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0001104659-01-501730.txt : 20010815 0001104659-01-501730.hdr.sgml : 20010815 ACCESSION NUMBER: 0001104659-01-501730 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BMC INDUSTRIES INC/MN/ CENTRAL INDEX KEY: 0000215310 STANDARD INDUSTRIAL CLASSIFICATION: COATING, ENGRAVING & ALLIED SERVICES [3470] IRS NUMBER: 410169210 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08467 FILM NUMBER: 1708467 BUSINESS ADDRESS: STREET 1: ONE MERIDIAN CROSSING STREET 2: SUITE 850 CITY: MINNEAPOLIS STATE: MN ZIP: 55423 BUSINESS PHONE: 6128516000 MAIL ADDRESS: STREET 1: ONE MERIDIAN CROSSING STREET 2: SUITE 850 CITY: MINNEAPOLIS STATE: MN ZIP: 55423 FORMER COMPANY: FORMER CONFORMED NAME: BUCKBEE MEARS CO/MN DATE OF NAME CHANGE: 19830517 10-Q 1 j1374_10q.htm 10-Q Prepared by MerrillDirect

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

	For the Quarterly Period ended June 30, 2001.


o	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 of Incorporation)	(IRS Employer Identification No.)

One Meridian Crossings, Suite 850, Minneapolis, Minnesota	55423

(Address of Principal Executive Offices)	(Zip Code)

(952) 851-6000

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.

ý Yes

o No

BMC Industries, Inc. has outstanding 27,002,429 shares of common stock as of August 10, 2001. There is no other class of stock outstanding.

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements

BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

			(Unaudited)
			June 30			December 31
ASSETS			2001			2000

Current assets
	Cash and cash equivalents		$	1,214		$	2,290
	Trade accounts receivable, net		46,734			45,645
	Inventories		87,981			82,015
	Deferred income taxes		14,019			17,954
	Other current assets		8,474			11,455

		Total current assets	158,422			159,359


Property, plant and equipment			278,444			276,568
Less accumulated depreciation			142,430			137,069

	Property, plant and equipment, net		136,014			139,499

Deferred income taxes			436			4,389
Intangible assets, net			63,518			65,180
Other assets			9,172			5,377

Total assets			$	367,562		$	373,804

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
	Short-term borrowings		$	1,010		$	1,206
	Accounts payable		33,520			33,939
	Income taxes payable		5,075			6,374
	Deferred income taxes		613			-
	Accrued expenses and other current liabilities		23,298			22,518

		Total current liabilities	63,516			64,037

Long-term debt			145,472			143,810
Other liabilities			16,814			17,080
Deferred income taxes			5,305			2,079

Stockholders’ equity
	Common stock		49,306			49,240
	Retained earnings		99,648			105,876
	Accumulated other comprehensive income (loss)		(10,977		)	(6,669		)
	Other		(1,522		)	(1,649		)

		Total stockholders’ equity	136,455			146,798

Total liabilities and stockholders’ equity			$	367,562		$	373,804

See accompanying Notes to Condensed Consolidated Financial Statements.

BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)

			Three Months Ended						Six Months Ended
			June 30						June 30

			2001			2000			2001			2000

Revenues			$	78,720		$	94,237		$	164,480		$	182,988
Cost of products sold			66,763			78,346			141,067			155,033

Gross margin			11,957			15,891			23,413			27,955
Selling expense			4,505			4,110			9,367			8,389
Administration expense			1,418			1,507			2,756			2,797

Income from operations			6,034			10,274			11,290			16,769

Other income and (expense)
	Interest expense		(2,749		)	(3,368		)	(5,790		)	(6,583		)
	Interest income		269			64			325			86
	Other income		251			1,027			1,034			1,027

Earnings before income taxes			3,805			7,997			6,859			11,299
Income taxes			11,256			2,522			12,264			3,523

Net (loss) earnings			$	(7,451	)	$	5,475		$	(5,405	)	$	7,776

Net (loss) earnings per share:
		Basic	$	(0.27	)	$	0.20		$	(0.20	)	$	0.28
		Diluted	(0.27		)	0.20			(0.20		)	0.28

Number of shares included in per share computation:
		Basic	27,393			27,401			27,395			27,392
		Diluted	27,393			27,582			27,395			27,590

Dividends declared per share			$	0.015		$	0.015		$	0.03		$	0.03

See accompanying Notes to Condensed Consolidated Financial Statements.

BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)

			Six Months Ended
			June 30

			2001			2000

Net Cash Provided by Operating Activities
	Net earnings		$	(5,405	)	$	7,776
	Depreciation and amortization		11,887			12,219
	Deferred income taxes		11,909			(183		)
	Changes in operating assets and liabilities		(11,943		)	2,774

		Total	6,448			22,586

Net Cash Used in Investing Activities
	Additions to property, plant and equipment		(8,431		)	(5,000		)
	Business acquisitions, net of cash acquired		-			(1,219		)

		Total	(8,431		)	(6,219		)

Net Cash Provided by (Used in) Financing Activities
	Decrease in short-term borrowings		(95		)	(1,000		)
	Increase (decrease) in long-term debt		1,662			(13,910		)
	Common stock issued		66			97
	Cash dividends paid		(823		)	(822		)
	Other		127			57

		Total	937			(15,578		)

Effect of exchange rate changes on cash and cash equivalents			(30		)	(25		)

Net (decrease) increase in cash and cash equivalents			(1,076		)	764
Cash and cash equivalents at beginning of period			2,290			1,146

Cash and cash equivalents at end of period			$	1,214		$	1,910

See accompanying Notes to Condensed Consolidated Financial Statements.

