BMC Industries, Inc. Executive Benefit Plan, effective January 1, 1993.	Incorporated by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.18	First Declaration of Amendment to the BMC Industries Executive Benefit Plan, effective September 1, 1998.	Incorporated by reference to Exhibit 10.12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.19	First Amendment, dated April 8, 1999, to the BMC Industries, Inc. Savings Trust.	Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-8467).
10.20	Lease Agreement, dated November 20, 1978, between Control Data Corporation and the Company.	Incorporated by reference to Exhibit 10.9 to the Company's Registration Statement on Form S-2 (File No. 2-79667).
10.21	Amendment to Lease Agreement, dated December 27, 1983, between Control Data Corporation and the Company.	Incorporated by reference to Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 1983 (File No. 1-8467).
10.22	Amendment to Lease Agreement, dated April 9, 1986, between Control Data Corporation and the Company.	Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 1987 (File No. 1-8467).
10.23	Amendment to Lease Agreement, dated April 12, 1989, between GMT Corporation (as successor in interest to Control Data Corporation) and the Company.	Incorporated by reference to Exhibit 10.14 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 1-8467).
10.24	Amendment to Lease Agreement, dated March 19, 1990, between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.15 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 (File No. 1-8467).
10.25	Amendment to Lease Agreement, dated May 17, 1993, between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.20 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 (File No. 1-8467).
10.26	Amendment of Lease, dated April 6, 1994 by and between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8467).
10.27	Waiver of Condition Precedent, dated July 29, 1994, by and between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1994 (File No. 1-8467).
10.28	Amendment of Lease, dated September 25, 1997 by and between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997 (File No. 1-8467).
10.29	Amendment of Lease, dated August 1, 1998 by and between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.30	Amendment of Lease, dated August 1, 1998 by and between GMT Corporation and the Company.	Incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.31	Form of Change of Control Agreement entered into between the Company and Mr. Burke.	Incorporated by reference to Exhibit 10.31 to the Company's Annual Report on Form 10-K for the year ended December 31, 1991 (File No. 1-8467).
10.32	Form of Change of Control Agreement entered into between the Company and Messrs. Carlson, Dobson, and Pouliquen and Ms. Pepski.	Incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.33	Employment Agreement by and between the Company and Kathleen P. Pepski, dated April 19, 2000.	Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (File No. 1-8467).
10.34	Employment Agreement, by and between the Company and Paul B. Burke, dated as of January 1, 1999.	Incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.35	Commitment letter, dated March 24, 1998, from BT Alex. Brown for an unsecured revolving credit facility totaling $275 million.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 30, 1998 (File No. 1-8467).
10.36	Credit Agreement, dated as of May 15, 1998, between the Company, Bankers Trust Company as Administrative Agent, NBD Bank as Documentation Agent and Various Lending Institutions.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 1-8467).
10.37	Amended and Restated Credit Agreement, dated as of June 25, 1998, among the Company, Several Banks, Bankers Trust Company as the Agent and a Lender and NBD Bank as Documentation Agent and a Lender.	Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 1-8467).
10.38	Amendment No. 1 to Amended and Restated Credit Agreement, dated as of July 23, 1998, among the Company, Several Banks, Bankers Trust Company as Agent and a Lender, NBD Bank as Documentation Agent and a Lender.	Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (File No. 1-8467).
10.39	Amendment No. 2 to Amended and Restated Credit Agreement, dated as of December 30, 1998, among the Company, Several Banks, Bankers Trust Company as Agent and a Lender, NBD Bank as Documentation Agent and a Lender.	Incorporated by reference to Exhibit 10.30 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1998 (File No. 1-8467).
10.40	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.	Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 (File No. 1-8467).
10.41	Consent, Waiver and Fourth Amendment to Credit Agreement, dated December 21, 1999, among the Company, several banks, Bankers Trust Company as Agent and a Lender, Bank One (as assignee of NBD Bank) as agent and a Lender.	Incorporated by reference to Exhibit 10.38 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.42	BME Share Pledge Agreement, dated June 24, 1999, among the Company, Buckbee-Mears Europe and several banks.	Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (File No. 1-8467).
10.43	Amended and Restated Pledge Agreement, dated December 21, 1999, among the Company and Bankers Trust Company as Collateral Agent and a Lender.	Incorporated by reference to Exhibit 10.40 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.44	Release of Pledge, dated December 21, 1999, among the Company and Bankers Trust Company as Collateral Agent.	Incorporated by reference to Exhibit 10.41 to the Company’s Annual Report on Form 10-K for the year ended December 31, 1999 (File No. 1-8467).
10.45	Lease, dated October 29, 1997, by and among the Company and Meridian Crossings LLC (d/b/a Told Development Company).	Incorporated by reference to Exhibit 10.3 to the Company’s quarterly Report on Form 10-Q for the quarter ended September 30, 1997 (File No. 1-8467).
13.1	Portions of the Company’s 2000 Annual Report to Stockholders incorporated herein by reference in this Annual Report on Form 10-K.	Filed electronically herewith.
21.1	Subsidiaries of the Registrant.	Filed electronically herewith.
23.1	Consent of Ernst & Young LLP, Independent Auditors.	Filed electronically herewith.
99.1	Press Release, dated December 13, 2000, announcing expectations for 2000.	Filed electronically herewith.
99.2	Press Release, dated January 23, 2001, announcing BMC to Report Fourth Quarter Results and Host Conference Call on Thursday, February 1, 2001.	Filed electronically herewith.
99.3	Press Release, dated February 1, 2001 announcing fourth quarter and full year 2000 earnings.	Filed electronically herewith.
99.4	Press Release, dated February 15, 2001 announcing quarterly dividend.	Filed electronically herewith.
99.5	Press Release, dated February 22, 2001 announcing change in NYSE ticker symbol effective March 5, 2001.	Filed electronically herewith.

EX-10.4

Exhibit 10.4

BMC INDUSTRIES, INC.
2001 MANAGEMENT INCENTIVE PLAN

CORPORATE PARTICIPANTS

1.OBJECTIVE

          To focus management attention on profit performance and balance sheet management.

2.GLOSSARY OF TERMS

EPS - Consolidated Earnings Per Share as reported publicly.

          Maximum Performance - The level of EPS justifying a “maximum” incentive award.

Par Performance - The level of EPS justifying a “target” incentive award.

          Cut-in Performance - The level of EPS justifying a “minimum” incentive award.

Target Incentive - The percent (%) of base pay when a 100% incentive award is earned.

Minimum Incentive - The percent (%) of base pay when a 10% incentive award is earned.

Maximum Incentive - The percent (%) of base pay when a 150% incentive award is earned.

3.ELIGIBLE PARTICIPANTS

Key management employees.

4.2001 PERFORMANCE STANDARDS

EPS targets are subject to change by management based on events that were not contemplated in the 2001 budget, including investments made for an acquisition, new facility or significant expansion.

5.AWARD LEVELS

Target incentive awards are a percent (%) of base salary, depending on the employee’s level of responsibility.

6.ORGANIZATIONAL WEIGHTING

Corporate participants earn awards based only on Corporate performance.

BMC Industries, Inc. - 2001 Management Incentive Plan - Corporate Participants – Page 2

7.INCENTIVE OPPORTUNITY

Individual incentive awards will be prorated and calculated based on the following, once the applicable thresholds have been exceeded:

•   150% of target incentive is earned when reported EPS, as defined earlier, equal or exceed “maximum”.
•   100% of target incentive is earned when reported EPS, as defined earlier, equal or exceed “par”.
•   10% of target incentive is earned when reported EPS, as defined earlier, equal “cut-in”.
•   No incentive will be paid when reported EPS, as defined earlier, fall below “cut-in”.

8.PAYMENT FORM

Cash.

BMC INDUSTRIES, INC.
 2001 MANAGEMENT INCENTIVE PLAN
General Provisions

1.“Base salary” in the Plan means the cumulative base salary paid, not earned, by BMC or one of its divisions (“the Company”) during the 2001 calendar year (“the Year”), excluding all other forms of compensation.

2.Incentive compensation payments for the Year will be made as soon as practicable after the review and receipt of the audited financial statements for the Year.

3.If a participant becomes ineligible during the Year because of a change in position, the participant will be eligible for incentive compensation only for the period of time he/she was participating in the Plan_.

4.Payments will be made only to those participants who are in the employment of the Company on the date the incentive payment is made, with the following exceptions:

a)If the participant is a member of a division divested during 2001 and remains in the employ of the Company through the closing date of the divestiture, he/she will be eligible for an incentive award based on year-to-date performance versus year-to-date performance standards. The year-to-date performance will be determined by applying the percent that the performance standards are of the approved 2001 budget.

b)If a participant dies during 2001, prorated incentive compensation will be paid to the participant’s beneficiary, as designated under the Group Life Insurance Plan, or if a beneficiary is not so designated, to the duly appointed personal representative of the participant’s estate.

c)If a participant retires with the consent of the Company during 2001, s/he will be eligible to receive incentive compensation prorated for the duration of his/her participation in the 2001 Plan.

d)If a participant has been given a military leave of absence and is to immediately enter the service of the armed forces, the participant will be eligible to receive incentive compensation prorated for the duration of his/her participation in the 2001 Plan.

e)       If a participant for any reason such as illness, disability, etc., is able to work only part-time, the Chief Executive Officer will determine the extent to which such employee shall participate. Each case will be handled on the basis of its own merits.

5.If, during the Year, a participant moves from an incentive-eligible position to a position with a different incentive target and/or different incentive criteria, s/he will be eligible to receive incentive compensation prorated for his/her participation in each position.

6.Participation in this Plan does not constitute or imply a guarantee of continued employment.

BMC Industries, Inc. – 2001 Management Incentive Plan – General Provisions – Page 2

7.Participation in this Plan does not constitute a warranty that a participant will participate in a future plan, and the existence of a plan during the Year is not to be construed as an obligation to provide any such plan in the future.

8.A participant whose general job performance is unsatisfactory, or whose managerial behavior is not in the best interest of the Company, will be terminated from the Management Incentive Plan, effective upon written notice, with no rights to a prorated award.

9.       The obligation of the Company, as set forth herein, shall be subject to modification in such manner and to such extent as it deems necessary to comply with any law, regulation or governmental order pertaining to employee compensation.

EX-13.1

BMC Industries, Inc

2000 Annual Report

BMC INDUSTRIES, INC. is a leading manufacturer of high-volume precision products for the entertainment, optical, high-tech, medical, defense and aerospace industries. Since its beginning in 1907, BMC has earned a reputation of technological leadership in its product offerings and customer service orientation. This pattern of excellence is exemplified by our two business segments: Buckbee-Mears and Optical Products.

             The Buckbee-Mears group is composed of both Mask and Micro-Technology Operations. Mask Operations is the only independent North American manufacturer of aperture masks—supplying them to nearly every major picture tube manufacturer around the world. Aperture masks are a key component in color television and computer monitor picture tubes and consist of thousands of precise, conically shaped holes designed to focus an electron beam on the proper phosphor color stripe to produce a crisp image. Micro-Technology Operations is a leading producer of a variety of precision photo-etched and electroformed parts that require fine features and tight tolerances.

             The Optical Products group, operating under the Vision-Ease trade name, is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic eyewear lenses. Vision-Ease is the technology and market leader in the polycarbonate lens segment. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent UV filtering and impact resistant characteristics. Vision-Ease provides the most extensive product line in the ophthalmic lens industry to the nation’s retail eyewear chains, wholesale laboratories and sun lens manufacturers.

             BMC is headquartered in Minneapolis, Minnesota. The Company’s common stock is traded on the New York Stock Exchange under the symbol “BMM.”

FINANCIAL HIGHLIGHTS
(in thousands, except per share amounts, percentages and ratios)

Years Ended December 31		2000	1999	1998	1997	1996
Revenues		$354,485	$353,854	$335,138	$312,538	$280,487
Revenue growth		0.2%	5.6%	7.2%	11.4%	9.8%
Gross margin		53,690	48,262	37,143	68,070	67,480
Net earnings (loss)1		14,900	7,824	(30,635)	35,721	35,101
Diluted earnings (loss) per share1		0.54	0.28	(1.13)	1.25	1.24
Number of shares included in per share computation		27,623	27,710	27,014	28,530	28,363
Net cash provided by operating activities		$36,637	$33,485	$26,948	$14,667	$20,786
Net cash used in investing activities		(10,655)	(13,157)	(122,427)	(76,867)	(54,662)
Net cash (used in) provided by financing activities		(24,458)	(20,041)	94,124	62,126	20,596
Capital expenditures		11,929	13,157	21,427	75,110	54,662
Total debt		145,016	168,262	189,195	74,565	17,989
Stockholders’ equity		146,798	136,422	133,257	178,752	144,108
Total debt to capitalization ratio		50%	55%	59%	29%	11%
Return on average equity		10.5%	5.8%	(19.6)%	22.1%	27.8%
Book value per share		$5.36	$4.98	$4.90	$6.43	$5.26
Stock closing price at year end		4 7⁄8	4 7⁄8	6 1⁄4	16 5⁄16	31 1⁄2
Adjusted EBITDA2		57,966	49,226	38,004	65,616	62,854
1	Includes charges in 1998 for impairment of long-lived assets ($26,700 after-tax) and acquired in-process research and development ($6,000 after-tax).
2	Adjusted EBITDA is defined as net income plus charges for impairment of long-lived assets, acquired in-process research and development, provision for income taxes, net interest expense and depreciation and amortization.  Adjusted EBITDA, while not a GAAP measure, is presented because the Company believes it is an indicator of its ability to incur and service debt, and its lenders, in determining compliance with financial covenants, use a similar formula.

TABLE OF CONTENTS

Business Summaries

	Buckbee-Mears	Optical Products
description
	Buckbee-Mears, through its Mask Operations, is a leading producer of aperture masks, a critical component of color television and computer monitor picture tubes. The Company is a leading supplier of masks to nearly every major picture tube manufacturer in the world. Buckbee-Mears, through its Micro-Technology Operations, also manufactures a variety of precision photo-etched and electroformed components that require fine features and tight tolerances. Products are manufactured at facilities in Cortland, New York, Müllheim, Germany, Tatabánya, Hungary and St. Paul, Minnesota.	Optical Products, operating as Vision-Ease, offers the most extensive product line in the ophthalmic lens industry with full-line capabilities in polycarbonate, glass and hard-resin plastic. Vision-Ease is the market and technological leader in the design and manufacture of the world’s fastest growing lens material — polycarbonate. Vision-Ease has established a laboratory network in Europe to drive polycarbonate sales into this growing market. The Company manufactures lenses at facilities located in Ramsey, Minnesota, Azusa, California and Jakarta, Indonesia. We also have laboratory operations in Müllheim, Germany and Brou, France.
markets served
	•   Color television aperture masks	•   Retail customers including Afflelou, ColeNational, Costco Wholesale, Eye Care Centers of America, LensCrafters, U.S. Vision, Vista Eyecare and Wal-Mart
	•   Computer monitor aperture masks	•   Wholesale ophthalmic laboratories
	•   Component parts used in the medical, electronic, telecommunication, automotive and filtration market segments	•   Sun lens manufacturers, including Bollé, Luxottica and Oakley
	•   Customers include Hitachi, Johnson & Johnson, Matsushita, Medtronic, Philips, Samsung, Siemens, Thomson, Toshiba and Xerox
competitive strengths
	•   Continuous in-line manufacturing process	•   Market leader in manufacturing polycarbonate lenses
	•   Only independent North American aperture mask manufacturer	•   Technological leader in higher value-added products such as polarizing and progressive lenses and advanced coatings
	•   Significant participant in design of HDTV, widescreen (16:9 format) and flat tube aperture masks	•   Rapidly growing brand equity with Tegra®, Outlook™ and SunRx®
	•   Process excellence with a wide variety of metals, including steel, invar, copper, nickel, molybdenum, tungsten, titanium and eligiloy	•   Reputation for high quality and innovative product development
		•   Largest manufacturer of fused multi-focal glass lenses
	•   ISO 9002 certified
outlook
	•   Consumers continue to shift to larger screen televisions and computer monitors	•   Leverage polycarbonate strength and leadership position into domestic and international growth
	•   New product introductions, such as HDTV, widescreen and flat screen televisions, multimedia and flat CRTs will contribute to future mask growth	•   Consumers demanding improved lens performance, driving growth in polarizing and progressive lenses with advanced coatings
	•   European manufacturing presence available to meet international growth opportunities	•   Improve overall product cost position by accelerating capacity expansion in Southeast Asia
	•   Miniaturization of component parts increases volume opportunities in a variety of markets	•   Grow European polycarbonate sales through retailers utilizing international lab facilities

TO OUR SHAREHOLDERS

YEAR 2000 — SOLID RESULTS AND PLATFORM FOR GROWTH BUILT

We are pleased with the progress made, and the results achieved, at BMC in the year 2000. Diluted earnings per share increased from 28 cents to 54 cents — meeting external expectations and initiating what we believe will be an ongoing pattern of year-over-year earnings growth. We generated operating cash flow of $36.6 million (an increase of 9% over 1999) and reduced our debt from $168.3 million at year-end 1999 to $145.0 million at year-end 2000. Finally, while sales were relatively flat over the prior year (up 3% when adjusted for the impact of currency), sales in strategic products, as delineated in more detail below, were up substantially in both businesses.