BMC INDUSTRIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(in thousands, except per share amounts)

1. Financial Statements

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as of June 30, 2001, and the results of operations and the cash flows for the three and six-month periods ended June 30, 2001 and 2000. Such adjustments are of a normal recurring nature. Certain items in the financial statements for the periods ended June 30, 2000 have been reclassified to conform to the presentation for the periods ended June 30, 2001. The results of operations for the three and six-month periods ended June 30, 2001 are not necessarily indicative of the results to be expected for the full year. The balance sheet as of December 31, 2000 is derived from the audited balance sheet as of that date. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

2. Inventories

	June 30, 2001		December 31, 2000

Raw materials	$	19,635	$	20,614
Work in process	11,408		17,835
Finished goods	56,938		43,566

	$	87,981	$	82,015

3. Derivative Financial Instruments

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

Interest Rate Swap Agreement – At various dates during 2001 and 2000, the Company entered into multiple interest rate swap agreements, which provide for the Company to swap a variable interest rate for fixed interest rates ranging from 6.7% to 7.1%. At June 30, 2001, $50,000 of these swaps remained outstanding with the swaps expiring in May and June 2003. At June 30, 2001, $2,031 of deferred net losses on the interest rate swap agreements were included in Accumulated Other Comprehensive Income.

Foreign Currency Forward-Exchange Contracts – As of June 30, 2001, the Company had the following foreign currency forward-exchange contracts in place:

	•	Contracts to purchase German marks (DM) to hedge certain steel purchases. As of June 30, 2001, contracts to purchase 6,000 DM remained outstanding.
	•	Contracts to purchase German marks (DM) to hedge certain U.S. dollar denominated sales and receivables at the Company’s German subsidiary. As of June 30, 2001, contracts to purchase 6,000 DM remained outstanding.
	•	Contracts to sell U.S. dollars to hedge certain U.S. dollar denominated sales and receivables at the Company’s German subsidiary. As of June 30, 2001, contracts to sell $1,950 remained outstanding.

At June 30, 2001, deferred net losses on these contracts in the amount of $720 were included in Accumulated Other Comprehensive Income (Loss). Assuming no change in underlying foreign exchange rates, all of these losses are expected to be recorded into earnings within the next twelve months.

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. During first quarter 2001, these contracts were terminated and a realized loss of $133 was recorded.

4. Comprehensive Income

The components of comprehensive income, net of related tax, for the three and six-month periods ended June 30, 2001 and 2000 are as follows:

	Three Months Ended						Six Months Ended
	June 30						June 30

	2001			2000			2001			2000

Net earnings (loss)	$	(7,451	)	$	5,475		$	(5,405	)	$	7,776
Foreign currency translation adjustments	(933		)	(982		)	(2,735		)	(2,261		)
Loss on derivative instruments	(326		)	(111		)	(1,573		)	(260		)

Comprehensive (loss) income	$	(8,710	)	$	4,382		$	(9,713	)	$	5,255

Foreign currency translation adjustment for 2001 is primarily due to the change in cumulative translation adjustment resulting from the strengthening of the U.S. dollar against the DM/Euro during the six-month period ended June 30, 2001.

5. Valuation Reserve for Deferred Tax Asset

In June 2001, the Company established a deferred tax asset valuation reserve of $10.0 million, the effect of which increased income tax expense. The need for the valuation reserve was driven by lower U.S. taxable income, which impairs the realization of the Company’s foreign tax credit carryovers. The statutory time period for using the foreign tax credits on its income tax returns extends beyond the period the Company used to assess impairment for accounting purposes. If at some time in the future it is determined that all or a portion of the existing foreign tax credit carryovers may be realized, the valuation reserve will be reduced accordingly.

6. Segment Information

The Company has two operating segments which manufacture and sell a variety of products: Buckbee-Mears and Optical Products. Buckbee-Mears, made up of Mask Operations and Micro-Technology Operations, 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 (Vision-Ease) manufactures ophthalmic lenses.

The following is a summary of certain financial information relating to the two segments for the three-month period ended June 30, 2001:

	Three Months Ended June 30

	Buckbee-Mears							Optical Products						Consolidated

	2001				2000			2001			2000			2001			2000


Revenues	$	44,067			$	55,576		$	34,653		$	38,661		$	78,720		$	94,237
Cost of products sold	37,768				47,156			28,995			31,190			66,763			78,346

Gross margin	6,299				8,420			5,658			7,471			11,957			15,891
Gross margin %	14.3			%	15.2		%	16.3		%	19.3		%	15.2		%	16.9		%
Selling expense	1,246				1,191			3,259			2,919			4,505			4,110
Unallocated corporate administration	-				-			-			-			1,418			1,507

Income from operations	$		5,053		$	7,229		$	2,399		$	4,552		6,034			10,274

Operating income %	11.5			%	13.0		%	6.9		%	11.8		%	7.7		%	10.9		%

Interest and other expense, net														(2,229		)	(2,277		)

Earnings before income taxes														$	3,805		$	7,997

The following is a summary of certain financial information relating to the two segments for the six-month period ended June 30, 2001:

	Six Months Ended June 30

	Buckbee-Mears							Optical Products						Consolidated

	2001				2000			2001			2000			2001			2000

Revenues	$	95,297			$	108,894		$	69,183		$	74,094		$	164,480		$	182,988
Cost of products sold	82,954				93,385			58,113			61,648			141,067			155,033

Gross margin	12,343				15,509			11,070			12,446			23,413			27,955
Gross margin %	13.0			%	14.2		%	16.0		%	16.8		%	14.2		%	15.3		%
Selling expense	3,031				2,516			6,336			5,873			9,367			8,389
Unallocated corporate administration	-				-			-			-			2,756			2,797

Income from operations	$		9,312		$	12,993		$	4,734		$	6,573		11,290			16,769

Operating income %	9.8			%	11.9		%	6.8		%	8.9		%	6.9		%	9.2		%

Interest and other expense, net														(4,431		)	(5,470		)

Earnings before income taxes														$	6,859		$	11,299

7. Legal Matters

During the quarter ended June 30, 2001, no significant new legal proceedings or environmental matters arose and there were no material changes in the status of the legal proceedings or environmental matters described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

8. New Accounting Standards

In July 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards (SFAS) No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 is effective for any business combination that is completed after June 30, 2001. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001.