Beyond the reported results, we made significant strides during the year in constructing a platform for the Company’s future growth. Organizational and infrastructure investments were made in both businesses aimed at driving new earnings and revenue streams. As will be described in more detail below for each of the businesses, the year 2000 again demonstrated the long-term sustainability of the growth drivers in our base businesses. We leave the year 2000 very confident in our ability to grow diversified earnings and revenue streams using our core technologies.

BUCKBEE-MEARS — ON THE THRESHOLD OF GROWTH IN NEW MARKETS

             In addition to manufacturing aperture masks, the Buckbee-Mears group is a leading producer of precision photo-etched and electroformed components. To better encapsulate the non-mask segment of Buckbee-Mears, we will refer to this segment in this and future communications as “Micro-Technology Operations” or “Micro-Technology.”

             The year 2000 was the first year in which the Mask and Micro-Technology segments of Buckbee-Mears operated as a single combined unit — focused on growth in new markets. While the group’s operating earnings improvement (5%) on a year-over-year basis was modest, the true underlying increase was masked by the transitional nature of our efforts to drive new growth and investments related thereto. We had success in a number of areas including the qualification and development of new products, the optimization and relocation of our production processes, the qualification and first volume sales of advanced television mask products and the expansion of our mask automation efforts. While mask market conditions, particularly in the computer monitor mask segment, continue to be challenging, we successfully combated these forces with strong cost controls and operating efficiency efforts combined with  a focus on improving our product mix. While the Micro-Technology portion of the business was a drag on earnings and sales growth, substantial steps were taken, particularly with regard to the augmentation of leadership and the allocation of human resources, in the effort to drive diversification opportunities. As we enter the year 2001, we are confident that we will begin to show tangible evidence of these investments and efforts.

             Noteworthy achievements of the Buckbee-Mears team over the course of the year included the following:

•   New Micro-Technology Production Line Started in Cortland – We successfully started a new production line for a significant portion of current and expected Micro-Technology products at the Cortland, New York facility. This start-up included the transfer of a number of products currently manufactured in St. Paul, Minnesota. This line provides both broader capabilities and lower costs for our Micro-Technology business.

•   Advanced TV Product Sales Growth – Sales of BMC’s flat, widescreen (16:9 format), HDTV and invar masks increased by 27% over 1999 as a result of continued growth in these product segments and BMC’s growth in market share.

•   Automation Expansion – Over the course of the year 2000 and into the early part of the first quarter of 2001, automatic inspection was added to four of BMC’s television mask manufacturing lines. Moreover, the application of automatic inspection was expanded not only on these lines but also on the two original monitor mask lines.

•   Mask Yield Performance/Operating Efficiencies – Yield improvement was shown throughout the Buckbee-Mears production lines, particularly on the monitor lines where improvement was critical to combating price reduction pressures.

•   Restart of Cortland Line 1 – As a result of stabilizing market conditions in the TV segment and our ability to drive our cost base down, we were able to restart Line 1 at Cortland in the fourth quarter of 2000 to manufacture additive, medium-size commodity TV masks.

             In addition to the above, a number of key organizational steps were taken and investments made to drive Micro-Technology’s sales and earnings growth. The leader of Research and Development for Buckbee-Mears relocated to St. Paul and will focus on Micro-Technology product development projects. A new leadership position for Micro-Technology sales and marketing was created to focus on product sales opportunities for this segment. The Micro-Technology product sales and product development engineering staffs were also augmented over the course of the year. Finally, significant investments were made in marketing studies aimed at identifying attractive high-volume business segments.

             In 2000, over 15% of Micro-Technology’s revenues were attributable to products developed within the past two years. Specific product areas in which new sales were realized included components for fuel cells, optical network attenuators, semiconductor packaging and medical devices. Considerable efforts were devoted to two major new product development projects, which culminated in the signing (in the first quarter of 2001) of production and licensing agreements with Cordis Corporation, a Johnson & Johnson company, and Visteon Corporation for the manufacture and sale of proprietary stents and advanced electronic interconnect devices, respectively.

             Each of our base mask markets showed continued growth in the year 2000. The direct-view television market grew at a worldwide rate of 6%, continuing a 30+ year trend of consistent growth. The jumbo category (which subsumes much of the flat, widescreen and HDTV categories) grew in total by 13% — reflective of a consistent double-digit compound growth rate over the last 20 years. We continue to be optimistic about growth in the jumbo segment based upon the prospects for high-definition digital signals, growth in pure flat designs and the growth in the use of the widescreen format.

             While BMC’s monitor mask sales contracted in the year 2000, this was largely due to a reduction in average selling prices. Moreover, we made a conscious decision over the course of the year to devote a portion of our monitor mask line time to advanced television products. The monitor market continued to grow in the year 2000, with unit sales increasing at a rate of 13%. We anticipate growth in this segment to continue in the 5-10% range for the next 3-5 years. While this segment has been subject to attack by LCD desktop monitors (currently 6% of the PC monitor market), the pricing of LCD display units has been artificially depressed by a gross imbalance in supply and demand for LCD panels, which may cycle back to a pattern of increases given more normalized supply conditions.

             Over the last 10 years, Buckbee-Mears has enjoyed sporadic success in developing new revenue streams. We have learned over time that we must maintain multiple, parallel new product development efforts to sustain consistent growth because the life cycle of new product streams is relatively limited (particularly compared to the mask business). We believe that the broad trends in product development, generally to smaller, more precise features, significantly favor our etching and electroforming capabilities. We believe that this is particularly the case in the filtration, medical, electronics and power segments. At the same time, the Buckbee-Mears trade name enjoys an excellent reputation worldwide and attracts a significant number of opportunities on a passive basis. By coupling our trade reputation with an aggressive, proactive communication of our capabilities to the design engineering communities in the noted segments, we expect to create new high-volume opportunities. In addition, we will be leveraging the capabilities and products that evolve in the development projects described above with Cordis, Visteon and others.

             Our optimism about the future of Buckbee-Mears continues to be based upon our ability to optimize the mask business and drive new product opportunities. Our major initiatives going into the year 2001 will be, accordingly:

•   Establish Diversified Micro-Technology Revenue Streams – Through the efforts described above, we expect over the course of the year to be able to demonstrate our ability to generate new Micro-Technology earnings and revenue streams.

•   Leverage Development Projects – Through the development and production agreements described above, we have the opportunity to not only pursue production opportunities with our partners, but to leverage the technology that we have gained in our development efforts into new product and customer arenas.

•   Grow Advanced TV Products Sales Base – A major Mask optimization initiative for the year is to grow our portfolio of advanced TV products both in terms of customers and types of products sold.

•   Expand the Impact of Automation/Improve Yields – With four TV lines now enjoying the benefits of our proprietary automatic inspection systems, we expect to be able to leverage these systems progressively over time to eliminate more costs and simplify our post-processing steps. In addition, we will continue to drive yield improvement efforts on all production lines.

VISION-EASE — IN PURSUIT OF MULTIPLE GROWTH PATHS

             Vision-Ease showed a substantial increase in profitability on a year-over-year basis at the same time that significant investments were being made in vehicles for future earnings growth. While total divisional sales were only up 3% on a year-over-year basis, our strategic product sales (high-end, value-added products) were up 20% on a year-over-year basis. Our specifically targeted premium prescription products grew dramatically on a year-over-year basis as did SunSport™, our plano polarizing product line, as described in more detail below.

             While not visible in the financial results, significant effort and investment were devoted to positioning Vision-Ease for growth in Europe and Latin America, in our SunSport™ product line, and in our pursuit of new market channels. Similarly, while we showed progress in product cost reduction, we expect to show significantly more in the year 2001 with the movement of production to our Asian facility and a clear definition of needed process and operating efficiency improvements.

             Key achievements for Vision-Ease during the year 2000 included the following:

•   Premium Products Sales Growth – Vision-Ease sales of Tegra® coated polycarbonate lenses and Outlook™ progressive polycarbonate lenses grew 176% in the year 2000 over 1999 — as Vision-Ease, for the first time in its history, began to make significant inroads in the progressive lens segment. SunRx® revenues increased by 66% over 1999 as the market continued to be drawn to this high-performance product for which Vision-Ease enjoys a proprietary technology position.

•   SunSport™ Growth – The SunSport™ business, selling polarized polycarbonate lenses to premium sunwear manufacturers, also showed dramatic growth of 64% over 1999 — with customers in the non-prescription, or plano, segment being drawn to the same polarizing performance characteristics sought in the prescription segment.

•   Polycarbonate Production Rationalization/Jakarta Start-Up – Over the course of the year, we optimized production allocation between our Ramsey, Minnesota and Azusa, California production facilities. In addition, we successfully initiated polycarbonate production at our Jakarta, Indonesia facility with volume production achieved in the fourth quarter.

•   European Product Qualifications and Infrastructure Expansion – A significant portion of the year 2000 in Europe was spent successfully qualifying our polycarbonate product line with a number of major European retailers. In addition, we expanded our European sales and marketing infrastructure, particularly in France where polycarbonate is growing very rapidly.

•   Glass Manufacturing Fully Moved to Jakarta – Throughout the year 2000 and into the early part of the year 2001, we successfully implemented a plan to transfer glass manufacturing completely to our Jakarta operation from our St. Cloud, Minnesota facility.

             Another major accomplishment during the year 2000 was the realignment of our sales and marketing resources around channel, geographic and product segment objectives — particularly in North America. Conjunctively, we have augmented the resources devoted to those market segments showing significant growth. While our plastic and glass business contracted during the year 2000 (largely due to market factors in the case of glass), we are confident that this new structure will ensure that adequate resources continue to be devoted to non-strategic segments which continue to contribute significant profits and revenues to Vision-Ease.

             Our new product development efforts during the year 2000 were a disappointment relative to beginning of the year expectations. While we did not successfully launch our proprietary polycarbonate photochromic product, we do continue to expect to launch this product in 2001, and the product will have a variety of attractive applications. Our launch of a finished multi-focal product line was also delayed due to production difficulties and the need to devote press capacity to conventional progressive lenses. We are, however, confident that this product line will also be launched during the year 2001, and that institutional learning from the development of this product will accelerate the development of our wafer lamination system.

             The polycarbonate ophthalmic lens market continues to grow at extremely attractive rates. The North American polycarbonate market segment grew at the rate of 20% in 2000, adding to its string of 15+ years of growth at rates in excess of 15%. Polycarbonate growth worldwide was roughly 20-22%, with growth in Europe estimated at 24%. For obvious reasons, this continues to be a very attractive segment and the principal focus of our strategic efforts. Polycarbonate offers an unmatched combination of performance features (thin, lightweight, impact resistant, UV absorptive and scratch resistant) and a modest price that makes it extremely attractive to eyewear dispensers faced with strong competitive pressures and the demands of managed care. Moreover, as the industry as a whole moves to take advantage of opportunities presented by the sunwear segment, particularly corrective sunwear, Vision-Ease is well positioned with a polycarbonate product line that includes polarizing, photochromic and tintable products. In sum, Vision-Ease enjoys very strong underlying base market dynamics.

             The polarizing segment is illustrative of the growth opportunities available to Vision-Ease — and is a segment where the Company enjoys a proprietary product and technology leading position. Corrective polarizing lens sales in the U.S. grew 28% in 2000, representing 20% of all prescription sun lenses sold in 2000. Growth in plano polarizing polycarbonate lenses for premium sunwear has grown at the compound rate of 20% since 1995. This growth for polarized products is driven by several factors:

•   The ease of demonstrating the benefits of polarization to the patient/consumer;

•   The need for the protection (impact resistance and UV filtering) of polycarbonate in active lifestyles;

•   The thinness and light weight of polycarbonate;

•   The ability to mold polycarbonate for extreme designs; and

•   The desire of retail sunwear makers to enhance their premium mix.

             Turning to the future for Vision-Ease, this group’s basic strategic mission is comprised of three critical components:

•   Driving polycarbonate as the ophthalmic lens material of choice worldwide;

•   Moving down the distribution channel and establishing a closer relationship with the professional community both in Europe and on a worldwide basis by leveraging our proprietary polycarbonate products and processes; and

•   Diversifying our revenue streams both through non-ophthalmic optical products (like SunSport™ lenses and reading glasses) as well as non-optical precision molded products and components.

             In pursuit of this mission, our major objectives for the year 2001 are as follows:

•   Premium Product Growth – We expect to continue to grow our Tegra®, Outlook™ and SunRx® product lines.

•   European Market Expansion – With the product qualifications discussed above and the growth of polycarbonate in the European market, we expect to show significant growth in our European operations over the course of 2001.

•   SunSport™ Expansion – Due to the factors described above, we expect to see continued significant growth in polarized polycarbonate lens usage. Moreover, we expect to add to the portfolio of products sold through our SunSport™ team.

•   Jakarta Polycarbonate Ramp-Up – Over the course of the year, we expect to ramp up production of commodity polycarbonate product at our Jakarta facility to substantial volumes.

•   Further Polycarbonate Geographic Expansion – We expect to grow our polycarbonate lens sales outside of Europe and North America through a focused effort over the course of the year aimed at Latin America in particular.

•   Polycarbonate Cost Reduction – In addition to the cost benefits realized in Jakarta polycarbonate volume production, we expect to make significant inroads in reducing our domestic polycarbonate product costs through yield improvement, automation and other measures over the course of 2001.

•   Consolidate and Streamline Distribution Network – Both as a cost control measure and as a means to better serve our customers, we will be consolidating our distribution network over the course of 2001.

             Vision-Ease continues to enjoy the luxury of a number of executable growth opportunities. We expect clear evidence of our success on multiple fronts during 2001.

ORGANIZATIONAL DEVELOPMENT

             A dynamically evolving worldwide marketplace continues to place greater and greater demands on our leaders and requires of them a broader and broader skill set. We made significant progress over the course of the year on our previously stated goal of improving the caliber of leadership at all levels throughout BMC. Vision-Ease’s leadership group was dramatically enhanced by a combination of internal promotions, internal transfers and external hires. We were particularly fortunate to make high-quality new leadership hires in the areas of polycarbonate operations, research and development, North American professional relations, sales and in Europe. The Buckbee-Mears team was significantly enhanced by internal promotions and transfers necessitated by the merger of the Mask and Micro-Technology businesses. We are very pleased by the manner in which affected individuals have met the challenge of their new responsibilities. Finally, we were blessed at the corporate office with the addition of an outstanding new Chief Financial Officer whose impact was felt even in the portion of the year she spent on the job.

             In summary, despite very challenging hiring conditions, we are delighted with the progress we have made in growing the BMC leadership team. We recognize, however, the need to continue to build depth to achieve growth and the multiple, parallel efforts required to sustain same. While it is difficult for shareholders to have visibility to the true caliber and quality of leadership at a given company, I can only say that I would be happy to match this team against any other.

2000 AND BEYOND

             After major challenges to both of our base businesses in 1998 and 1999, we have proven our ability to rebuild and revive these businesses and drive them to substantial growth. In the case of the Buckbee-Mears mask business, we have shown that we can optimize a business in the face of extremely strong competitive challenges and difficult market conditions. We are presently applying these same abilities to Vision-Ease to build world-class, highly professional manufacturing and business processes that will enable substantial cost savings and new product opportunities. Through the growth and optimization of each of our base businesses, we are confident that we can significantly grow our earnings. However, we recognize the necessity of meaningfully demonstrating the ability to diversify our earnings streams into new high-growth opportunities by leveraging our base capabilities. As hopefully has been demonstrated by the comments that have preceded, we take this message very seriously and have taken strong, multiple steps to ensure the proper allocation of resources to drive our diversification initiatives. Diversification is a BMC leadership team mission, which is imbedded in all of our goals and objectives.

             As we embark on our diversification efforts, we have more than adequate financial resources to fulfill our strategic objectives. As noted above, we reduced our debt by $23.3 million in 2000, as the organic cash-generating power of our business grew over the course of the year. Over the last 24 months, we have reduced our debt by $44.2 million while investing $25.1 million in our businesses. We have the financial leverage available to drive our new business growth initiatives.

             Our leadership team has been frustrated by the fact that our successes over the last 12 months have generated a minimal impact on our stock value. We recognize conjunctively, however, that we must achieve our diversification goals in addition to showing sustained profitability growth in order to merit higher valuation levels. As noted above, this team is committed to achieving those goals.