SFAS No. 141 eliminates the pooling-of-interest method and requires the purchase method of accounting on all business combinations completed after June 30, 2001. SFAS No. 141 has no current impact on the Company’s financial statements. Under SFAS No. 142, amortization of goodwill and other intangible assets will continue until adoption of the new accounting standard on January 1, 2002. Upon adoption of SFAS No. 142, amortization of goodwill and other intangible assets with indefinite lives ceases and a transitional impairment test is required, with subsequent impairment tests required at least annually. The Company’s current amortization expense on goodwill is approximately $2,000 annually. The full effects of adoption of this statement have not yet been determined.

Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

BMC INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

Comparison of three months ended June 30, 2001 and 2000

Total revenues for the second quarter of 2001 decreased by $15.5 million or 16% from the second quarter of 2000. With consistent foreign currency exchange rates during the quarter, consolidated revenues would have decreased 15%. Revenues of the Buckbee-Mears group for the second quarter decreased $11.5 million, or 21%, from $55.6 million in 2000 to $44.1 million in 2001. Excluding the impact of the foreign currency translation, revenues for the group would have decreased 19%. Sales of computer monitor masks decreased 31% in second quarter 2001 as compared to second quarter 2000 due to competitive price reductions, as well as a decline in volumes as a result of the continuing worldwide softness in demand for personal computers and computer monitors. The Buckbee-Mears group also experienced a decline in demand for television masks, particularly jumbo and large-sized television masks. Entertainment mask sales were down 13% in second quarter 2001 as compared to the prior year second quarter. Second quarter 2001 sales of jumbo-size masks (those 30” and larger) and large-size masks (those 24” to 29”) declined 19% as a result of weakness in both product segments, particularly in the NAFTA region. European demand also weakened during the quarter. The group attributes the significant drop in demand to a build up of excess inventory in these sizes at all levels of the supply chain, in addition to reduced retail demand for televisions in the quarter. Delayed qualification of advanced mask products also impacted sales performance during the second quarter. The Optical Products group reported sales of $34.7 million in the second quarter of 2001, down 10%, or $4.0 million, over the prior year quarter. Vision-Ease sales were negatively impacted by a flat domestic ophthalmic lens market, certain temporary capacity issues which inhibited sales growth in a number of Vision-Ease’s polycarbonate product lines, and a significant decline in SunSportä sales versus the second quarter of last year. Sales of the group’s high-end, value-added products (including polycarbonate, progressive and polarizing sun lenses) decreased 12% from second quarter 2000 and accounted for 64% of total second quarter 2001 revenues, as compared to 66% of total second quarter revenues in 2000. In addition, glass lens sales were down 14% in second quarter 2001 as compared to the prior year quarter, due principally to the accelerated erosion of the domestic glass lens market. Plastic lens sales for second quarter 2001 increased 6% from the same quarter of last year as a result of additional promotional activity and improved product supply.

Cost of products sold were 85% of net sales for the second quarter of 2001, compared to 83% in the same period of 2000. The increased cost of products sold percentage was due to low capacity utilization and related cost absorption at Micro-Technology and certain product supply constraints and capacity issues at Vision-Ease. The gross margin percentage at Buckbee-Mears decreased from the same quarter last year due to low capacity utilization at Micro-Technology as well as costs incurred during the quarter to transition certain of its production from St. Paul, Minnesota to lines in Cortland, New York and Müllheim, Germany. This increase in costs has been somewhat offset by strong mask operating and production performance. The Optical Products gross margin percentage decreased from second quarter 2000 due to capacity constraints on certain polycarbonate products and product transition issues with a major customer in the SunSportä business.

Selling expenses were $4.5 million or 6% of revenues and $4.1 million or 4% of revenues for the second quarter of 2001 and 2000, respectively. The increase is due primarily to increases in selling and marketing expenses in Optical Products as the group has added infrastructure to support expansion and sales growth initiatives.

Interest expense in the second quarter of 2001 is lower than in second quarter 2000 as a result of lower interest rates and debt levels in 2001 compared to the second quarter 2000.

The provision for income taxes was 33% and 31.5% of pre-tax income in the second quarter of 2001 and 2000, respectively, excluding the non-recurring tax charge. The tax rate is a function of the Company’s domestic and foreign earnings mix and ongoing tax initiatives and can fluctuate from quarter to quarter. During the second quarter, the Company recorded a deferred tax asset valuation reserve of $10.0 million, the effect of which increased income tax expense. The valuation reserve was driven by lower U.S. taxable income, which impairs the realization of the Company’s foreign tax credit carryovers. The statutory time period for using the foreign tax credits on its income tax returns extends beyond the period the Company used to assess impairment for accounting purposes. If at some time in the future it is determined that all or a portion of the existing foreign tax credit carryovers may be realized, the valuation reserve will be reduced accordingly.