CONCLUSION

             We are pleased with the results that we reported in the year 2000 and are even more pleased with the progress we made in getting ourselves positioned for substantial further growth in the year 2001 and beyond. As a consequence, we believe that investment in BMC is well placed. To reinforce that point, over the decade that concluded with the year 2000, and despite what we believe was a disproportionate impact on our valuation resulting from the challenges faced in the late nineties, BMC showed compound stock price appreciation of 17%, compound earnings growth of 23% and compound sales growth of 7%. Despite our best efforts, there is a certain amount of volatility that accompanies any investment in a smaller company. However, we believe our historic track record and our prospects for the future make us attractive to the long-term investor. We appreciate your investment and ongoing support.

Sincerely,

             /s/  Paul B. Burke

Paul B. Burke

Chairman and
Chief Executive Officer

HISTORICAL FINANCIAL SUMMARY
(in thousands, except per share amounts, percentages and ratios)

Years Ended December 31	2000	1999	1998	1997	1996
SUMMARY OF OPERATIONS
Revenues	$354,485	$353,854	$335,138	$312,538	$280,487
Cost of products sold	300,795	305,592	297,995	244,468	213,007
Gross margin	53,690	48,262	37,143	68,070	67,480
Selling and administrative expenses	22,552	23,352	20,675	16,012	15,033
Impairment of long-lived assets	—	—	42,800	—	—
Acquired in-process research and development	—	—	9,500	—	—
Earnings (loss) before interest, other income and income taxes	31,138	24,910	(35,832)	52,058	52,447
Interest expense, net	(12,833)	(13,099)	(13,374)	(1,065)	(280)
Other income	2,838	1,036	522	209	236
Earnings (loss) before income taxes	21,143	12,847	(48,684)	51,202	52,403
Income tax (expense) benefit	(6,243)	(5,023)	18,049	(15,481)	(17,302)
Net earnings (loss)	$14,900	$7,824	$(30,635)	$35,721	$35,101
EARNINGS (LOSS) PER SHARE
Basic	$0.54	$0.29	$(1.13)	$1.30	$1.29
Diluted	0.54	0.28	(1.13)	1.25	1.24
NUMBER OF SHARES INCLUDED IN PER SHARE COMPUTATION
Basic	27,396	27,299	27,014	27,583	27,268
Diluted	27,623	27,710	27,014	28,530	28,363
CASH FLOW
Cash dividends per share	$0.06	$0.06	$0.06	$0.06	$0.0525
Depreciation and amortization expense	23,990	23,280	21,014	13,349	10,171
Net cash provided by operating activities	36,637	33,485	26,948	14,667	20,786
Capital expenditures	11,929	13,157	21,427	75,110	54,662
FINANCIAL POSITION
Working capital	$95,322	$88,833	$94,971	$74,914	$41,354
Property, plant and equipment, net	139,499	151,238	162,594	182,382	123,845
Total assets	373,804	383,553	399,465	319,407	232,969
Total debt	145,016	168,262	189,195	74,565	17,989
Stockholders’ equity	146,798	136,422	133,257	178,752	144,108
STATISTICS AND RATIOS
Current ratio	2.5	2.5	2.7	2.6	1.8
Total debt to equity ratio	1.0	1.2	1.4	0.4	0.1
Earnings (loss) before interest, other income and income taxes, as a percentage of revenues	8.8%	7.0%	(10.7)%	16.7%	18.7%
Return on average equity	10.5%	5.8%	(19.6)%	22.1%	27.8%
Book value per share	$5.36	$4.98	$4.90	$6.43	$5.26

MANAGEMENT’S DISCUSSION AND ANALYSIS

SUMMARY

             BMC Industries, Inc. is one of the world’s largest manufacturers of aperture masks for color picture tubes used in televisions and computer monitors and a leading producer of precision photo-etched metal and electroformed parts. The Company is also a leading producer of polycarbonate, glass and plastic eyewear lenses. The Company has two business segments; Buckbee-Mears, made up of Mask Operations and Micro-Technology Operations, and Optical Products (operating as Vision-Ease).

             Net revenues of $354.5 million for 2000 represent a slight increase over the $353.9 million in 1999. Excluding the impact from foreign currency exchange rate changes during the year, total revenues would have increased 3% over 1999 revenues. The revenue growth during 2000 was provided by Optical Products due to growth in sales of high-end, value-added products (including polycarbonate, progressive and polarizing sun lenses), partially offset by declines in glass and plastic lens sales. Buckbee-Mears group sales decreased 1% in 2000. Excluding the impact of foreign currency translation, the Buckbee-Mears group revenues would have increased 3% over 1999.

             Net earnings and diluted earnings per share for 2000 were $14.9 million and $0.54, respectively, compared to net earnings and diluted earnings per share of $7.8 million and $0.28, respectively, for 1999.

RESULTS OF OPERATIONS

             The following discussion and analysis examines the operating results of the Company’s two business segments. As used herein, “operating profit” refers to operating profit before charges for the impairment of long-lived assets and acquired in-process research and development (IPR&D), administrative expense and interest, as shown in Note 12 to the Consolidated Financial Statements — Segment Information.

BUCKBEE-MEARS
REVENUES AND OPERATING PROFIT

             Comparison of 2000 and 1999. Buckbee-Mears group revenues were $214.9 million for 2000, a decrease of $3.0 million or 1% from 1999. Excluding the impact of foreign currency translation, revenues would have increased 3% over 1999. Sales of large (24-29 inches) and jumbo (30 inches and larger) entertainment masks were up 11% and 10%, respectively, over 1999 levels as a result of increased demand, particularly in Europe, for flat and widescreen (16:9 format) televisions. In addition to the shift to larger sizes, the group experienced a favorable sales mix shift with invar (nickel alloy) entertainment mask sales up 25% and standard AK steel entertainment mask sales down 6%. Computer monitor mask sales decreased 10% compared to 1999, largely offsetting the higher entertainment mask sales. Sales of monitor masks were negatively impacted by year-over-year price reductions and the Company’s decision to utilize monitor mask production capacity for HDTV and other higher-margin entertainment products, thus displacing monitor volumes. Micro-Technology Operations revenue declined 22% from 1999 as the Company has continued to redirect the efforts of this group toward new, strategic markets.

             Operating profit for Buckbee-Mears was $25.1 million for 2000, an increase of $1.2 million from 1999. The operating margin was 12% of revenues for 2000 compared to 11% for 1999. The increase in operating profit is primarily due to product cost reductions derived from yield improvements and automated inspection equipment installed in 2000, and the favorable sales mix shift to larger sized and invar steel entertainment masks. In addition, Mask Operations restarted an idle entertainment mask line at the Company’s Cortland, New York, facility at the end of the year which provided some additional absorption of the group’s fixed overhead. Partially offsetting these favorable variances were continued pricing pressures in the mask business, particularly for monitor masks, and lower profits from Micro-Technology Operations. The group continued to invest in 2000 in the engineering and sales and marketing infrastructure needed to drive future growth in new Micro-Technology products and market segments. The effect of foreign currency translation had a nominal impact on the group’s operating profit.

             Comparison of 1999 and 1998. Revenues of Buckbee-Mears were $217.9 million for 1999, an increase of $5.8 million or 3% over 1998. The increase was primarily attributable to incremental monitor mask revenue generated from a monitor mask production line in Cortland that was restarted in January 1999, partially offset by lower entertainment mask and Micro-Technology revenues. Total year 1999 computer monitor mask sales were $64.1 million, an increase of 74% over 1998. Sales of invar entertainment masks were up 14% compared to total year 1998 sales. Offsetting these increases, AK steel entertainment mask sales were down 20% compared to 1998 sales, and other Micro-Technology Operations revenue declined 17% from 1998.

             Operating profit for Buckbee-Mears was $23.9 million for 1999, an increase of $21.9 million from 1998. Operating margin was 11% of revenues for 1999 compared to 1% for 1998. The increase in operating margin was due primarily to the increase in monitor mask and invar entertainment mask revenue, partially offset by lower AK steel entertainment mask revenue, pricing pressures in the mask business — particularly pricing for monitor masks — and lower sales from Micro-Technology products. The effect of foreign currency translation had a nominal impact on the group’s operating profit.

OPTICAL PRODUCTS
REVENUES AND OPERATING PROFIT

             Comparison of 2000 and 1999. The Optical Products group sales were $139.6 million for 2000, an increase of $3.6 million or 3% from 1999. The increase was due to a 20% increase in sales of high-end, value-added products (which the Company defines as polycarbonate, progressive and polarizing sun lenses). Sales of high-end products accounted for 63% of total Optical Products group revenue in 2000 compared to 55% in 1999. Sales of Tegra® coated polycarbonate lenses and Outlook™ progressive polycarbonate lenses in 2000 grew 176% over 1999. Sales of the Company’s polarized polycarbonate sun lenses also grew significantly in 2000 with SunRx® (prescription) and SunSport™ (non-prescription or plano) revenues in 2000 increasing 66% and 64%, respectively, over sales in 1999.

             Partially offsetting the increases reported for high-end products were declines in glass and plastic lens sales. Sales of plastic product decreased 18% and glass sales decreased 17%, due primarily to overall market dynamics in these product categories and difficulties the Company experienced in obtaining plastic lenses from its OEM suppliers.

             Operating profit of Optical Products was $11.4 million for 2000, an increase of $5.7 million or 99% from 1999. Operating margin was 8% of net sales for 2000 compared to 4% in 1999. The operating margin increase in 2000 was primarily due to the favorable sales mix shift to high-end, value-added products experienced in 2000. In addition, 1999 results were negatively impacted by poor product cost performance and product line integration costs.

             Comparison of 1999 and 1998. Optical Products group revenues were $136.0 million for 1999, an increase of $12.9 million or 11% from 1998. The increase was primarily due to the incremental revenue contributed from the Orcolite acquisition, which was completed in May 1998. High-end, value-added product sales increased 23% and accounted for 55% of total Optical Products group revenue in 1999 compared to 53% in 1998. On a pro forma basis, assuming the Orcolite acquisition had occurred at the beginning of 1998, Optical Products revenue in 1999 decreased 1%. Sales of high-end products increased 3% over the pro forma Vision-Ease revenues for the same period.

             Sales of mid-range and commodity plastic product decreased 8% due primarily to the Company’s reduced emphasis on plastic lens products and increased price competition in the plastic lens segment. On a pro forma basis, plastic product sales declined 16%. Glass product sales declined 7% due to the continued contraction of worldwide glass lens sales.

             Operating profit of Optical Products was $5.7 million for 1999, a decrease of $13.9 million or 71% from 1998. Operating margin was 4% of net sales for 1999 compared to 16% in 1998. The 1999 operating margin decline was due primarily to increased polycarbonate product costs, charges for product discontinuances and phase-outs related to product line integration, aggressive product pricing on glass, plastic and low-end polycarbonate lenses, new lens product development costs and increased polycarbonate product promotions.

SELLING EXPENSES

             Selling expenses were $17.2 million, $18.7 million and $15.5 million or 4.8%, 5.3% and 4.6% of revenues for 2000, 1999 and 1998, respectively. The decrease in 2000 is due primarily to decreases in the Optical Products group as a result of expanded marketing efforts in 1999 on high-end products as well as the consolidation of certain sales and marketing functions in 2000. The increase in 1999 is due primarily to incremental costs associated with the Orcolite acquisition and expanded sales and marketing costs related to the promotion of the Optical Products group’s branded product lines.

ADMINISTRATIVE EXPENSES

             Administrative expenses were $5.4 million, $4.7 million and $5.2 million or 1.5%, 1.3% and 1.5% of revenues for 2000, 1999 and 1998, respectively. The increase in administrative expenses in 2000 is due primarily to performance-based employee incentive benefits tied to the Company’s earnings and also due to expenses related to filled positions which were open in 1999. The decrease in administrative expenses from 1998 to 1999 is due primarily to several open administrative positions in 1999.

INTEREST EXPENSE (INCOME)

             Interest expense was $13.1 million, $13.4 million and $13.5 million for 2000, 1999 and 1998, respectively. Interest income was $0.3 million, $0.3 million and $0.2 million for 2000, 1999 and 1998, respectively. Interest expense in 2000 was down slightly from 1999 due to lower debt levels, partially offset by higher interest rates in the second half of the year. 1999 interest expense was consistent with 1998 due to flat average debt levels and interest rates throughout the year compared to 1998.

INCOME TAXES

             The Company’s effective tax rate was 30%, 39% and 37% in 2000, 1999 and 1998, respectively. The 2000 tax rate was lower due to the Company’s domestic and foreign earnings mix, ongoing tax initiatives and a statutory rate reduction in Germany. The 1999 tax rate was impacted by a non-recurring tax charge related to the settlement of an audit during the year. In addition, the 1999 tax rate was higher than the 1998 rate due to an earnings mix shift to higher taxed foreign-based earnings in 1999.

             Realization of the Company’s net deferred tax asset is dependent on future taxable income. The Company performed a detailed analysis and believes that it is probable that such assets will be realized based on the Company’s estimate of future taxable income and the expected timing of temporary difference reversals.

SEASONALITY

             The Company’s earnings have been generally lower in the first and third quarters due to maintenance shutdowns at the Company’s mask production facilities during those periods. Also, the seasonality of end products in several markets (televisions, computer monitors and ophthalmic lenses) affects the Company’s annual earnings pattern.

MASK OPERATIONS EXTENDED SHUTDOWN

             During the third quarter of 1998, the Company shut down three manufacturing lines (two entertainment mask and one computer monitor mask) at the Company’s Cortland facility for an extended period of time. These shutdowns were done in conjunction with the Company’s normal summer maintenance shutdowns to avoid additional ramp-up costs. One entertainment mask line resumed operation in the fourth quarter 1998. The computer monitor mask line was restarted in late January 1999 and the remaining entertainment mask line was restarted in the fourth quarter of 2000.

DIVIDENDS

             In 2000, the Company continued payment of cash dividends to shareholders. Cash dividends of one and one-half cents per share were declared in each quarter of 2000. The Company currently expects to continue dividend payments in 2001.

ENVIRONMENTAL

             The Company’s operations are subject to federal, state, local and foreign environmental laws and regulations. Under the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended (CERCLA or Superfund), the Company has been designated as a potentially responsible party (PRP) by the United States Environmental Protection Agency with respect to certain waste sites at which the Company may have had direct or indirect involvement. Similar designations have been made by some state environmental agencies under applicable state environmental laws. Such designations are made regardless of the extent of the Company’s involvement. Such designations have been made by the filing of a complaint, the issuance of an administrative directive or order, or the issuance of a notice or demand letter. These actions are in various stages of administrative or judicial proceedings. They include demands for recovery of past governmental costs and/or for future investigative or remedial actions. In many cases, the dollar amount of site costs or the Company’s portion of site costs is not specified. In most cases, however, the Company has been designated a de minimis party and claims have been asserted against a number of other entities for the same recovery or other relief as was asserted against the Company. The Company is currently participating in eight environmental investigations and/or remedial actions in which final settlement has not been reached.

             To the extent possible, and with the amount of information available at this time, the Company has evaluated its responsibility for costs and related liability with respect to the above investigations and/or remedial actions, and has recorded reserves for such liability in accordance with generally accepted accounting principles. It is the Company’s opinion that the Company’s liability with respect to these matters should not have a material adverse effect on the financial position or the results of operations of the Company. In arriving at this conclusion, the Company has considered, among other things, the payments that have been made in the past; the factors, such as volume and relative toxicity, ordinarily applied to allocated defense and remedial costs; the probable costs to be paid by the other potentially responsible parties; total projected remedial costs, to the extent known; existing technology; and currently enacted laws and regulations. A portion of the costs and related liability for these matters has been or will be covered by insurance or third parties.

FINANCIAL POSITION AND LIQUIDITY

             Working capital was $95.3 million and the current ratio was 2.5 at December 31, 2000, compared to $88.8 million and a current ratio of 2.5 at December 31, 1999. Accounts receivable balances increased $3.6 million compared to 1999 due primarily to a higher level of mask sales in the last month of 2000. Inventory levels were even with 1999. Accounts payable and other liabilities increased primarily due to extended payment terms with certain vendors at Buckbee-Mears and a higher level of expense accruals at the end of 2000 compared to 1999.

             At December 31, 2000, the Company had $145.0 million in debt and the ratio of total debt to total equity was 1.0. At December 31, 1999, the Company had $168.3 million in debt and the ratio of total debt to total equity was 1.2. The $23.3 million reduction in debt during 2000 was due primarily to improved working capital utilization and cash generated from operations.