Comparison of six months ended June 30, 2001 and 2000

Total revenues for the first six months of 2001 decreased by $18.5 million, or 10%, from the first six months of 2000. This revenue decrease would have been 9% excluding the impact of foreign currency translation. Revenues of the Buckbee-Mears group for the six-month period decreased 12% from the prior year period due to the decline in worldwide demand for both computer monitors and televisions. This revenue decrease would have been 10% excluding the impact of foreign currency translation. Revenues of the Optical Products group were down 7% due mainly to a flat domestic ophthalmic lens market and capacity issues discussed earlier.

Cost of products sold were 86% and 85% of net sales for the first six months of 2001 and 2000, respectively. The increase in cost of sales percentage is due to the low capacity utilization at Micro-Technology and certain product supply constraints and capacity issues at Vision-Ease. The increase in costs has been partially offset by strong mask operating performance.

Selling expenses were $9.4 million, or 6%, of revenues and $8.4 million, or 5%, of revenues for the first six months of 2001 and 2000, respectively. The increase is primarily due to higher selling and marketing expenses in both divisions. Optical Products’ selling and marketing expenses have increased as the group has added infrastructure to support expansion and sales growth.

Interest expense in the first six months of 2001 was $5.8 million compared to $6.6 million in the first six months of 2000. This decrease is due to lower debt levels and interest rates in 2001.

The provision for income taxes was 33% and 31.2% of pre-tax income for the first six months of 2001 and 2000, respectively, excluding the non-recurring tax charge. The tax rate is a function of the Company’s domestic and foreign earnings mix and ongoing tax initiatives and can fluctuate from quarter to quarter.

MARKET RISK

There were no significant changes in market risks from those disclosed in the Company’s Form 10-K for the year ended December 31, 2000.

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 (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. These derivative instruments are discussed more fully in footnote 3.

INTEREST RATE SWAPS

At various dates during 2001 and 2000, the Company entered into multiple interest rate swap agreements which provide for the Company to swap a variable interest rate for fixed interest rates ranging from 6.7% to 7.1%. At June 30, 2001, $50 million of these swaps remained outstanding with the swaps expiring in May and June 2003. These swaps are discussed more fully in footnote 3.

FINANCIAL POSITION AND LIQUIDITY

Debt increased $1.5 million from $145.0 million to $146.5 million during the first six months of 2001 primarily as a result of capital expenditures of $8.4 million offset by cash flow from operations of $6.4 million. Working capital was $94.9 million at June 30, 2001 compared to $95.3 million at December 31, 2000. The current ratio was 2.5 at both June 30, 2001 and December 31, 2000. The ratio of debt to capitalization was 52% at June 30, 2001 compared to 50% at December 31, 2000.

There were no significant changes in the Company’s credit facilities during the six months ended June 30, 2001. The Company was in compliance with all covenants related to credit facilities as of June 30, 2001. The Company continues to expect that the combination of internally-generated funds and unused financing sources will be adequate to meet the Company’s financing requirements for 2001.

ENVIRONMENTAL

There were no material changes in the status of the legal proceedings and environmental matters described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2000.

CAUTIONARY STATEMENTS

Certain statements included in this Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Form 10-Q by the Company or its representatives, as well as other communications, including reports to shareholders, news releases and presentations to securities analysts or investors, contain forward-looking statements made in good faith by the Company pursuant to the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These statements relate to non-historical information and include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements. The Company wishes to caution the reader not to place undue reliance on any such forward-looking statements, which reflect our opinion as of the date of this Form 10-Q. These statements are not guarantees of future performance and are subject to certain risks and uncertainties that could cause actual results to differ materially from those presently anticipated or projected and include, among others, continued imbalance in supply and demand for computer monitor masks; further aperture mask price declines, particularly for computer monitor masks; slowdown in growth of high-end lens products, including continued weakness in SunSportä products; rising raw material costs; ability to improve operating and manufacturing efficiencies; ability to qualify new products with customers; 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 source plastic lens product requirement from third parties; 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 in growth for Micro-Technology products; 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. Certain of these and other factors are more particularly described in “Item 1 - Business” of the Company’s Form 10-K for the year ended December 31, 2000, which in some cases have affected and in the future could adversely affect the Company’s actual results and could cause the Company’s actual financial performance to differ materially from that expressed in any forward-looking statement. These factors should not, however, be considered an exhaustive list. The Company does not undertake the responsibility to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” on page 11.

Part II: OTHER INFORMATION

Item 1. Legal Proceedings.

With regard to legal proceedings and certain environmental matters, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations” which begins on page 9 and Note 7 of the “Notes to Condensed Consolidated Financial Statements” on page 8.

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

The Company’s 2001 Annual Meeting of Stockholders was held on May 17, 2001. One matter was submitted to a vote of stockholders: Election of certain members of the Company’s Board of Directors.

The nominees for election to the Company’s Board of Directors, as listed in the Company’s Proxy Statement dated March 29, 2001 were elected for two-year terms at that meeting. Voting for the individual nominees was as follows:

Nominee	Votes For	Votes Withheld or Against

Mr. John W. Castro	24,107,326	1,742,230
Mr. Joe E. Davis	24,091,786	1,767,770
Mr. James M. Ramich	24,204,813	1,644,743

The following directors did not stand for election this year because their terms of office continued after the meeting: Mr. Paul B. Burke, Dr. H. Ted Davis and Mr. Harry A. Hammerly.

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

	99.1	News Release, dated August 3, 2001, announcing quarterly dividend (filed herein).

	99.2	News Release, dated July 26, 2001, announcing second quarter 2001 operating results (filed herein).

	99.3	News Release, dated July 12, 2001, announcing BMC Industries to report second quarter 2001 results and host conference call on Thursday, July 26, 2001.