             In 2000, the Company generated $36.6 million of cash flow from operating activities. The cash generated from operating activities was used primarily for debt reduction totaling $23.3 million and property, plant and equipment additions totaling $11.9 million. The Company generated $33.5 million of cash flow from operating activities in 1999, which was used primarily for debt reduction totaling $20.9 million and property, plant and equipment additions totaling $13.2 million. In 1998, the Company generated $26.9 million of cash flow from operating activities and $94.1 million from financing activities, primarily through incremental debt. The cash generated from operating and financing activities in 1998 was used primarily for property, plant and equipment additions totaling $21.4 million and the cash acquisition of Orcolite for $101.0 million.

             Capital spending in 2001 is planned to be approximately $20.0 million. It is currently anticipated that 2001 capital expenditures will be financed primarily with funds from operations.

             As of December 31, 2000, the Company had a $220.0 million domestic secured credit facility with a syndicate of banks. There was $143.1 million outstanding under this facility at December 31, 2000. The Company’s German subsidiary maintains short-term and long-term credit facilities with available credit of $13.2 million at December 31, 2000. The Company currently believes that internally generated funds and unused financing sources will be adequate to meet the Company’s financing requirements for 2001.

MARKET RISK

Foreign Currency
             A portion of the Company’s operations consists of manufacturing and sales activities in foreign jurisdictions. The Company manufactures its products in the United States, Germany, Hungary and Indonesia and purchases products from Asian, as well as other foreign suppliers. The Company sells its products in the United States and into various foreign markets. The Company’s sales are typically denominated in either the U.S. dollar or the German mark (DM/Euro). Buckbee-Mears also has an indirect exposure to the Japanese yen and the Korean won because its most significant competitors are Japanese and Korean. As a result, the Company’s financial results could be significantly affected by factors such as changes in foreign currency exchange rates or weak economic conditions in foreign markets. In addition, sales of products overseas are affected by the value of the U.S. dollar relative to other currencies. Long-term strengthening of the U.S. dollar may have an adverse effect on these sales and competitive conditions in the Company’s markets and may limit the Company’s ability to increase product pricing in times of adverse currency movements.

             To manage the volatility relating to these exposures, the Company utilizes various derivative instruments, including foreign currency forward-exchange contracts and cross-currency swaps. The cross-currency swaps are accounted for under mark-to-market accounting.

             At December 31, 2000 and 1999, the Company had approximately 19.8 million DM and 11.0 million DM, respectively, of outstanding foreign currency forward-exchange contracts to exchange U.S. dollars for German marks at a set exchange rate. In addition, at December 31, 2000, the Company had approximately 15 billion rupiah of outstanding foreign currency forward-exchange contracts to exchange U.S. dollars for Indonesian rupiah at a set exchange rate. There were no outstanding foreign currency forward-exchange contracts for the rupiah at December 31, 1999. At December 31, 2000, the Company’s German subsidiary had approximately $5.9 million of outstanding foreign currency forward-exchange contracts to sell U.S. dollars for German marks at a set exchange rate. There were no outstanding foreign currency forward-exchange contracts for the U.S. dollar at December 31, 1999.

             In August 1999, the Company entered into a cross-currency swap that provided for the Company to swap a total of $10.0 million of notional debt for the equivalent amount of Japanese yen-denominated debt. Under this swap, the Company also effectively swapped a floating U.S. dollar-based interest rate for a floating Japanese yen-based interest rate. Under mark-to-market accounting, the Company recorded as Other Income a foreign exchange gain of $0.6 million in 2000 and a loss of $1.2 million in 1999 for this swap agreement. This swap agreement was closed out in May 2000. The Company does not currently have any cross-currency swaps outstanding, but continually monitors its foreign currency position.

             In January 1999, the Company entered into a cross-currency swap which provided for the Company to swap a total of $10.0 million of notional debt for the equivalent amount of Japanese yen-denominated debt. This swap agreement was closed out in May 1999. The Company recorded as Other Income a foreign exchange gain of $0.5 million in 1999 related to this swap.

             In October and November 1998, the Company entered into cross-currency swaps which provided for the Company to swap a total of $20.0 million of floating notional debt for the equivalent amount of floating Japanese yen-denominated debt. These swap contracts were settled in November 1998, resulting in a gain of $0.9 million, which was recorded as Other Income.

             The Company experiences foreign currency gains and losses, which are reflected on the Company’s Statements of Operations, due to the strengthening and weakening of the U.S. dollar against the currencies of the Company’s foreign subsidiaries and the resulting effect on the valuation of the inter-company and other accounts. The net exchange gain or loss was not material in 2000 or 1999. The Company anticipates that it will continue to incur exchange gains and losses from foreign operations in the future.

             The Company’s net investment in foreign subsidiaries with non-U.S. dollar functional currency was $27.6 million and $28.8 million at December 31, 2000 and 1999, respectively, translated into U.S. dollars at year-end exchange rates. The potential loss in value resulting from a hypothetical 10% change in foreign currency exchange rates is $2.5 million and $2.6 million in 2000 and 1999, respectively. The loss, if incurred, would be recorded as a charge to Accumulated Other Comprehensive Income (Loss).

             During 2000 and 1999, the U.S. dollar strengthened against the DM. A weaker dollar generally has a positive impact on overseas results because foreign currency-denominated earnings translate into more U.S. dollars; a stronger dollar generally has a negative translation effect. However, a significant component of our overseas revenue is U.S. dollar based, somewhat mitigating this effect. As a result, the effect of the change in exchange rates for 2000 and 1999 did not have a material impact on net earnings.

Interest
             Substantially all of the Company’s debt and associated interest expense is sensitive to changes in the level of interest rates. To mitigate the impact of fluctuations in interest rates, the Company enters into interest rate swaps to hedge the exposure of a portion of its floating-rate debt. The Company’s primary interest rate exposure is U.S., and to a lesser extent DM/Euro and yen-based interest rates.

             At various dates during 1998, 1999 and 2000, the Company entered into multiple interest rate swap agreements to provide for the Company to swap a variable interest rate for fixed interest rates ranging from 6.2% to 7.1%. At December 31, 2000, $75.0 million of these swaps remained outstanding with the swaps expiring at various dates ranging from January 2001 to June 2003.

             A hypothetical 100 basis point increase in interest rates would result in a $0.7 million and $0.8 million adverse impact on interest expense in 2000 and 1999, respectively.

IMPACT OF YEAR 2000

             The Company is not aware of any material problems resulting from Year 2000 issues, either with its products, its internal systems or the products and services of third parties.

NEW ACCOUNTING STANDARDS

             SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” was adopted by the Company in 1999, and SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities — an Amendment of FASB Statement No. 133,” was adopted by the Company in 2000. See Note 6 to the Consolidated Financial Statements — Derivative Instruments and Hedging Activities. The adoption of these new statements did not have a material effect on results of operations or financial position.

             In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements” (SAB 101). SAB 101, as amended, summarizes some of the SEC’s views in applying generally accepted accounting principles to revenue recognition in financial statements. The Company has reviewed the rule requirements and determined compliance therewith. SAB 101 was effective for the Company in the fourth quarter of 2000 and did not have a material effect on the Company’s operations or financial position.

EURO CURRENCY CONVERSION

             On January 1, 1999, 11 of the 15 member countries of the European Union, including Germany, adopted the euro as their common legal currency. The euro trades on currency exchanges and is available for non-cash transactions. From January 1, 1999 through January 1, 2002, each of the participating countries is scheduled to maintain its national (legacy) currency as legal tender for goods and services. Beginning January 1, 2002, new euro-denominated bills and coins will be issued, and legacy currencies will be withdrawn from circulation no later than July 1, 2002. The Company’s foreign operating subsidiaries that will be affected by the euro conversion have established plans to address the business issues raised, including the competitive impact of cross-border price transparency. It is not anticipated that there will be any near-term business ramifications; however, the long-term implications, including any changes or modifications that will need to be made to business and financial strategies, are still being reviewed. From an accounting, treasury and computer system standpoint, the impact from the euro currency conversion is not expected to have a material impact on the financial position or results of operations of the Company.

CAUTIONARY STATEMENTS

             Certain statements included in this Management’s Discussion and Analysis by the Company or its representatives, as well as other communications, including its filings with the SEC, 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. The Company wishes to caution the reader not to place undue reliance on any such forward-looking statements. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties detailed from time to time in reports filed by the Company with the SEC, including Forms 10–Q and 10-K, that could cause actual results or outcomes to differ materially from those presently anticipated or projected and include, among others; further mask and ophthalmic lens price declines, particularly for computer monitor masks, and imbalances of supply and demand; slowdown in growth of high-end products; rising raw material and chemical costs; ability to improve operating and manufacturing efficiencies; ability to meet customer new product qualifications; consumer demand for direct-view high-definition television and digital receivers; competition with alternative technologies and products, including laser surgery for the correction of visual impairment and liquid crystal, plasma, projection and other types of visual displays; ability to implement the Optical Products group’s initiatives in strategic polycarbonate marketing; ability to grow sales of polycarbonate products both domestically and abroad, including growth in European sales through the operation of processing laboratories; new product development, introduction and acceptance; cost reduction and reorganization efforts; continued slowdown for Micro-Technology Operations; ability to diversify Micro-Technology customer and product base and partner with new and existing Buckbee-Mears customers or transition development relationships into full-scale production; the effect of regional or global economic slowdowns; adjustments to inventory valuations; liability and other claims asserted against BMC; negative foreign currency fluctuations; and ability to recruit and retain key personnel. 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. Investors should also be aware that while the Company does, from time to time, communicate with securities analysts, it is against BMC’s policy to disclose to them any material non-public information or other confidential commercial information prior to disclosure of such information by means designed to broadly disseminate such information to all investors. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. In addition, BMC does not confirm financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of BMC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

Years Ended December 31	2000	1999	1998
Revenues	$354,485	$353,854	$335,138
Cost of products sold	300,795	305,592	297,995
Gross margin	53,690	48,262	37,143
Selling expense	17,163	18,650	15,496
Administrative expense	5,389	4,702	5,179
Impairment of long-lived assets	—	—	42,800
Acquired in-process research and development	—	—	9,500
Income (loss) from operations	31,138	24,910	(35,832)
Other income and (expense)
Interest expense	(13,115)	(13,376)	(13,537)
Interest income	282	277	163
Other income	2,838	1,036	522
Earnings (loss) before income taxes	21,143	12,847	(48,684)
Income tax expense (benefit)	6,243	5,023	(18,049)
Net earnings (loss)	$14,900	$7,824	$(30,635)
Earnings (loss) per share
Basic	$0.54	$0.29	$(1.13)
Diluted	0.54	0.28	(1.13)
Number of shares included in per share computation
Basic	27,396	27,299	27,014
Diluted	27,623	27,710	27,014
See Notes to Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEETS(in thousands)

December 31	2000	1999
ASSETS
Current Assets
Cash and cash equivalents	$2,290	$1,146
Trade accounts receivable, less allowances of $2,863 and $3,374	45,645	42,025
Inventories	82,015	82,312
Deferred income taxes	17,954	11,588
Other current assets	11,455	12,580
Total current assets	159,359	149,651
Property, plant and equipment, net	139,499	151,238
Deferred income taxes	4,389	9,761
Intangible assets, net	65,180	68,232
Other assets, net	5,377	4,671
Total assets	$373,804	$383,553
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$1,206	$2,303
Accounts payable	33,939	30,342
Accrued compensation and benefits	14,465	12,909
Income taxes payable	6,374	8,093
Other current liabilities	8,053	7,171
Total current liabilities	64,037	60,818
Long-term debt	143,810	165,959
Other liabilities	17,080	18,229
Deferred income taxes	2,079	2,125
Stockholders’ Equity
Common stock (shares issued of 27,399 and 27,370)	49,240	49,077
Retained earnings	105,876	92,620
Accumulated other comprehensive income (loss)	(6,669)	(3,495)
Other	(1,649)	(1,780)
Total stockholders’ equity	146,798	136,422
Total liabilities and stockholders’ equity	$373,804	$383,553
See Notes to Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY(in thousands, except per share amounts

	Common Stock	Retained Earning	Accumulated Other Comprehensive Income (Loss)	Other	Total
Years Ended December 31, 2000, 1999 and 1998
BALANCE AT DECEMBER 31, 1997	$62,263	$118,693	$(1,217)	$(987)	$178,752
Comprehensive Loss:
Net loss	—	(30,635)	—	—	(30,635)
Foreign currency translation adjustments	—	—	2,330	—	2,330
Total comprehensive loss					(28,305)
Repurchase of 1,000 shares of Company stock	(16,636)	—	—	—	(16,636)
Exercise of options, including tax benefit	2,048	—	—	—	2,048
Restricted stock grants, net of forfeitures and including tax benefits	39	—	—	—	39
Net employee repayments (loans) for exercise of stock options	—	—	—	(1,019)	(1,019)
Cash dividends declared – $0.06 per share	—	(1,622)	—	—	(1,622)
BALANCE AT DECEMBER 31, 1998	47,714	86,436	1,113	(2,006)	133,257
Comprehensive Income:
Net earnings	—	7,824	—	—	7,824
Foreign currency translation adjustments	—	—	(4,577)	—	(4,577)
Loss on derivative instruments	—	—	(31)	—	(31)
Total comprehensive income					3,216
Exercise of options, including tax benefit	1,153	—	—	—	1,153
Restricted stock grants, net of forfeitures and including tax benefits	210	—	—	—	210
Net employee repayments (loans) for exercise of stock options	—	—	—	226	226
Cash dividends declared – $0.06 per share	—	(1,640)	—	—	(1,640)
BALANCE AT DECEMBER 31, 1999	49,077	92,620	(3,495)	(1,780)	136,422
Comprehensive Income:
Net earnings	—	14,900	—	—	14,900
Foreign currency translation adjustments	—	—	(2,027)	—	(2,027)
Loss on derivative instruments	—	—	(1,147)	—	(1,147)
Total comprehensive income					11,726
Exercise of options, including tax benefit	15	—	—	—	15
Restricted stock grants, net of forfeitures and including tax benefits	148	—	—	—	148
Net employee repayments (loans) for exercise of stock options	—	—	—	131	131
Cash dividends declared – $0.06 per share	—	(1,644)	—	—	(1,644)
BALANCE AT DECEMBER 31, 2000	$49,240	$105,876	$(6,669)	$(1,649)	$146,798

Common Stock: 99,000 shares of voting common stock without par value authorized; 27,399, 27,370 and 27,173 shares issued and outstanding at December 31, 2000, 1999 and 1998, respectively.

Undesignated Stock: 500 shares authorized, of which 200 shares were designated as Series A Junior Participating Preferred Shares on June 30, 1998 in connection with the Company’s adoption of a Share Rights Plan. The Board of Directors is authorized to designate the name of each class or series of the undesignated shares and to set the terms thereof (including, without limitation, terms with respect to redemption, dividend, liquidation, conversion and voting rights and preferences).

See Notes to Consolidated Financial Statements

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

Years Ended December 31	2000	1999	1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss)	$14,900	$7,824	$(30,635)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities
Depreciation and amortization	23,990	23,280	21,014
Gain on sale of property and equipment	(443)	—	—
Impairment of long-lived assets	—	—	42,800
Acquired in-process research and development	—	—	9,500
Deferred income taxes	(983)	(644)	(10,665)
Other non-cash income and expense items	—	(4)	(933)
Decrease (increase) in assets
Trade accounts receivable	(4,235)	(4,475)	(2,621)
Inventories	(1,084)	(2,252)	(1,930)
Other current assets	1,106	1,762	(616)
Other noncurrent assets	(835)	538	3,155
Increase (decrease) in liabilities
Accounts payable	4,033	3,029	(560)
Income taxes payable	(1,387)	4,972	581
Accrued expenses and other current liabilities	2,767	(2,685)	(1,787)
Other noncurrent liabilities	(1,192)	2,140	(355)
Net cash provided by operating activities	36,637	33,485	26,948
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment	(11,929)	(13,157)	(21,427)
Business acquisitions, net of cash acquired	(1,219)	—	(101,000)
Proceeds from sale of property and equipment	2,493	—	—
Net cash used in investing activities	(10,655)	(13,157)	(122,427)
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease (increase) in short-term borrowings	(959)	845	723
Decrease (increase) in long-term debt	(22,149)	(20,839)	110,601
Common stock issued, including tax benefit	163	1,363	2,087
Common stock repurchased	—	—	(16,636)
Cash dividends paid	(1,644)	(1,636)	(1,632)
Net employee repayments (loans) for exercise of stock options	131	226	(1,019)
Net cash (used in) provided by financing activities	(24,458)	(20,041)	94,124
Effect of exchange rate changes on cash and cash equivalents	(380)	(169)	—
Net increase (decrease) in cash and cash equivalents	1,144	118	(1,355)
Cash and cash equivalents at beginning of year	1,146	1,028	2,383
Cash and cash equivalents at end of year	$2,290	$1,146	$1,028

See Notes to Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands, except per share amounts)

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

             The Consolidated Financial Statements include the accounts of the Company and its subsidiaries, all of which are wholly or majority-owned.