	99.4	News Release, dated June 7, 2001, announcing BMC Industries, Inc. expectations for second quarter 2001 (filed herein).

	99.5	News Release, dated May 18, 2001, announcing BMC Industries quarterly dividend (filed herein).

(b) Reports on Form 8-K.

The Company did not file any reports on Form 8-K for the quarter ended June 30, 2001.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	BMC INDUSTRIES, INC.

	/s/ Kathleen P. Pepski

	Kathleen P. Pepski
	Chief Financial Officer
	(Principal Financial Officer)

Dated: August 14, 2001

EX-99.1 3 j1374_ex99d1.htm EX-99.1 Prepared by MerrillDirect

Exhibit 99.1

News Release

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

BMC INDUSTRIES ANNOUNCES QUARTERLY DIVIDEND

August 3, 2001 –– Minneapolis, Minnesota, USA – On August 2, 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 September 19, 2001 will receive a dividend of $.015 for each share owned on that date, to be paid on October 3, 2001.

BMC Industries, founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products. The Buckbee-Mears group, through its Mask Operations, is the only independent North American manufacturer of aperture masks. The Buckbee-Mears group, through its Micro-Technology Operations, is also a leading producer of a variety of precision photo-etched and electroformed components 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 a technology and market share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet (UV) filtering and impact resistant characteristics.

BMC Industries, Inc. is traded on the New York Stock Exchange under the ticker symbol “BMM.” For more information about BMC Industries, Inc., visit the Company’s Web site at www.bmcind.com.

EX-99.2 4 j1374_ex99d2.htm EX-99.2 Prepared by MerrillDirect

Exhibit 99.2

News Release

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

BMC Industries, Inc. Reports Second Quarter and Six-Month 2001 Results

July 26, 2001 – Minneapolis, Minnesota, USA - BMC Industries, Inc., today reported results for the second quarter and six-month period ended June 30, 2001. For the quarter, consolidated revenues were $78.7 million, a decrease of 16% from the $94.2 million posted in second quarter 2000. With consistent foreign currency exchange rates during second quarter 2001, revenues would have decreased 15% from the prior year quarter. Excluding a non-recurring income tax charge, described later in the release, the Company reported consolidated net earnings for the second quarter of $2.5 million, or $0.09 per diluted share. Including the income tax charge, the Company incurred a net loss of $7.5 million, or ($0.27) per diluted share, in second quarter 2001. This compares to net earnings of $5.5 million, or $0.20 per diluted share, in the second quarter of 2000.

For the six months ended June 30, 2001, consolidated revenues decreased 10% to $164.5 million compared to $183.0 million for the same period in 2000. Without the impact of foreign currency translation rate changes during the period, consolidated revenues would have decreased 9%. Excluding the non-recurring income tax charge noted earlier, consolidated net earnings for the first six months of 2001 were $4.6 million, or $0.17 per diluted share. Including the income tax charge, the Company incurred a net loss of $5.4 million, or ($0.20) per diluted share, for the first six months of 2001; compared to net earnings of $7.8 million, or $0.28 per diluted share, for the same period in 2000.

“While our operating results are consistent with the revised guidance we provided earlier in the quarter, by the end of the quarter it was evident that difficult market conditions, particularly in the mask business, would persist for the foreseeable future,” said BMC Chairman and Chief Executive Officer Paul B. Burke. “These conditions and the outlook for the remainder of the year have forced us to conservatively assess, for accounting purposes, our ability to use our foreign tax credits and consequently, to create a valuation reserve reducing the value of the Company’s deferred tax assets.”

Mr. Burke continued, “Our Mask Operations are being impacted by a sudden drop in demand for both television and computer monitor masks as customers are adjusting their inventory positions. While there is reason to believe that demand will return to normalized levels by the end of this year, we have planned for continuing soft conditions. Despite lower volumes, however, our mask manufacturing plants continue to perform extremely well and we have taken steps to better align our costs with the weak sales we are experiencing.”

“Soft ophthalmic lens market conditions have hurt Vision-Ease’s performance, which has been exacerbated by capacity constraints on polycarbonate products, and supply and product transition issues in our SunSportä business,” added Mr. Burke. “In light of the challenging environment, we are taking steps to attack product and operating costs throughout the organization, while continuing to strategically invest in areas that will drive new revenue streams in the future. However, underlying demand for polycarbonate, even in these economic conditions, continues to grow.”

Buckbee-Mears Group
Second quarter 2001 revenues for the Buckbee-Mears group, which includes both Mask Operations and Micro-Technology Operations, were $44.1 million, a decrease of $11.5 million, or 21%, from the $55.6 million of revenues reported in the second quarter of 2000. Excluding the impact of foreign currency translation, second quarter 2001 revenues for the group would have decreased 19% from the prior year quarter.

Sales of computer monitor masks decreased 31% in second quarter 2001 as compared to second quarter 2000 due to competitive price reductions, as well as a decline in volumes as a result of the continuing worldwide softness in demand for personal computers and computer monitors.

The Buckbee-Mears group also experienced a decline in demand for television masks, particularly jumbo and large-sized television masks. Entertainment mask sales were down 13% in second quarter 2001 as compared to the prior year second quarter. Second quarter 2001 sales of jumbo-size masks (those 30” and larger) and large-size masks (those 24” to 29”) declined 19% as a result of weakness in both product segments, particularly in the NAFTA region. European demand also weakened during the quarter. The group attributes the significant drop in demand to a build up of excess inventory in these sizes at all levels of the supply chain, in addition to reduced retail demand for televisions in the quarter. Delayed qualification of advanced mask products also impacted sales performance during the second quarter.

Micro-Technology sales and earnings for the second quarter were negatively impacted as its customers continued to react to slow demand, particularly in the semiconductor, automotive and telecommunications segments, resulting in low capacity utilization. This group also incurred costs during the second quarter as it transitioned certain of its production to lines in Cortland, New York and Müllheim, Germany.

Buckbee-Mears’ second quarter 2001 operating earnings of $5.1 million represent a decrease of $2.1 million from the $7.2 million earned in second quarter 2000. Operating margin for the second quarter 2001 was 11.5% as compared to 13.0% in second quarter 2000. The group’s operating earnings in second quarter 2001 were negatively impacted by the lower sales described above, and the resulting low capacity utilization and related cost absorption. These negative factors were partially mitigated by continued strong manufacturing performance as evidenced by high yield performance, product cost reductions derived from automated inspection equipment installed last year and early this year, and favorable foreign currency movement for certain raw material purchases.

Optical Products Group
The Optical Products group reported revenues of $34.7 million in the second quarter of 2001, down 10%, or $4.0 million, from second quarter 2000. Vision-Ease sales were negatively impacted by a flat domestic ophthalmic lens market, certain temporary capacity issues which inhibited sales growth in a number of Vision-Ease’s polycarbonate product lines, and a significant decline in SunSportä sales versus the second quarter of last year. Polycarbonate capacity was expanded during the quarter and will be further expanded with additional equipment to be installed during the third quarter.

Sales of the group’s high-end, value-added products (including polycarbonate, progressive and polarizing sun lenses) during second quarter 2001 decreased 12% from second quarter 2000 and accounted for 64% of total second quarter 2001 revenues, as compared to 66% of total second quarter revenues in 2000. In addition, glass lens sales were down 14% in second quarter 2001 as compared to the prior year quarter, due principally to the accelerated erosion of the domestic glass lens market. Plastic lens sales for second quarter 2001 increased 6% from the same quarter of last year as a result of additional promotional activity and improved product supply.

While Vision-Ease experienced sales reductions in certain high-end products, it continued to report sales growth in its SunRxâ premium polarized and its Outlookä progressive polycarbonate lens product lines. Sales of SunRxâ polarized prescription lenses increased 23% during second quarter 2001 over the same period a year ago. Vision-Ease’s Outlookä progressive lens sales also grew 8% in second quarter 2001 over the same period in 2000.

After nine consecutive quarters of year-over-year growth, Vision-Ease’s SunSportä business had a difficult quarter as a result of certain product supply constraints and delays in a major customer’s conversion to a new product line. Sales for this business were down 46% in second quarter 2001 versus the same quarter a year ago. We believe that the factors negatively impacting this segment’s second quarter performance are temporary in nature and we should see significant improvement over the balance of the year.

Optical Product’s second quarter 2001 operating earnings of $2.4 million represent a decrease of $2.2 million as compared to the $4.6 million earned in second quarter 2000. Second quarter 2001 operating margin was 6.9%, compared to 11.8% posted in second quarter 2000. The group’s second quarter 2001 operating earnings decrease was driven by the sales factors mentioned earlier, in addition to higher distribution costs attributable to the consolidation of depots and to backorder freight expense caused by the earlier described polycarbonate capacity issues.

The group’s results were also negatively impacted by increases in selling and marketing expenses as the group has added infrastructure to support expansion and sales growth initiatives, with the offsetting revenue growth expected to be realized in future quarters. Finally, while polycarbonate and glass product cost reduction efforts continue to proceed as planned, the full impact of these initiatives will be delayed and will grow progressively over the course of the year due to average product costing methodology.

Other Items
Other income of $0.3 million for the second quarter 2001 is primarily foreign exchange gain and loss activity.

During the second quarter, the Company recorded a deferred tax asset valuation reserve of $10.0 million, the effect of which increases income tax expense. The valuation reserve was driven by lower U.S. taxable income, which impairs the realization of the Company’s foreign tax credit carryovers. The statutory time period for using the foreign tax credits on its income tax returns extends beyond the period the Company used to assess impairment for accounting purposes. Therefore, if at some time in the future, it is determined that all or a portion of the existing foreign tax credit carryovers may be realized, the valuation reserve will be reduced accordingly.

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 this section.

The Company is cautious to project an economic rebound and the following outlook assumes continuing soft market conditions in both of its operating units during the balance of this fiscal year.

The Buckbee-Mears group expects continued weakness in worldwide demand for televisions and computer monitors. To respond to the external pressures facing our mask business, the Buckbee-Mears group temporarily shut down all aperture mask production lines at its Cortland, New York manufacturing facility for a three-week period beginning July 19, 2001. Buckbee-Mears Europe shut down its monitor mask production line for an extended period beginning July 9, 2001, and will idle its two television mask lines for limited periods as well. The shutdown of lines in Cortland and Germany represent an extension of previously scheduled annual maintenance shutdowns. In addition, the group is experiencing a decrease in volume for a number of its advanced mask products due to changing customer requirements and delays in new customer qualifications.

The Optical Products group projects premium product growth to resume in the remainder of the year. Domestic retail market conditions, however, are expected to remain flat, which will constrain growth. Additional capacity for the production of premium products is expected to become operational during the third quarter, which should allow for improved sales performance in the balance of the year as the group grows market share and is able to take advantage of opportunities in these product categories.

BMC expects consolidated revenues for the remainder of the year to be flat or down slightly in comparison to the same period in 2000. Buckbee-Mears group sales are projected to be down roughly 5-8% and Optical Products’ revenue is forecasted to be up 7-10%, as compared to the last half of 2000.