             Revenue Recognition – Revenue is recognized upon shipment of product to the customer and when persuasive evidence of an arrangement exists, the price to the buyer is fixed and determinable, and collectibility is reasonably assured.

             Cash Equivalents – Consist of highly-liquid debt instruments with a maturity of three months or less at the date of purchase. These instruments are carried at cost, which approximates fair market value.

             Inventories – Stated at the lower of cost or market. Cost is determined principally on the average cost method.

             Provisions for Inventory Reserves, Uncollectible Trade Receivables and Product Returns –The Company determines its provision for obsolete and slow-moving inventory based on management’s analysis of inventory levels and future sales forecasts. However, the factors impacting such provisions vary significantly between the Buckbee-Mears and Optical Products segments. Within the Buckbee-Mears segment, products are manufactured to customer specifications and changes in product demand from the loss of a customer, a new product offering or modifications to customer specifications can significantly impair the value of raw material and finished goods on hand. As a result, inventory valuation reserve requirements within this segment must be established based on specific facts and circumstances that can fluctuate significantly and are difficult to predict. We do not anticipate these conditions will change due to the customized nature of the products manufactured by the Buckbee-Mears segment. The Optical Products segment inventory reserve requirements historically have been more predictable and more readily estimated by analyzing historic build and sales patterns.

             The Company establishes a reserve and records a provision for doubtful receivable accounts based on historic loss levels as well as specific provisions considering current facts and circumstances. Both the Buckbee-Mears and Optical Products segments have several large customers that, if circumstances warrant, can create the need for additional, specific, reserves.

             The provision and reserve for product returns is calculated primarily on a percentage of sales basis, which is established based on trends that have historically provided a reasonable estimate. This reserve is also calculated on a specific basis considering current facts and circumstances.

             Property, Plant and Equipment – Stated at cost. Additions, improvements or major renewals are capitalized, while expenditures that do not enhance or extend the asset’s useful life are charged to operating expense as incurred. Depreciation is provided on the straight-line method over estimated useful lives of generally 40 years for buildings, 20 years for building improvements and infrastructure and eight years for machinery and equipment. Depreciation of assets included in construction in progress does not begin until the construction is complete and the assets are placed into service. Depreciation expense was $20,504, $19,827 and $18,980 in 2000, 1999 and 1998, respectively.

             Statement of Financial Accounting Standards (SFAS) No. 121 (SFAS 121), “Accounting for the Impairment of Long-Lived Assets,” prescribes that an impairment loss be recognized in the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable, and the estimated future undiscounted cash flows related to the asset are less than the carrying amount of the asset. After careful assessment of various factors relevant to its computer monitor mask business, including significant declines in sales prices, the Company determined it was appropriate to write down the value of its computer monitor mask production assets in the second quarter of 1998. As a result, the Company recorded a charge of $26,700 after-tax ($42,800 pre-tax) in accordance with SFAS 121 in 1998.

             Intangible Assets – Consist primarily of goodwill and other acquisition-related intangible assets, which are stated at fair value as of the date acquired in a business acquisition accounted for as a purchase, less accumulated amortization. Amortization is computed on a straight-line basis over estimated useful lives of 7 to 30 years. Amortization expense was $3,486, $3,453 and $2,034 in 2000, 1999 and 1998, respectively. Management periodically assesses the amortization period and recoverability of the carrying amount of goodwill based upon an estimate of future cash flows from related operations.

             Income Taxes – A deferred tax liability is recognized for temporary differences between financial reporting and tax reporting that will result in taxable income in future years. A deferred tax asset is recognized for temporary differences that will result in tax deductions in future years.

             Comprehensive Income (Loss) – The Company follows SFAS No. 130 (SFAS 130), “Reporting Comprehensive Income.” Comprehensive Income (Loss) consists of net earnings, foreign currency translation adjustments and gains/losses on derivative instruments and is presented in the Consolidated Statements of Stockholders’ Equity. The accumulated loss on derivative instruments was $1,178, $31 and $0 as of December 31, 2000, 1999 and 1998, respectively. The accumulated foreign currency translation loss (gain) was $5,491, $3,464 and $(1,113) as of December 31, 2000, 1999 and 1998, respectively.

             Earnings Per Share – The basic earnings per share amounts are determined based on the weighted average common shares outstanding, while the diluted earnings per share amounts also give effect to the common shares’ dilutive potential. For the Company’s earnings per share calculations, the basic and diluted weighted average outstanding share amounts differ only due to the dilutive impact of stock options.

             Stock-Based Compensation – The Company has elected to follow Accounting Principles Board Opinion No. 25 (APB 25), “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its employee stock options and non-vested stock awards. Under APB 25, because the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recorded. For non-vested stock awards, compensation cost is recognized for the fair value of the stock awarded and is charged to expense over the respective vesting periods. The Company has adopted the disclosure-only provisions of SFAS No. 123 (SFAS 123), “Accounting for Stock-Based Compensation.”

             Estimates – The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

             Reclassification – Certain items in the 1999 and 1998 Consolidated Financial Statements have been reclassified to conform to the 2000 presentation. These reclassifications had no impact on net income or stockholders’ equity as previously reported.

2.  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 7 to 30 years.

             In addition, in accordance with generally accepted accounting principles, the independently appraised value of acquired in-process research and development (IPR&D) 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 IPR&D based on risk-adjusted cash flows related to the IPR&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.

             The consolidated statements of earnings 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 IPR&D discussed above.

	Unaudited 1998
Year Ended December 31
Revenues	$349,356
Net loss	(32,253)
Diluted loss per share	(1.19)

             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.

3.  INVENTORIES

             The following is a summary of inventories at December 31:

	2000	1999
Raw materials	$20,614	$24,167
Work in process	17,835	12,564
Finished goods	43,566	45,581
Total inventories	$82,015	$82,312

4.  INTANGIBLE ASSETS

             The following is a summary of intangible assets at December 31:

	2000	1999
Goodwill	$61,525	$61,559
Other	13,467	12,941
Total	74,992	74,500
Less accumulated amortization	(9,812)	(6,268)
Total intangible assets, net	$65,180	$68,232

5.  PROPERTY, PLANT AND EQUIPMENT

             The following is a summary of property, plant and equipment at December 31:

	2000	1999
Land and improvements	$6,333	$6,472
Buildings and improvements	92,196	97,877
Machinery and equipment	170,065	169,172
Construction in progress	7,974	5,286
Total	276,568	278,807
Less accumulated depreciation and amortization	(137,069)	(127,569)
Total property, plant and equipment, net	$139,499	$151,238

6.  DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

             Derivative financial instruments are used by the Company to reduce foreign exchange and interest rate risks.

             Effective in 1999, the Company adopted SFAS No. 133 (SFAS 133), “Accounting for Derivative Instruments and Hedging Activities,” and effective in 2000, the Company adopted SFAS No. 138 (SFAS 138), “Accounting for Certain Derivative Instruments and Certain Hedging Activities — an Amendment of FASB Statement No. 133.” In doing so, the Company did not incur any transition adjustments to earnings. All derivatives are recognized on the balance sheet at their fair value. On the date a derivative contract is entered into, the derivative is designated as a fair value hedge, cash flow hedge or a foreign-currency net investment hedge. The Company hedges some selected foreign-currency denominated forecasted transactions (cash flow hedges), in which changes in the fair value of highly effective derivatives are recorded in Accumulated Other Comprehensive Income (Loss). The Company also has multiple interest rate swap agreements (cash flow hedges), which provide for the Company to swap a variable interest rate for fixed interest rates. Accounting for the Company’s cross-currency swap agreements remains unchanged under SFAS 133 and SFAS 138 as these swaps continue to be accounted for under mark-to-market accounting.

             The Company formally documents all relations between hedging instruments and the hedged items, as well as its risk-management objectives and strategy for undertaking various hedge transactions. The Company formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of the hedged items.

FOREIGN CURRENCY FORWARD-EXCHANGE CONTRACTS

             The Company uses foreign currency forward-exchange contracts with durations of less than 12 months to hedge against the effect of exchange rate fluctuations on certain foreign currency denominated steel purchases and other expenditures, and certain U.S. dollar denominated sales in a foreign subsidiary.

             As of December 31, 2000, contracts to purchase 19,800 German marks (DM) remained outstanding and expire in 2001. The fair market value of these contracts was recorded as a liability and as part of Accumulated Other Comprehensive Income (Loss). At December 31, 2000, $255 of deferred net losses on derivative instruments were included in Accumulated Other Comprehensive Income (Loss). Assuming no change in underlying foreign exchange rates, these losses are expected to be recorded into earnings during the next 12 months.

             During 2000, the Company’s German subsidiary entered into foreign currency forward-exchange contracts to sell U.S. dollars to hedge certain U.S. dollar denominated sales. As of December 31, 2000, contracts to sell $5,850 remained outstanding and expire in 2001. The fair market value of these contracts was recorded as an asset and as part of Accumulated Other Comprehensive Income (Loss). At December 31, 2000, deferred gains on these contracts in the amount of $450 were included in Accumulated Other Comprehensive Income (Loss). Assuming no change in underlying foreign exchange rates, these gains are expected to be recorded into earnings within the next 12 months.

             Also, during 2000, the Company entered into foreign currency forward-exchange contracts to purchase a total of 22.5 billion Indonesian rupiah to hedge certain purchases in our Vision-Ease Indonesian operations. As of December 31, 2000, contracts to purchase 15 billion rupiah remained outstanding and expire in 2001. The fair market value of these contracts was recorded as a liability and as part of Accumulated Other Comprehensive Income (Loss). At December 31, 2000, $140 of deferred net losses on these contracts was included in Accumulated Other Comprehensive Income (Loss). Assuming no change in underlying foreign exchange rates, these losses are all expected to be recorded into earnings within the next 12 months.

INTEREST RATE SWAPS

             At various dates during 1998, 1999 and 2000, the Company entered into multiple interest rate swap agreements to provide for the Company to swap a variable interest rate for fixed interest rates ranging from 6.2% to 7.1%. At December 31, 2000, $75,000 of these swaps remained outstanding with the swaps expiring at various dates ranging from January 2001 to June 2003. The notional amount of interest rate swaps is not a measure of the Company’s exposure to credit or market risks and is not included in the Consolidated Balance Sheets. Fixing the interest rate minimizes the Company’s exposure to the uncertainty of floating interest rates during this 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 agreement. At December 31, 2000, deferred net losses on the interest rate swap agreements in the amount of $1,233 were included in Accumulated Other Comprehensive Income (Loss).

CROSS-CURRENCY SWAPS

             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 was subsequently closed out in May 1999. Under this swap, the Company also effectively swapped a fixed U.S. dollar-based interest rate of 5.1% for a fixed Japanese yen-based interest rate of 1.05%. This Japanese yen-based debt derivative was accounted for under mark-to-market accounting. The Company recorded as Other Income a foreign exchange gain of $453 in 1999 related to this swap.

             In August 1999, the Company entered into a cross-currency swap agreement to swap $10,000 of notional debt for the equivalent amount of Japanese yen-denominated debt. Under this swap, the Company also effectively swapped a floating U.S. dollar-based interest rate for a floating Japanese yen-based interest rate. This Japanese yen-based debt derivative was accounted for under mark-to-market accounting. This swap was subsequently closed out in May 2000. The Company recorded as Other Income foreign exchange gains of $598 in 2000 and losses of $1,173 in 1999 related to this swap.

The Company had no cross-currency swaps outstanding as of December 31, 2000.

7.  DEBT

             The following is a summary of long-term debt at December 31:

	2000	1999
U.S. revolving credit facility	$143,100	$163,500
Japanese yen-denominated cross-currency swap	—	1,173
German credit facility	521	1,496
Other	1,395	2,093
Total	145,016	168,262
Less amounts due within one year	(1,206)	(2,303)
Total long-term debt	$143,810	$165,959

             The Company has a revolving domestic credit agreement (the Agreement) with a syndicate of banks for secured borrowings totaling up to $220,000. This Agreement, which expires in 2003, is secured by a pledge of certain shares of common stock of the Company’s subsidiaries and an intercompany note from one of the Company’s European holding companies. Borrowings under the Agreement bear interest at the Eurodollar rate plus a spread ranging from 0.5% to 1.623%. The rate spread is dependent upon the Company’s ratio of debt to cash flow, as defined in the Agreement. The Company’s effective rate under the Agreement was 7.9% at December 31, 2000. In addition, the Company pays a facility fee on unborrowed funds at rates ranging from 0.225% to 0.475% (0.375% at December 31, 2000), depending on the Company’s debt to cash flow ratio. Under terms of the Agreement, the Company must meet certain financial covenants, including maintaining a specified consolidated net worth, leverage ratio (debt to cash flow), interest coverage ratio and level of capital expenditures. The Company was in compliance with all covenants under the Agreement at December 31, 2000.

             The Company’s German subsidiary maintains short-term and long-term credit facilities with available credit at December 31, 2000 of $500 and $12,700, respectively. The short-term credit lines are unsecured and bear interest at either 0.75% over the DM LIBOR rate or approximately 3.0% over the German Bundesbank Discount rate. The lender may withdraw the short-term lines at any time. There was no debt outstanding at December 31, 2000 and 1999 under the German short-term credit lines. A portion of the long-term credit line is secured by land and buildings with a net book value of $9,766 at December 31, 2000. These long-term credit lines bear interest at 0.50% to 0.75% over the DM LIBOR rate.

             On December 31, 2000 and 1999, the estimated fair value of the Company’s debt described above approximates the recorded amount.

             Annual maturities of long-term debt for the next five years are $1,206 in 2001, $195 in 2002, $143,110 in 2003, $10 in 2004, $10 in 2005 and $485 thereafter.

             There was $1,790 of outstanding letters of credit at December 31, 2000.

             Interest expense paid, net of amounts capitalized of $410, $253 and $685, was $13,035, $12,964 and $11,456 in 2000, 1999 and 1998, respectively.

8.  COMMITMENTS

             The Company leases five manufacturing facilities, nine sales, distribution or administrative facilities and the Company headquarters. In addition, the Company leases certain data processing and other equipment.

             At December 31, 2000, the approximate future minimum rental commitments required under non-cancelable operating leases are as follows:

2001	$2,699
2002	2,330
2003	1,579
2004	662
2005	261
Total minimum lease payments	$7,531

             Rent expense was $2,387, $1,591 and $1,079 in 2000, 1999 and 1998, respectively.

             At December 31, 2000, the Company had commitments of approximately $590 related to capital projects.

9.  STOCK OPTIONS/AWARDS AND STOCK REPURCHASES/OTHER

             The Restated and Amended 1994 Stock Incentive Plan (the 1994 Plan) provides for the granting of either incentive stock options or nonqualified stock options to purchase shares of the Company’s common stock and for other stock-based awards to officers, directors and key employees responsible for the direction and management of the Company and to non-employee consultants and independent contractors. During 2000, the Company’s stockholders approved an amendment to the 1994 Plan authorizing an additional 2,000 shares of common stock for issuance. At December 31, 2000, 4,758 shares of common stock were reserved for issuance under the 1994 Plan and for outstanding options under the 1984 Omnibus Stock Plan, which terminated on January 10, 1994. The reserved shares included 1,989 shares available for awards under the 1994 Plan.

             Information relating to stock options during 2000, 1999 and 1998 is as follows:

		Option Price
	Number of Shares	Per Share Average	Total Price
Shares under option at December 31, 1997	2,225	$11.36	$25,285
1998 Activity:
Granted	902	9.38	8,465
Exercised	(345)	4.70	(1,621)
Forfeited	(201)	13.78	(2,769)
Terminated	(252)	16.40	(4,134)
Shares under option at December 31, 1998	2,329	10.83	25,226
1999 Activity:
Granted	798	7.31	5,830
Exercised	(150)	6.58	(987)
Forfeited	(443)	12.09	(5,355)
Shares under option at December 31, 1999	2,534	9.75	24,714
2000 Activity:
Granted	450	5.29	2,379
Exercised	(3)	5.00	(15)
Forfeited	(212)	9.66	(2,047)
Shares under option at December 31, 2000	2,769	$9.04	$25,031
Shares exercisable at December 31, 2000	1,591	$8.49	$13,502
Shares exercisable at December 31, 1999	1,052	$8.19	$8,617
Shares exercisable at December 31, 1998	942	$7.07	$6,660

             The following table summarizes information concerning currently outstanding and exercisable options:

Range of Exercise Prices	Options Outstanding			Options Exercisable
	Number  Outstanding	Weighted  Average  Remaining  Contractual  Life (Years)	Weighted  Average  Exercise  Price	Number  Exercisable	Weighted  Average  Exercise  Price
$0 - 5	818	3.1	$3.08	639	$2.76
5 - 10	1,228	7.7	6.12	587	6.08
10 - 20	350	7.3	14.32	120	13.39
20 - 31	373	5.5	26.75	245	26.81
	2,769	6.0	$9.04	1,591	$8.49

             All outstanding options are nonqualified options. No compensation expense related to stock option grants was recorded in 2000, 1999 or 1998 as the option exercise prices were equal to fair market value on the date of grant.