2001 consolidated earnings for BMC are expected at breakeven for the last six months of the year with a loss in the third quarter forecasted to be offset by a return to profitability in the fourth quarter. The Buckbee-Mears group projects lower earnings for the remainder of 2001 compared to the first half of 2001 and the last half of 2000, driven mainly by Mask Operations as a result of continued softness in demand for both entertainment and monitor masks, monitor mask pricing pressures and lower demand for the group’s higher-margin advanced product aperture masks. We also anticipate earnings for the Micro-Technology group to be lower as reduced demand for its products continues and production consolidation costs are absorbed.

Vision-Ease expects its profitability to improve in the last half of 2001 compared to the first half of 2001 and the last six months of 2000. The profitability increase will be driven by the expected sales increase described above, as well as anticipated reductions in polycarbonate product costs and distribution costs. Strategic investments in sales and marketing infrastructure costs will partially offset expected gross margin generated from the higher sales.

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”, “forecasts”, “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, continued imbalance in supply and demand for computer monitor masks; further aperture mask price declines, particularly for computer monitor masks; slowdown in growth of high-end lens products, including continued weakness in SunSportä products; rising raw material costs; ability to improve operating and manufacturing efficiencies; ability to qualify new products with customers; 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 source plastic lens product requirement from third parties; 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 in growth for Micro-Technology products; 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. 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, 2000 and other documents filed with the Securities and Exchange Commission.

BMC Industries, founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products.

The Buckbee-Mears group, through its Mask Operations, is the only independent North American manufacturer of aperture masks. The Buckbee-Mears group, through its Micro-Technology Operations, is also a leading producer of a variety of precision photo-etched and electroformed components that require fine features and tight tolerances.

BMC Industries, Inc. is traded on the New York Stock Exchange under the ticker symbol “BMM.” For more information about BMC Industries, Inc., visit the Company’s Web site at www.bmcind.com.

Investor Conference Call Information:
Thursday, July 26, 2001
10:00 a.m. Central Time (11:00 a.m. Eastern Time)
Call-in Number: 888-273-9885 (U.S.) or 612-332-0345 (International)
Replay Number: 800-475-6701 (U.S.) or 320-365-3844 (International)
Replay Access Code: 591697
The rebroadcast of the conference call will be available starting at 1:30 p.m. Central Time, July 26, 2001 through 11:59 p.m. Central Time, July 31, 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, click on “Conference Calls” and then click on the CCBN icon.

BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)

		Three Months Ended June 30						Six Months Ended June 30

		2001			2000			2001			2000

Revenues		$	78,720		$	94,237		$	164,480		$	182,988
Cost of products sold		66,763			78,346			141,067			155,033

Gross margin		11,957			15,891			23,413			27,955
Selling		4,505			4,110			9,367			8,389
Administrative		1,418			1,507			2,756			2,797

Income from operations		6,034			10,274			11,290			16,769

Other income and (expense)
	Interest expense	(2,749		)	(3,368		)	(5,790		)	(6,583		)
	Interest income	269			64			325			86
	Other income	251			1,027			1,034			1,027

Earnings before income taxes		3,805			7,997			6,859			11,299
Income tax expense		11,256			2,522			12,264			3,523

Net earnings (loss)		$	(7,451	)	$	5,475		$	(5,405	)	$	7,776

Net earnings (loss) per share:
	Basic	$	(0.27	)	$	0.20		$	(0.20	)	$	0.28
	Diluted	(0.27		)	0.20			(0.20		)	0.28

Number of shares included in per share computation:
	Basic	27,393			27,401			27,395			27,392
	Diluted	27,393			27,582			27,395			27,590

BMC INDUSTRIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

ASSETS			(Unaudited) June 30 2001			December 31 2000

Current assets
	Cash and cash equivalents		$	1,214		$	2,290
	Trade accounts receivable, net		46,734			45,645
	Inventories		87,981			82,015
	Deferred income taxes		14,019			17,954
	Other current assets		8,474			11,455

		Total current assets	158,422			159,359


Property, plant and equipment			278,444			276,568
Less accumulated depreciation			142,430			137,069

		Property, plant and equipment, net	136,014			139,499

Deferred income taxes			436			4,389
Intangibles assets, net			63,518			65,180
Other assets			9,172			5,377

Total assets			$	367,562		$	373,804

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
	Short-term borrowings		$	1,010		$	1,206
	Accounts payable		33,520			33,939
	Income taxes payable		5,075			6,374
	Deferred Income Taxes		613			-
	Accrued expenses and other current liabilities		23,298			22,518

		Total current liabilities	63,516			64,037


Long-term debt			145,472			143,810
Other liabilities			16,814			17,080
Deferred income taxes			5,305			2,079

Stockholders’ equity
	Common stock		49,306			49,240
	Retained earnings		99,648			105,876
	Accumulated other comprehensive income (loss)		(10,977		)	(6,669		)
	Other		(1,522		)	(1,649		)

		Total stockholders’ equity	136,455			146,798


Total liabilities and stockholders’ equity			$	367,562		$	373,804

BMC INDUSTRIES, INC.
SEGMENT INFORMATION
(Unaudited)
(in thousands)

	Three Months Ended June 30

	Buckbee-Mears						Optical Products						Consolidated

	2001			2000			2001			2000			2001			2000

Revenues	$	44,067		$	55,576		$	34,653		$	38,661		$	78,720		$	94,237
Cost of products sold	37,768			47,156			28,995			31,190			66,763			78,346

Gross margin	6,299			8,420			5,658			7,471			11,957			15,891
Gross margin %	14.3		%	15.2		%	16.3		%	19.3		%	15.2		%	16.9		%
Selling	1,246			1,191			3,259			2,919			4,505			4,110
Unallocated corporate administration	-			-			-			-			1,418			1,507