             At December 31, 2000, there were 97 shares outstanding pursuant to non-vested stock awards under the 1994 Plan.

             Pro forma information regarding net income and earnings per share is required by SFAS 123 and has been determined as if the Company had accounted for its employee stock options under the fair value method of that Statement. The fair value for these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted average assumptions for 2000, 1999 and 1998:

	2000	1999	1998
Risk-free interest rate	6.02%	6.20%	5.50%
Dividend yield	1.23%	1.23%	0.96%
Volatility factor	0.76	0.80	0.55
Weighted average expected life	5 years	5 years	5 years

             The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

             For purposes of pro forma disclosures, the estimated fair value of the options using the Black-Scholes option pricing model is amortized to expense over the options’ vesting period. The Company’s pro forma net earnings and earnings per share were as follows:

	2000	1999	1998
Net earnings (loss) – as reported	$14,900	$7,824	$(30,635)
Net earnings (loss) – pro forma	13,208	6,291	(32,006)
Basic earnings (loss) per share – as reported	0.54	0.29	(1.13)
Basic earnings (loss) per share – pro forma	0.48	0.23	(1.18)
Diluted earnings (loss) per share – as reported	0.54	0.28	(1.13)
Diluted earnings (loss) per share – pro forma	0.48	0.23	(1.18)
Weighted average fair value of options granted during the year	3.22	4.60	4.52

             Because SFAS 123 provides for pro forma amounts for options granted beginning in 1995, the pro forma expense will likely increase in future years as the new option grants become subject to the pricing model.

             Stock Option Exercise Loan Program. During 2000, the Company discontinued the Stock Option Exercise Loan Program under which holders of exercisable stock options could obtain interest-free and interest-bearing loans from the Company to facilitate their exercise of stock options. Under provisions of the program, new loans cannot be made, but existing loans will continue to be administered until they are repaid. Such full recourse loans are evidenced by demand promissory notes and are secured by shares of stock. The portion of such loans directly related to the option exercise price is classified as a reduction of stockholders’ equity. The remainder is included in current assets.

             Common Stock Repurchases. In January 1998, the Company repurchased 1,000 common shares at a total cost of approximately $16,600. This share repurchase was financed using the Company’s domestic bank credit facility.

             Share Rights Plan. In June 1998, the Company adopted a Share Rights Plan and declared a dividend of one Preferred Share Purchase Right (Right) for each outstanding share of common stock to stockholders of record on July 20, 1998. The Rights will become exercisable after any person or group acquires or announces a tender or exchange offer resulting in the beneficial ownership of 15% or more of the Company’s common stock. Each Right entitles shareholders to buy one five-hundredth of a share of a newly created series of preferred stock at an exercise price of $75 subject to adjustment upon certain events. If any person or group acquires 15% or more of the Company’s common stock, if the Company is acquired in a business combination, or if the Company sells 50% or more of its assets, each Right entitles its holder, other than the person or group acquiring the common stock, to purchase at the Right’s then current exercise price, shares of the Company’s common stock having a value of twice the Right’s then current exercise price. The Rights are redeemable at $0.001 per Right and will expire on July 20, 2008 unless extended or redeemed earlier by the Company.

10.  EMPLOYEE BENEFIT PLANS

             The Company maintains a savings and profit sharing plan covering substantially all of its domestic salaried employees and a majority of those domestic hourly employees not covered by a pension plan or retirement fund described below. Under the terms of the profit sharing provision of the plan, the Company makes an annual minimum contribution equal to 3% of participants’ wages, with the potential for an additional discretionary contribution depending upon the Company’s profitability. Provisions of the profit sharing portion of the plan include 100% vesting after five years of continuous service, and payment of benefits upon retirement, total disability, death or termination. Under the terms of the savings provision of the plan, the Company makes an annual minimum contribution, which is invested in Company stock, equal to 25% of participants’ before-tax contributions up to 6% of base salary, with the potential for an additional discretionary contribution depending upon the Company’s profitability. Provisions of the savings portion of the plan include vesting of the Company’s contributions at the rate of 25% per year of continuous service, and payment of benefits upon retirement, total disability, death or termination.

             In addition, the Company’s German subsidiary has a noncontributory defined benefit pension plan covering substantially all of its employees. Benefits payable under the plan are based upon the participant’s base salary prior to retirement and years of credited service. As allowed under German law, this plan is not funded. However, under generally accepted accounting principles, the estimated future liability is accrued in the Company’s Consolidated Financial Statements.

             In addition to the defined benefit plans discussed above, the Company had two defined benefit post-retirement plans covering certain domestic employees. One plan provides medical benefits and the other provides life insurance benefits. During 2000, the Company terminated the medical benefits plan, resulting in a termination gain of $1,678, which is included in Other Income in the Consolidated Statement of Operations. The life insurance plan provides term life insurance coverage to all retired full-time hourly employees at one former domestic operation. The Company accrues the expected cost of providing benefits under the life insurance benefit plan during the years that eligible employees rendered service. The life insurance plan is not funded and the liability under the plan is immaterial.

             The above described defined benefit and post-retirement plans included the following components:

	Pension Benefits		Post-Retirement Benefits
	2000	1999	2000	1999
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$13,272	$14,321	$1,948	$1,662
Service cost	450	490	47	173
Interest cost	802	824	55	156
Foreign currency exchange rate changes	(606)	(1,511)	—	—
Plan participants’ contributions	—	—	138	92
Actuarial (gain) loss	(11)	(494)	228	112
Benefit payments	(421)	(358)	(555)	(247)
Settlement/curtailment gain	—	—	(1,861)	—
Benefit obligation at end of year	13,486	13,272	—	1,948
CHANGE IN FAIR VALUE OF PLAN ASSETS:
Fair value of plan assets at beginning of year	4,011	3,579	—	—
Actual return on plan assets	577	675	—	—
Employer contribution	—	—	417	155
Plan participants’ contributions	—	—	138	92
Benefit payments	(253)	(243)	(555)	(247)
Fair value of plan assets at end of year	4,335	4,011	—	—
FUNDED STATUS:
Funded status of the plan (underfunded)	(9,151)	(9,261)	—	(1,948)
Unrecognized transitional amount	48	64	—	—
Unrecognized net gain	(423)	(165)	—	(41)
Fourth quarter contribution	—	—	—	7
Accrued pension cost	$(9,526)	$(9,362)	$—	$(1,982)

	2000	1999	1998
COMPONENTS OF NET PERIODIC PENSION COST
Pension benefits:
Service cost	$450	$490	$497
Interest cost	802	824	832
Expected return on plan assets	(350)	(313)	(371)
Amortization of transition obligation	12	14	15
Recognized actuarial gain	(11)	—	(5)
Net periodic pension cost	$903	$1,015	$968
Post-retirement benefits:
Service cost	$47	$173	$87
Interest cost	55	156	108
Recognized actuarial (gain) loss	3	7	—
Settlement/curtailment gain	(1,678)	—	—
Net periodic pension cost	$(1,573)	$336	$195

             Assumptions used in developing the projected benefit obligation and the net periodic pension cost as of December 31 were as follows:

	2000	1999	1998
Domestic plans (including post-retirement plan):
Discount rate	7.75%	7.75%	6.75%
Rate of return on plan assets	9.00%	9.00%	9.00%
Foreign plan:
Discount rate	6.00%	6.00%	6.00%
Rate of increase in compensation	2.50%	2.50%	2.50%

             Under a contract with its union employees, one of the Company’s domestic operations makes, on behalf of each active participant, fixed weekly contributions to a retirement fund (aggregating $122, $147 and $173 in 2000, 1999 and 1998, respectively). At December 31, 2000, the market value of this fund’s assets of $17,598 was lower than benefit obligations of $17,774 by $176.

             The total cost of all profit sharing, savings and pension plans, domestic and foreign, was $4,591, $5,469 and $2,708 in 2000, 1999 and 1998, respectively.

11.  INCOME TAXES

             The provision (benefit) for income taxes was based on earnings (loss) before income taxes, as follows:

Years Ended December 31	2000	1999	1998
Domestic	$6,648	$(1,472)	$(50,756)
Foreign	14,495	14,319	2,072
Earnings (loss) before income taxes	$21,143	$12,847	$(48,684)

             The provision (benefit) for income taxes consisted of:

Years Ended December 31	2000	1999	1998
Current
Federal	$1,102	$10	$(6,223)
State	(15)	(59)	75
Foreign	6,310	6,811	150
Deferred
Federal and state	(1,292)	(610)	(12,722)
Foreign	138	(1,129)	671
Income tax expense (benefit)	$6,243	$5,023	$(18,049)

             Significant components of deferred income tax assets and liabilities were as follows at December 31:

	2000	1999
FEDERAL AND STATE NET DEFERRED INCOME TAXES
Deferred tax asset
Reserves and accruals	$3,277	$5,357
Compensation and benefit-related accruals	4,609	5,238
Other temporary differences	2,617	1,052
NOL and tax credit carryovers	14,844	12,232
Total	25,347	23,879
Deferred tax liability
Depreciation	(3,032)	(2,634)
Capitalized molds and tooling	(214)	(436)
Total	(3,246)	(3,070)
Net deferred tax asset	$22,101	$20,809
FOREIGN NET DEFERRED INCOME TAXES
Deferred tax liability
Depreciation	$(2,487)	$(3,626)
Inventory	(352)	—
Other temporary differences	(642)	(366)
Total	(3,481)	(3,992)
Deferred tax asset
Retirement benefits	751	741
Inventory	—	622
Other temporary differences	893	1,044
Total	1,644	2,407
Net deferred tax liability	$(1,837)	$(1,585)

             The federal and state net deferred tax asset included a current portion of $18,190 and $11,588 at December 31, 2000 and 1999, respectively, and a long-term portion of $3,911 and $9,221 at December 31, 2000 and 1999, respectively. The foreign net deferred tax liability included a current liability of $236 and $0 at December 31, 2000 and 1999, respectively, and a long-term liability of $1,601 and $1,585 at December 31, 2000 and 1999, respectively.

             Net operating loss carryforwards of $14,105 at December 31, 2000 expire in 2020. General business credit carryforwards of $207 expire in 2020 and 2021. Foreign tax credit carryforwards of $8,225 expire in 2003 through 2005. Alternative minimum tax credits of $881 can be carried forward indefinitely to offset regular tax liabilities.

             The differences between income taxes at the U.S. federal statutory tax rate and the effective tax rate were as follows:

Years Ended December 31	2000	1999	1998
Statutory rate	35.0%	35.0%	(35.0)%
Differences in taxation of foreign earnings	6.1	4.8	0.1
Foreign income taxed in the U.S.	(9.5)	(5.3)	(1.9)
Unfavorable settlement of tax audit	—	4.8	—
State income taxes, net of federal benefit	1.0	(0.7)	(1.4)
Other items	(3.1)	0.5	1.1
Effective tax rate	29.5%	39.1%	(37.1)%

             Differences in taxation of foreign earnings relate primarily to taxation of foreign earnings at rates in excess of the U.S. statutory rate. Undistributed earnings of foreign subsidiaries at December 31, 2000 were approximately $13,519. No U.S. taxes have been provided on these undistributed earnings, because the Company expects to be able to utilize foreign tax credits to offset any U.S. tax that would result from their distribution.

             Income taxes paid (refunded) were $7,888, $(2,489) and $(8,571) in 2000, 1999 and 1998, respectively.

12.  SEGMENT INFORMATION

             The Company has two operating segments which manufacture and sell a variety of products: Buckbee-Mears and Optical Products. Buckbee-Mears manufactures precision photo-etched and electroformed parts that require fine features and tight tolerances. Its principal product is aperture masks, a key component used in the manufacture of color television and computer monitor picture tubes. Optical Products manufactures ophthalmic lenses. Net sales of aperture masks comprised 91%, 89% and 86% of Buckbee-Mears segment revenues in 2000, 1999 and 1998, respectively, and 55%, 55% and 54% of the Company’s consolidated total revenues in 2000, 1999 and 1998, respectively.

             The following is a summary of certain financial information relating to the two segments:

Years Ended December 31	2000	1999	1998
TOTAL REVENUES BY SEGMENT
Buckbee-Mears	$214,880	$217,868	$212,083
Optical Products	139,605	135,986	123,055
Total revenues	$354,485	$353,854	$335,138
OPERATING PROFIT (LOSS) BY SEGMENT
Buckbee-Mears
Before impairment charge	$25,108	$23,863	$1,969
Impairment of long-lived assets	—	—	(42,800)
Total	25,108	23,863	(40,831)
Optical Products
Before acquired research and development charge	11,419	5,749	19,678
Acquired in-process research and development	—	—	(9,500)
Total	11,419	5,749	10,178
Total Segment Operating Profit (Loss)	36,527	29,612	(30,653)
Administrative expense	(5,389)	(4,702)	(5,179)
Interest expense, net	(12,833)	(13,099)	(13,374)
Other income	2,838	1,036	522
Earnings (loss) before income taxes	$21,143	$12,847	$(48,684)
IDENTIFIABLE ASSETS BY SEGMENT
Buckbee-Mears	$158,453	$159,431	$168,540
Optical Products	191,884	196,074	206,825
Total identifiable assets	350,337	355,505	375,365
Corporate and other assets	23,467	28,048	24,100
Total assets	$373,804	$383,553	$399,465
DEPRECIATION AND AMORTIZATION BY SEGMENT
Buckbee-Mears	$13,492	$12,883	$13,582
Optical Products	10,336	10,231	7,215
Corporate and other	162	166	217
Total depreciation and amortization	$23,990	$23,280	$21,014
CAPITAL EXPENDITURES BY SEGMENT
Buckbee-Mears	$7,703	$5,556	$9,764
Optical Products	4,182	7,469	11,526
Corporate and other	44	132	137
Total capital expenditures	$11,929	$13,157	$21,427

             The following is a summary of the Company’s operations in different geographic areas:

Years Ended December 31	2000	1999	1998
TOTAL REVENUES FROM UNAFFILIATED CUSTOMERS
United States	$232,458	$227,390	$233,142
Germany	95,796	103,788	94,181
Other	26,231	22,676	7,815
Total	$354,485	$353,854	$335,138
LONG-LIVED ASSETS
United States	$107,679	$119,190	$124,543
Germany	21,404	24,155	30,052
Other	10,416	7,893	7,999
Total	$139,499	$151,238	$162,594

             The Company evaluates segment performance based on profit or loss from operations before interest, other income/expense, taxes and charges for corporate administration. Revenues by geographic area are based upon revenues generated from each country’s operations. Net sales to unaffiliated foreign customers from domestic operations (export sales) in 2000, 1999 and 1998 were $61,686, $56,893 and $40,820, or 17%, 16% and 12%, respectively, of total revenues. Buckbee-Mears had sales to one customer of $62,895, $71,303 and $51,785; to another customer of $58,174, $45,077 and $56,983; and to a third customer of $27,178, $46,078 and $33,801 in 2000, 1999 and 1998, respectively. Optical Products did not have sales to any individual customer greater than 10% of total revenues.

13.  CONCENTRATIONS OF CREDIT RISK

             Approximately 64% of the trade accounts receivable before allowances (receivables) of Buckbee-Mears at December 31, 2000 were represented by four customers. Approximately 53% of the receivables of Optical Products at December 31, 2000 were represented by 20 customers. These 24 customers represented approximately 59% of the Company’s consolidated receivables at December 31, 2000, with one customer of Buckbee-Mears representing approximately 18% of consolidated receivables and another customer representing approximately 15% of consolidated receivables.

             Buckbee-Mears’ customer base consists of the largest television and computer monitor manufacturers in the world. Accordingly, Buckbee-Mears generally does not require collateral and its trade receivables are unsecured. Optical Products’ customer base consists of a wide range of eyewear retailers and optical laboratories. Optical Products performs detailed credit evaluations of customers and establishes credit limits as necessary. Collateral or other security for accounts receivable is obtained as considered necessary for Optical Products’ customers.

14.  LEGAL MATTERS

             The Company is a defendant in various suits, claims and investigations that arise in the normal course of business. In the opinion of the Company’s management, the ultimate disposition of these matters will not have a material adverse effect on the consolidated financial position, liquidity or results of operations of the Company.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
BMC Industries, Inc.

             We have audited the accompanying consolidated balance sheets of BMC Industries, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

             We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

             In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of BMC Industries, Inc. at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

             /s/ Ernst & Young LLP

Minneapolis, Minnesota
January 26, 2001

SELECTED QUARTERLY DATA
(Unaudited, in thousands, except per share amounts)

	First  Quarter	Second  Quarter	Third  Quarter	Fourth  Quarter	Total  Year
1999
Revenues	$84,645	$93,339	$88,321	$87,549	$353,854
Gross margin	13,567	17,473	9,250	7,972	48,262
Net earnings (loss)	3,191	5,007	(426)	52	7,824
Earnings (loss) per share
Basic	0.12	0.18	(0.02)	0.00	0.29
Diluted	0.12	0.18	(0.02)	0.00	0.28
Number of shares included in computation
Basic	27,201	27,275	27,349	27,370	27,299
Diluted	27,405	27,769	27,349	27,668	27,710
2000
Revenues	$88,751	$94,237	$90,179	$81,318	$354,485
Gross margin	12,064	15,891	12,649	13,086	53,690
Net earnings	2,301	5,475	2,737	4,387	14,900
Earnings per share
Basic	0.08	0.20	0.10	0.16	0.54
Diluted	0.08	0.20	0.10	0.16	0.54
Number of shares included in computation
Basic	27,384	27,401	27,399	27,400	27,396
Diluted	27,599	27,582	27,645	27,669	27,623

PRICE RANGE OF COMMON STOCK

             The Company’s common stock is traded on the New York Stock Exchange under the ticker symbol “BMM”. The table below sets forth the high and low reported sales prices of the Company’s stock by quarter for the years 2000 and 1999. At March 23, 2001, there were approximately 1,100 stockholders of record.

	Dividends Per Share	Price
		High	Low
1999
First Quarter	$.0150	$6 7⁄16	$4 3⁄16
Second Quarter	.0150	11 3⁄16	4 5⁄16
Third Quarter	.0150	13 1/4	10 3⁄8
Fourth Quarter	.0150	12 11⁄16	4 1/2
2000
First Quarter	$.0150	$6 3⁄16	$4 9⁄16
Second Quarter	.0150	6	3 11⁄16
Third Quarter	.0150	6 7⁄8	4 3⁄16
Fourth Quarter	.0150	7	4 5⁄8

SHAREHOLDER INFORMATION

NYSE LISTING
The common shares of BMC Industries, Inc. are traded on the New York Stock Exchange under the symbol BMM.

ANNUAL MEETING
The annual meeting of stockholders will be held at 10:00 a.m. on Thursday, May 17, 2001, at the Holiday Inn Select International Hotel, Three Appletree Square (34th Avenue South & Interstate 494), Bloomington, Minnesota. Meeting notices and proxy materials were mailed to all stockholders of record as of March 23, 2001.

STOCKHOLDERS’ REQUESTS FOR INFORMATION
Requests to transfer the Company’s shares should be addressed to the Company’s transfer agent and registrar:
Wells Fargo Bank Minnesota, N.A.
Shareowner Services
P.O. Box 738
161 N. Concord Exchange
South St. Paul, MN 55075-0738
Telephone (800) 468-9716
Fax (651) 450-4078

For other information regarding your stock holdings and a copy of the annual report to the Securities and Exchange Commission on Form 10-K, please write to:

BMC Industries, Inc.
Investor Relations Department
One Meridian Crossings
Suite 850
Minneapolis, MN 55423

In addition, these and similar reports can be accessed through our Web site at www.bmcind.com.

AUDITORS
Ernst & Young LLP
Minneapolis, Minnesota

CORPORATE HEADQUARTERS
BMC Industries, Inc.
One Meridian Crossings
Suite 850
Minneapolis, MN 55423
Telephone (952) 851-6000
Fax (952) 851-6050

CORPORATE INFORMATION

BOARD OF DIRECTORS

Paul B. Burke
Chairman of the Board and Chief Executive Officer of BMC Industries, Inc.

John W. Castro ^1,2
President and Chief Executive Officer of Merrill Corporation

Joe E. Davis ^1,3
Former President and Chief Executive Officer of National Health Enterprises, Inc.

H. Ted Davis ^2,4
Dean, Institute of Technology, University of Minnesota

Harry A. Hammerly ^1,4
Former Executive Vice President and Director of 3M Company

James M. Ramich ^2,3
Former Executive Vice President, Corning Communications of Corning Incorporated

¹ Audit Committee
² Compensation Committee
³ Finance Committee
⁴ Corporate Governance Committee

CORPORATE OFFICERS

Paul B. Burke
Chairman of the Board and Chief Executive Officer

Benoit Y. Pouliquen
President and Chief Operating Officer

Kathleen P. Pepski
Senior Vice President and Chief Financial Officer

Jon A. Dobson
Vice President, Human Resources, General Counsel and Secretary

Bradley D. Carlson
Treasurer

Kevin E. Roe
Acting Corporate Controller

BUCKBEE-MEARS

MASK OPERATIONS

5791 Route 80
Tully, New York 13159

Gerald C. Gugger, Vice President, Finance and Administration

Gary W. Nelson, Senior Vice President, Sales and Marketing, Buckbee-Mears Group

Joseph P. Springer, Vice President, Worldwide Sales and Marketing, Mask Operations

BUCKBEE-MEARS CORTLAND
P.O. Box 189, 30 Kellogg Road
Cortland, New York 13045

James D. Brewer, Vice President, Cortland Operations

BUCKBEE-MEARS EUROPE GMBH
Renkenrunsstrasse 24-26
D-79379 Müllheim, Germany

Michael Sillmann, Managing Director and Vice President, BME Operations

BUCKBEE-MEARS HUNGARY KFT.
2800 Tatabánya
Tavaszmezo u. 6., Hungary

MICRO-TECHNOLOGY OPERATIONS

BUCKBEE-MEARS ST. PAUL
278 East Seventh Street
St. Paul, Minnesota 55101

Dr. Derek B. Harris, Vice President, Technology and St. Paul Operations

OPTICAL PRODUCTS

VISION-EASE LENS, INC.
7100 Northland Circle, Suite 312
Brooklyn Park, Minnesota 55428

Mark W. Becker, Vice President, Professional Services

Richard D. Mark, Vice President, North American Retail Sales

Richard J. Montag, Vice President, Americas Sales and Glass and Plastic Business

VISION-EASE LENS - RAMSEY
7000 Sunwood Drive
Ramsey, Minnesota 55303

Joseph B. Gudenburr, Vice President, Polycarbonate and Research & Development Operations

Eric N. Hockert, Vice President, Research and Development

Ronald R. Zimmer, Vice President, Distribution

VISION-EASE LENS – ST. CLOUD
700 North 54th Avenue
St. Cloud, Minnesota 56301

VISION-EASE LENS AZUSA, INC.16016 Montoya Street
Azusa, California 91702

Daniel A. Klamut, Vice President, SunSport™

P.T. VISION-EASE ASIA
Jln. Meranti 3 Blok L No. 8
Delta Silicon Industrial Park
Lippo Cikarang Bekasi 17550, Indonesia

Milind A. Gadre, Vice President and Managing Director, Asian Business and Operations

VISION-EASE EUROPE LIMITED48 Tailor’s Court
Temple Farm Industrial Estate
South End-on-Sea, Essex SS2 5SX
United Kingdom

VISION-EASE DEUTSCHLAND GMBHRenkenrunsstrasse 24-26
D-79379 Müllheim, Germany

Guntram Mehl, Vice President, Vision-Ease Europe

VISION-EASE FRANCE SASZone Industrielle – Route de Chartres
28160 Brou, France

EX-21.1

Exhibit 21.1

SUBSIDIARIES
 OF
BMC INDUSTRIES, INC.

1.       Buckbee-Mears Europe GmbH

2.       BMC Industries Foreign Sales Corporation

3.       Buckbee-Mears Hungary Kft.

4.       Vision-Ease Lens, Inc.

5.       Vision-Ease Lens Azusa, Inc.

6.       Vision-Ease Europe Limited

7.       Vision-Ease Canada, Ltd.

8.       P. T. Vision-Ease Asia, joint venture with P.T. Astron Lensindo Nusa

9.       Buckbee-Mears Holding Company B.V.

10.     Buckbee-Mears European Holding Company B.V.

11.     Buckbee-Mears Deutschland Holding GmbH

12.     Vision-Ease France SAS

13.     Vision-Ease Deutschland GmbH

EX-23.1

Exhibit 23.1

Consent of Independent Auditors

We consent to the incorporation by reference in this Annual Report (Form 10-K) of BMC Industries, Inc. of our report dated January 26, 2001, included in the 2000 Annual Report to Stockholders of BMC Industries, Inc.

Our audits also included the financial statement schedule of BMC Industries, Inc. listed in Item 14(a).  This schedule is the responsibility of the Company’s management.  Our responsibility is to express an opinion based on our audits.  In our opinion, the financial statement schedule referred to above, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also consent to the incorporation by reference in the Registration Statements (Form S-8, No. 33-2613, No. 33-32389 and No. 33-60937) pertaining to the BMC Industries, Inc. 1984 Omnibus Stock Program, in the Registration Statement (Form S-8 No. 33-55089) pertaining to the BMC Industries, Inc. 1994 Stock Incentive Plan and in the Registration Statements (Form S-8, No. 33-38684) pertaining to the BMC Industries, Inc. Restated and Amended 1994 Stock Incentive Plan of our report dated January 26, 2001 with respect to the consolidated financial statements of BMC Industries, Inc. incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedule included in this Annual Report (Form 10-K) of BMC Industries, Inc.

/s/  Ernst & Young LLP

Minneapolis, Minnesota
March 27, 2001

EX-99.1

Exhibit 99.1

BMC
	BMC Industries, Inc.
	One Meridian Crossings, Suite 850
	Minneapolis, MN 55423
	Website:  www.bmcind.com
NEWS RELEASE

CONTACT:	INVESTOR RELATIONS	(NYSE:  BMC)
	(952) 851-6000	FOR IMMEDIATE RELEASE

BMC Industries, Inc. Releases Expectations For 2000

December 13, 2000 – Minneapolis, Minnesota, USA –  BMC Industries, Inc. commented today that, as a result of the well-publicized reduction in demand for personal computers and slower growth in television sales, total revenues in the Buckbee-Mears operating group for 2000 are expected to be flat with revenues in 1999.  Due to softness in the optical retail market, Vision-Ease total revenues for 2000 are expected to be flat as compared to revenues in 1999, although sales of premium products, including polycarbonate, are still expected to show significant growth.  In addition, revenues for the year continue to be negatively impacted by foreign currency translation.

Due to all of these factors, BMC expects to report consolidated revenues of approximately $80-85 million for the fourth quarter, slightly below the same period for the previous year.  Notwithstanding these revenue expectations, BMC expects to report diluted earnings per share in the range of $0.13 to $0.16 for the quarter and $0.51 to $0.54 for the fiscal year ending December 31, 2000.  This earnings forecast is somewhat below the $0.52 to $0.54 currently projected by investment analysts for the fiscal year 2000.

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, which could cause actual results to differ materially from those projected.  These and other risks and uncertainties are detailed in the company’s Form 10-Q for the quarter ended September 30, 2000, the company’s Form 10-K for the year ended December 31, 1999 and in other company documents filed with the Securities and Exchange Commission.

BMC Industries, Inc., through its Vision-Ease Lens subsidiary, is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic eyewear lenses.  BMC also, through its Buckbee-Mears division, manufactures precision imaged products such as aperture masks and a variety of photo-etched metal and electroformed parts.  BMC is the only North American manufacturer of aperture masks, which are key components used in color television and computer monitor picture tubes.  BMC’s common stock is traded on the New York Stock Exchange under the symbol “BMC”.  For more information about BMC Industries, Inc., visit the Company’s web site: http://www.bmcind.com

EX-99.2

Exhibit 99.2

BMC
	BMC Industries, Inc.
	One Meridian Crossings, Suite 850
	Minneapolis, MN 55423
	Website:  www.bmcind.com
NEWS RELEASE

CONTACT:	JOSH DEBELAK	(NYSE:  BMC)
	(952) 851-6017	FOR IMMEDIATE RELEASE

BMC Industries To Report Fourth Quarter Results and
Host Conference Call on Thursday, February 1, 2001

January 23, 2001 — BMC Industries, Inc. is scheduled to release its earnings results for the year and quarter ended December 31, 2000 on Thursday, February 1, 2001.

The Company will host a conference call to discuss the earnings results later that morning at 10:00 a.m. Central Time (11:00 a.m. Eastern Time).  The conference call is available to interested parties by dialing 800-288-8968 (U.S.) or 612-332-0530 (International).  A replay of the call will be available beginning at 12:30 p.m. Central Time on February 1, 2001 by dialing 800-475-6701 (U.S.) or 320-365-3844 (International) and using Access Code:  563344.  The conference call will be available for replay until February 5, 2001 at 11:59 p.m. (Central Time).

The conference call will also be offered live, through a simulcast offered by CCBN.com and StreetEvents.com.  To access this Webcast, go to the “Investor Relations” portion of the Company’s Web site, www.bmcind.com, and click on the CCBN.com icon.

BMC Industries, Inc., through its Vision-Ease Lens subsidiary, is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic eyewear lenses.  BMC also, through its Buckbee-Mears division, manufactures precision imaged products such as aperture masks and a variety of photo-etched metal and electroformed parts.  BMC is the only North American manufacturer of aperture masks, which are key components used in color television and computer monitor picture tubes.  BMC’s common stock is traded on the New York Stock Exchange under the symbol “BMC”.  For more information about BMC Industries, Inc., visit the Company’s web site at www.bmcind.com.

EX-99.3

Exhibit 99.3

BMC
	BMC Industries, Inc.
	One Meridian Crossings, Suite 850
	Minneapolis, MN 55423
	Website:  www.bmcind.com
NEWS RELEASE

CONTACT:	KATHLEEN P. PEPSKI	(NYSE:  BMC)
	(952) 851-6030	FOR IMMEDIATE RELEASE

BMC Industries’ Fourth Quarter and Full Year 2000 Earnings Rise;
Fiscal 2000 EPS $0.54

February 1, 2001 – Minneapolis, Minnesota, USA - BMC Industries, Inc. reported consolidated net earnings for the fourth quarter ended December 31, 2000 of $4.4 million, or $0.16 per diluted share.  This compares to breakeven performance of $0.1 million, or $0.00 per diluted share, in the fourth quarter of 1999.  Consistent with the Company’s news release on December 13, 2000, fourth quarter 2000 consolidated revenues were $81.3 million, a decrease of 7% from the $87.5 million posted in fourth quarter 1999.  Excluding the impact from foreign currency exchange rate changes during fourth quarter 2000, consolidated revenues would have decreased 3% from the prior year quarter.

For the fiscal year ended December 31, 2000, total revenues were $354.5 million, a slight increase over revenues of $353.9 million in 1999.  Excluding the impact from foreign currency exchange rate changes during the year, total revenues would have increased 3% over total revenues in 1999.  Net earnings for fiscal year 2000 were $14.9 million, or $0.54 per diluted share, versus $7.8 million, or $0.28 per diluted share, in fiscal year 1999.

“Buckbee-Mears’ strong earnings performance in the fourth quarter caps off a very good year 2000 for our Mask Operations,” said BMC Chairman and Chief Executive Officer Paul B. Burke.  “The group’s fourth quarter operating earnings of $7.7 million and operating margin of 14.6% were the highest quarterly figures in over three years and were achieved despite challenging markets for personal computer and television sales and ongoing investments being made to strategically reposition our Non-Mask business.”

Mr. Burke continued, “Despite the softness we experienced in the optical retail market late in the year, Vision-Ease posted continued strong revenue growth in fourth quarter 2000 with respect to the Company’s high-end, value-added product lines as compared to 1999.  Sales of Vision-Ease’s Tegraâ coated polycarbonate and Outlookä polycarbonate progressive lenses increased substantially, as did sales of the Company’s SunSportä non-ophthalmic and SunRxâ polarized polycarbonate lenses.”

Buckbee-Mears Group

Fourth quarter revenues for the Buckbee-Mears group, which includes both Mask Operations and Non-Mask Operations were $52.7 million in 2000, a decrease of $5.6 million, or 10%, from the $58.3 million of revenues reported in 1999.  Buckbee-Mears sales continued to be negatively impacted by foreign currency translation during the quarter.  Excluding the impact of foreign currency translation, fourth quarter 2000 revenues for the group would have decreased 4% from the prior year quarter.

For the full year, Buckbee-Mears group sales decreased 1% to $214.9 million in 2000 as compared to $217.9 million in 1999.  Excluding the impact of foreign currency translation, group revenues would have increased 3% year over year.  Operating earnings for 2000 were $25.1 million, an increase of $1.2 million, or 5%, as compared to $23.9 million in 1999.