Income from operations	$	5,053		$	7,229		$	2,399		$	4,552		$	6,034		$	10,274

Operating income %	11.5		%	13.0		%	6.9		%	11.8		%	7.7		%	10.9		%
Capital spending													$	4,979		$	2,591
Depreciation and amortization													$	5,914		$	6,138
EBITDA													$	12,199		$	17,439
EBITDA %													15.5		%	18.5		%

EX-99.3 5 j1374_ex99d3.htm EX-99.3 Prepared by MerrillDirect

Exhibit 99.3

News Release

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

BMC Industries To Report Second Quarter 2001 Results and
Host Conference Call on Thursday, July 26, 2001

July 12, 2001 — BMC Industries, Inc. is scheduled to release its earnings results for the second quarter ended June 30, 2001 on Thursday, July 26, 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 888-273-9885 (U.S.) or 612-332-0345 (International). A replay of the call will be available beginning at 1:30 p.m. Central Time on July 26, 2001 by dialing 800-475-6701 (U.S.) or 320-365-3844 (International) and using Access Code: 591697. The conference call will be available for replay until July 31, 2001 at 11:59 p.m. (Central Time).

BMC Industries, founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products.

BMC Industries, Inc. is traded on the New York Stock Exchange under the ticker symbol “BMM”. For more information about BMC Industries, Inc., visit the Company’s Web site at www.bmcind.com.

EX-99.4 6 j1374_ex99d4.htm EX-99.4 Prepared by MerrillDirect

Exhibit 99.4

News Release

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

BMC Industries, Inc. Releases Expectations For Second Quarter 2001

June 7, 2001 – Minneapolis, Minnesota, USA – BMC Industries, Inc. commented today that both of its businesses continue to be impacted by the slowing global economy and by external market factors similar to those affecting the businesses in the first quarter 2001. As a result, financial results for the second quarter 2001 will be negatively affected.

The Buckbee-Mears group is experiencing significant pricing pressure in its computer monitor mask business as a result of continuing weakness in worldwide demand for computer monitors. In addition, the group is projecting a decline in demand for television masks, particularly jumbo-size television masks, for the second quarter 2001. The group attributes the drop in demand to a build-up of excess inventory at several picture tube customers. It is currently anticipated that television mask demand will rebound after this excess inventory position is corrected. Micro-Technology sales and earnings also remain sluggish as its customers continue to react to slowed economic conditions.

The Optical Products group’s results continue to be negatively impacted by a flat domestic ophthalmic lens market and the following unanticipated factors: temporary SunSport™ product supply constraints and delays in a major customer’s conversion to a new product line hindering second quarter SunSport™ sales; accelerated erosion of the domestic glass market; polycarbonate sales growth inhibited by capacity issues (in the process of being addressed and therefore believed to be temporary) in certain product lines; and unplanned distribution costs attributable to the consolidation of depots and to backorder freight expense caused by the above-described polycarbonate capacity issues. This group’s results will also be negatively impacted by increases in selling and administrative expenses as the group has added infrastructure to support expansion and sales growth initiatives, with the offsetting revenue growth expected to be realized in future quarters. Finally, while polycarbonate and glass product cost reduction efforts continue to proceed as planned, the full impact of these initiatives will be delayed and will grow progressively over the course of the year due to average product costing methodology.

“We are finding the second quarter business environment to be more difficult than expected for both of our operations,” said BMC Chairman and Chief Executive Officer Paul B. Burke. “While we are taking aggressive action to respond to these difficult conditions, we will protect the Vision-Ease sales and distribution infrastructure we have been in the process of building as we expect these capacity issues to be resolved in the short term. We continue to see tremendous growth potential in this business and we are working to resolve the capacity issues in order to be in a position to capitalize on that potential when market conditions improve.”

Due to the conditions outlined earlier, BMC expects to report consolidated revenues of approximately $80 to $85 million for the second quarter 2001. Revenues in the second quarter of 2000 were $94.2 million. As a result of the sales shortfall and the Vision-Ease costs mentioned earlier, BMC expects to report diluted earnings per share in the range of $0.09 to $0.12 for the second quarter of 2001. The Company earned $0.20 per diluted share in second quarter 2000. The Company continues to reassess its outlook for the last half of 2001 and will address its forecast for the remainder of the year with its second quarter earnings release in July.

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, ability to resolve capacity constraints in the Optical Products group, rebound in demand for televisions, computer monitors and ophthalmic lenses; further aperture mask and ophthalmic lens price declines, particularly for computer monitor masks, and imbalances of supply and demand; slowdown in growth of high-end lens 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 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 in growth for Micro-Technology products; 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. 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, 2000 and other documents filed with the Securities and Exchange Commission.

BMC Industries, founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products.

BMC Industries, Inc. is traded on the New York Stock Exchange under the ticker symbol “BMM.” For more information about BMC Industries, Inc., visit the Company’s Web site at www.bmcind.com.

EX-99.5 7 j1374_ex99d5.htm EX-99.5 Prepared by MerrillDirect

Exhibit 99.5

News Release

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

BMC INDUSTRIES ANNOUNCES QUARTERLY DIVIDEND

May 18, 2001 –– Minneapolis, Minnesota, USA – On May 17, 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 June 20, 2001 will receive a dividend of $.015 for each share owned on that date, to be paid on July 5, 2001.

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 share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet (UV) filtering and impact resistant characteristics.

BMC Industries, Inc. is traded on the New York Stock Exchange under the ticker symbol “BMM.” For more information about BMC Industries, Inc., visit the Company’s Web site at www.bmcind.com.