Sales of entertainment masks were relatively flat in fourth quarter 2000 as compared to the prior year quarter with some weakness experienced at year-end in the NAFTA region.  However, we continue to experience a favorable shift in product mix fueled by increased demand, particularly in Europe, for flat and widescreen (16:9 format) televisions.  Sales of computer monitor masks decreased 16% in fourth quarter 2000 when compared to fourth quarter 1999 as a result of the global softening in demand for personal computers and year-over-year price reductions.  Sales of monitor masks were also negatively impacted versus fourth quarter 1999 by the Company’s decision to utilize monitor mask production capacity for HDTV and other higher-margin entertainment products, thus displacing lower-margin monitor volumes.

Buckbee-Mears’ fourth quarter 2000 operating earnings of $7.7 million represent an increase of $0.4 million from the $7.3 million earned in fourth quarter 1999.  Operating earnings in fourth quarter 2000 were driven by a favorable shift in product mix related to both television masks, as discussed earlier, and larger-size computer monitors.  In addition, margins were helped by product cost reductions derived from yield improvements and automated inspection equipment installed in 2000. The group was also aided by the restarting of the idled entertainment manufacturing line in Cortland, New York, dedicated primarily to the production of medium-sized, commodity entertainment masks, which provided additional absorption of the group’s overall fixed overhead expenses.  Partially offsetting this strong operating performance were higher selling costs primarily due to increased freight expenses.

In fourth quarter 2000, our Non-Mask Operations continued to experience negative sales and earnings comparisons to fourth quarter 1999.  Despite lower revenues, the group continued to invest in the engineering, and sales and marketing infrastructure that we believe will drive substantial growth in new products and new market segments.

Optical Products Group

BMC’s Optical Products group reported revenues of $28.7 million in the fourth quarter of 2000, down 2%, or $0.5 million, from the prior year quarter.  Vision-Ease sales were negatively impacted primarily by overall softness in the optical retail market, as well as by constrained capacity limiting our ability to meet demand in several premium product categories.  Sales of the group’s high-end, value-added products (including polycarbonate, progressive and polarizing sun lenses) during fourth quarter 2000 increased 14% from fourth quarter 1999 and accounted for 62% of total fourth quarter 2000 revenues, as compared to 54% of total fourth quarter revenues in 1999.  Partially offsetting this strong high-end product performance were glass and plastic lens sales, which were down 25% and 16%, respectively, in fourth quarter 2000 as compared to the prior year quarter, due principally to soft market conditions, overall market dynamics in these product categories and continuing plastic lens supply issues.

High-end sales growth was due primarily to strong sales of Tegraâ coated polycarbonate lenses and Outlookä progressive polycarbonate lenses.  Together, fourth quarter 2000 sales of these products were up 53% over the same period last year.  Polarized polycarbonate sun lenses also continued their strong revenue momentum.  Vision-Ease’s prescription SunRxâ lens business grew a dramatic 139% in fourth quarter 2000 over the same period in 1999.  In addition, Vision-Ease’s non-ophthalmic SunSportä lens business delivered sales growth of 37% in fourth quarter 2000 over the same period a year ago.

Optical Product’s fourth quarter earnings were $1.0 million in 2000, compared to a loss of $3.8 million in 1999.  Fourth quarter 2000 operating margin was 3.4%, which was a significant improvement from the negative 13.0% margin posted in fourth quarter 1999.  Last year’s results were negatively impacted by poor product cost performance.  The group’s fourth quarter 2000 operating earnings were significantly below third quarter 2000, primarily as a result of a decline in quarter to quarter sales driven by the weakness in the retail market noted, normal year-end seasonality and investments made in our European laboratory and sales infrastructure.

For the full year, Vision-Ease sales grew from $136.0 million in 1999 to $139.6 million in 2000, a 3% increase.  High-end, value-added sales in 2000 increased 20% as compared to 1999, with much of the growth offset by the contraction of glass and plastic sales.  For the full year, sales of Tegraâ coated polycarbonate lenses and Outlookä progressive polycarbonate lenses in 2000 grew 176% over 1999.  SunRxâ and SunSportä revenues in 2000 increased 66% and 64%, respectively, over sales in 1999 and carry strong market momentum into 2001. Operating earnings for the year increased substantially to $11.4 million in 2000 from $5.7 million in 1999.

Other Items

During the fourth quarter of 2000, the Company recorded in other income a gain in connection with the termination of its post-retirement medical benefits.  The Company’s effective tax rate for the year 2000 was 30%, down significantly from the 39% recorded in 1999 due to the Company’s year-end domestic/foreign earnings mix, ongoing tax initiatives and a nonrecurring tax charge in 1999.

Total debt at December 31, 2000 was $145.0 million compared to $168.3 million at December 31, 1999, or a decrease of $23.3 million.  Capital expenditures during the fourth quarter of 2000 were $4.0 million versus $4.1 million in the same quarter last year, bringing total capital expenditures, excluding acquisitions, for the year to $11.9 million, down slightly from the $13.2 million spent in 1999.

Business Outlook

The following statements are based on current expectations.  These statements are forward-looking, and actual results may differ materially from those projected in this news release.  We caution the reader not to place undue reliance on these statements and encourage the reader to read the Business Outlook section in conjunction with the “Safe Harbor for Forward-Looking Statements” that follows the Full Year 2001 section.

First Quarter 2001

The Buckbee-Mears group is cautious in forecasting the market environment for televisions, particularly in NAFTA, and personal computers given the well-publicized slowdown in demand.  As a consequence, revenues for this group are projected to be relatively flat and earnings down somewhat in the first quarter of 2001 as compared to first quarter 2000 as mask customers react to ongoing reduced demand and adjust their inventory positions accordingly.  In addition, during January we shut down two entertainment lines in our Cortland, N.Y. plant to complete the installation of automated inspection equipment.

The Optical Products group projects first quarter 2001 premium product growth to continue in excess of 10% and total revenues to increase slightly over the first quarter of 2000.  Profitability should improve in first quarter 2001 from the same period in 2000.  However, one-time costs will be incurred in the quarter as this group closes several distribution centers and completes the transfer of U.S. glass manufacturing to its Jakarta, Indonesia facility.

Full Year 2001

The Company is expecting the demand for its products in both operating groups to rebound in early to mid-2001 and is currently projecting overall revenue growth for the year to be in the mid to high single digits.  We expect consolidated earnings for 2001 to grow 12% to 15% over net income reported for 2000.

We anticipate that Buckbee-Mears group earnings growth for 2001 will be driven by an increase in Non-Mask profitability; continued favorable trends for digital and widescreen television, particularly in Europe; and continued migration to larger-size, higher-margin computer monitors.

Vision-Ease is forecasted to continue to experience strong growth in premium products as polycarbonate lenses continue to gain market share domestically and abroad.  Major initiatives, including expanding our facility in Jakarta, Indonesia; polycarbonate cost reductions; and consolidation of several product distribution centers, will continue and are expected to enhance the 2001 earnings performance for this group.

Safe Harbor for Forward-Looking Statements

This news release contains various “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 news release that are not statements of historical facts, including statements regarding future performance, are Forward-Looking Statements.  Forward-Looking Statements may be identified by the use of words such as “anticipates”, “estimates”, “expects”, “projects”, “intends”, “plans”, “predicts”, and similar expressions.  Forward-Looking Statements are subject to a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those projected, including, among others, rebound in demand for televisions, computer monitors and ophthalmic lenses; further mask and ophthalmic lens price declines, particularly for computer monitor masks, and imbalances of supply and demand; slowdown in growth of high-end products; rising raw material and chemical costs; ability to improve operating and manufacturing efficiencies including efficient installation of automated inspection equipment on the remaining entertainment lines at the Cortland, N.Y. facility; ability to meet customer new product qualifications; consumer demand for direct-view high-definition television and digital receivers; competition with alternative technologies and products, including laser surgery for the correction of visual impairment and liquid crystal, plasma, projection and other types of visual displays; ability to implement the Optical Products group’s initiatives in strategic polycarbonate marketing and manufacturing sourcing; ability to gain market share of polycarbonate products both domestically and abroad, including growth in European sales through the operation of processing laboratories; new product development, introduction and acceptance; cost reduction and reorganization efforts; continued slowdown for Non-Mask Operations; ability to diversify Non-Mask customer and product base and partner with new and existing Buckbee-Mears customers or transition development relationships into full-scale production; the effect of regional or global economic slowdowns; adjustments to inventory valuations; liability and other claims asserted against BMC; negative foreign currency fluctuations; and ability to recruit and retain key personnel.  Certain of these and other risks and uncertainties are discussed in further detail in BMC’s Annual Report and Form 10-K for the year ended December 31, 1999 and other documents filed with the Securities and Exchange Commission.

BMC Industries, Inc., through its Vision-Ease Lens subsidiary, is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic eyewear lenses.  BMC, through its Buckbee-Mears division, also manufactures precision imaged products such as aperture masks and a variety of photo-etched metal and electroformed parts.  BMC is the only North American manufacturer of aperture masks, which are key components used in color television and computer monitor picture tubes.  BMC’s common stock is traded on the New York Stock Exchange under the symbol “BMC”.  For more information about BMC Industries, Inc., visit the Company’s web site:  www.bmcind.com.

Investor Conference Call Information:
Thursday, February 1, 2001
10:00 a.m. Central Time (11:00 a.m. Eastern Time)
Call-in Number: 800-288-8968 (U.S.) or 612-332-0530 (International)
Replay Number: 800-475-6701 (U.S.) or 320-365-3844 (International)
Replay Access Code:  563344
The rebroadcast of the conference call will be available starting at 12:30 p.m. Central Time, February 1, 2001 through 11:59 p.m. Central Time, February 5, 2001.

The conference call will also be offered live, through a simulcast offered by CCBN.com and StreetEvents.com.  To access this Webcast, go to the “Investor Relations” portion of the Company’s Web site, www.bmcind.com and click on the CCBN.com icon.

BMC INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(in thousands, except per share amounts)

	Three Months Ended December 31		Year Ended December 31
	2000	1999	2000	1999
Revenues	$81,318	$87,549	$354,485	$353,854
Cost of products sold	68,232	79,577	300,795	305,592
Gross margin	13,086	7,972	53,690	48,262
Selling	4,418	4,498	17,163	18,650
Administration	1,331	990	5,389	4,702
Income from Operations	7,337	2,484	31,138	24,910
Other Income and (Expense)
Interest expense	(3,174)	(3,238)	(13,115)	(13,376)
Interest income	84	122	282	277
Other income	1,567	1,466	2,838	1,036
Earnings before Income Taxes	5,814	834	21,143	12,847
Income Tax Expense	1,427	782	6,243	5,023
Net Earnings	$4,387	$52	$14,900	$7,824
Net Earnings Per Share:
Basic	$0.16	$0.00	$0.54	$0.29
Diluted	0.16	0.00	0.54	0.28
Number of Shares Included in Per Share Computation:
Basic	27,400	27,370	27,396	27,299
Diluted	27,669	27,668	27,623	27,710

BMC INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)

	December 31	December 31
	2000	1999
ASSETS
Current Assets
Cash and cash equivalents	$2,290	$1,146
Trade accounts receivable, net	45,645	42,025
Inventories	82,015	82,312
Deferred income taxes	17,954	11,588
Other current assets	11,455	12,580
Total Current Assets	159,359	149,651
Property, plant and equipment	276,568	278,807
Less accumulated depreciation	137,069	127,569
Property, plant and equipment, net	139,499	151,238
Deferred income taxes	4,389	9,761
Intangibles assets, net	65,180	68,232
Other assets	5,377	4,671
Total Assets	$373,804	$383,553
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Short-term borrowings	$1,206	$2,303
Accounts payable	33,939	30,342
Income taxes payable	6,374	8,093
Accrued expenses and other current liabilities	22,518	20,080
Total Current Liabilities	64,037	60,818
Long-term debt	143,810	165,959
Other liabilities	17,080	18,229
Deferred income taxes	2,079	2,125
Stockholders’ Equity
Common stock	49,240	49,077
Retained earnings	105,876	92,620
Accumulated other comprehensive income (loss)	(6,669)	(3,495)
Other	(1,649)	(1,780)
Total Stockholders’ Equity	146,798	136,422
Total Liabilities and Stockholders’ Equity	$373,804	$383,553

BMC INDUSTRIES, INC.

SEGMENT INFORMATION
(Unaudited)
 (in thousands)

	Three Months Ended December 31
	Buckbee-Mears		Optical Products		Consolidated
	2000	1999	2000	1999	2000	1999
Revenues	$52,653	$58,337	$28,665	$29,212	$81,318	$87,549
Cost of products sold	43,233	49,892	24,999	29,685	68,232	79,577
Gross margin	9,420	8,445	3,666	(473)	13,086	7,972
Gross margin %	17.9%	14.5%	12.8%	(1.6)%	16.1%	9.1%
Selling	1,733	1,176	2,685	3,322	4,418	4,498
Unallocated corporate administration	-	-	-	-	1,331	990
Income (Loss) from Operations	$7,687	$7,269	$981	$(3,795)	$7,337	$2,484
Operating income %	14.6%	12.5%	3.4%	(13.0)%	9.0%	2.8%
Capital spending					$4,009	$4,099
Depreciation and amortization					$5,716	$6,334
EBITDA					$14,620	$10,284
EBITDA %					18.0%	11.7%

EX-99.4

Exhibit 99.4

BMC
	BMC Industries, Inc.
	One Meridian Crossings, Suite 850
	Minneapolis, MN 55423
	Website:  www.bmcind.com
NEWS RELEASE

CONTACT:	INVESTOR RELATIONS	(NYSE:  BMC)
	(952) 851-6000	FOR IMMEDIATE RELEASE

BMC INDUSTRIES ANNOUNCES QUARTERLY DIVIDEND

February 15, 2001 – Minneapolis, Minnesota, USA – On February 14, 2001, BMC Industries, Inc.’s Board of Directors approved a continuation of its quarterly cash dividend of $.015 per share.

Shareholders of record as of March 21, 2001 will receive a dividend of $.015 for each share owned on that date, to be paid on April 4, 2001.

BMC Industries, Inc., through its Vision-Ease subsidiary, is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic eyewear lenses.  BMC, through its Buckbee-Mears division, also manufactures precision imaged products such as aperture masks and photo-etched metal and electroformed parts.  BMC is the only North American manufacturer of aperture masks, which are used in color television and computer monitor picture tubes.  BMC’s common stock is traded on the New York Stock Exchange under the symbol “BMC”.  For more information about BMC Industries, Inc., visit the Company’s website:  www.bmcind.com.

EX-99.5

Exhibit 99.5

BMC
	BMC Industries, Inc.
	One Meridian Crossings, Suite 850
	Minneapolis, MN 55423
	Website:  www.bmcind.com
NEWS RELEASE

CONTACT:	JOSH DEBELAK	(NYSE:  BMC)
	(952) 851-6017	FOR IMMEDIATE RELEASE

BMC Industries Announces Change in NYSE Ticker Symbol
Effective March 5, 2001

February 22, 2001 — BMC Industries, Inc. today announced that it will change its three-letter ticker symbol under which its common stock trades on the New York Stock Exchange (NYSE) from “BMC” to “BMM” effective Monday, March 5, 2001.

BMC Industries is not making any change to its name.  The change of its NYSE ticker symbol is being made in anticipation of the transfer of BMC Software, Inc. from the NASDAQ National Market System to the New York Stock Exchange on March 13, 2001, at which time their common stock will begin trading under the symbol “BMC”.  To avoid confusion surrounding the two unaffiliated companies, BMC Industries will begin trading under the “BMM” ticker symbol prior to the date of BMC Software’s listing on the NYSE.

BMC Industries, Inc. was founded in 1907 and began listing its common stock on the New York Stock Exchange in 1983.  The Company presently is comprised of two business segments: Buckbee-Mears and Optical Products.

The Buckbee-Mears Group is composed of both Mask and Non-Mask Operations.  Mask Operations is the only independent North American manufacturer of aperture masks.  Aperture masks are a key component in color television and computer monitor picture tubes and consist of thousands of precise, conically shaped holes designed to focus an electron beam on the proper phosphor color stripe to produce a crisp image.  Non-Mask Operations is a leading producer of a variety of precision photo-etched and electroformed parts that require tight tolerances and miniaturization.

The Optical Products Group, operating as Vision-Ease Lens, Inc., is a leading designer, manufacturer and distributor of polycarbonate, glass and hard-resin plastic ophthalmic lenses.  Vision-Ease is the technology and market share leader in the polycarbonate lens segment.  Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent UV filtering and impact resistant characteristics.

For more information about BMC Industries, Inc., visit the Company’s web site at www.bmcind.com.