Materion Corporation Reports Third Quarter Financial Results Declares Fourth Quarter Dividend Business Wire MAYFIELD HEIGHTS, Ohio -- October 24, 2013 Materion Corporation (NYSE:MTRN) today reported third quarter 2013 results. THIRD QUARTER 2013 HIGHLIGHTS *Net sales were $275.4 million, which compares to sales of $290.6 million in the third quarter of 2012 and sales of $306.1 million in the second quarter of 2013. Value-added sales (sales less the cost of pass-through metals) were $148.7 million compared to $152.3 million for the prior-year quarter and $159.3 million in the second quarter 2013. The decline in both comparisons is due primarily to the previously reported delays of high-margin shipments. In addition, seasonality is a factor in the sequential comparison. *Earnings per share was $0.24, which compares to $0.39 per share in the prior-year quarter and $0.43 per share in the second quarter of 2013. The decline in both comparisons is due to a combination of factors, including the aforementioned shipment delays, weaker mix and weaker manufacturing performance. *Gross margin as a percent of sales was 16.4% in the third quarter of 2013 compared to 18.0% in the same quarter of 2012. Gross margin as a percent of value-added sales was 30.3%, which compares to 34.4% in the third quarter of 2012 and 33.1% in the second quarter of 2013. *Operating profit as a percent of sales was 2.2% for the third quarter of 2013, compared to 4.6% in the third quarter of 2012. Operating profit as a percent of value-added sales was 4.0% which compares to 8.8% for the third quarter of 2012 and 8.4% in the second quarter of 2013. *The effective tax rate was a low 2.7% in the third quarter 2013 due to revisions to the projections for the full year and net favorable discrete items recorded during the period. *Production at the beryllium pebble plant was the highest since start-up and production levels, at quarter end, were ahead of the rates targeted for the fourth quarter of 2013. *As previously announced, the Company is planning to take additional facility and product rationalization actions during the fourth quarter of 2013 that are expected to favorably impact 2014 performance by up to $0.30 per share. *Excluding up to $0.15 in fourth quarter 2013 charges related to the above-noted facility and product rationalizations, the Company now expects earnings for the year to be in the range of $1.40 to $1.45 per share, assuming no significant changes to global economic conditions. *The Company declared a fourth quarter dividend of $0.08 per share payable on December 3, 2013 to shareholders of record on November 15, 2013. VALUE-ADDED SALES The cost of gold, silver, platinum, palladium and copper are typically passed through to customers and, therefore, reported sales, but not necessarily reported margin dollars, can be affected by movements in metal prices. Internally, we manage our business on a value-added sales basis. Value-added sales is a non-GAAP measure that deducts these pass-through metals from sales and removes the potential distortion in business levels and profit margin percentages caused by differences in metal values sold. The Company began reporting value-added sales and margins in the first quarter of 2013. The Company believes that this is informative to the investor and provides a better understanding of our business. For the Company in total, when comparing sequentially to the second quarter of the year, value-added sales were lower in the majority of the Company’s markets largely due to seasonal factors and the aforementioned high-margin shipment delays. The consumer electronics, industrial components and commercial aerospace, defense and science, automotive electronics, telecom infrastructure, energy and services markets all saw lower value-added sales in the third quarter. The medical market, when comparing to the second quarter of the year, saw higher value-added sales. A reconciliation of GAAP sales to value-added sales is provided later in this press release. DIVIDEND Today, the Company also announced the declaration of its fourth quarter dividend of $0.08 per share payable on December 3, 2013 to shareholders of record on November 15, 2013. The dividend is a reflection of the Company's continued confidence in the strength of its business, its prospects for long-term growth and its ability to continue to grow the business organically, as well as through acquisitions, while returning cash to shareholders. COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES As previously announced, the Company is planning to take additional facility and product line rationalization actions during the fourth quarter that are expected to further reduce costs and significantly improve margins beginning in 2014. These actions will result in a charge of up to $0.15 per share in the fourth quarter, approximately 25% of which is non-cash, and these are expected to favorably impact 2014 performance by up to $0.30 per share. THIRD QUARTER 2013 RESULTS Sales for the third quarter were $275.4 million compared to sales of $290.6 million for the third quarter of 2012. Value-added sales for the third quarter were $148.7 million, compared to value-added sales of $152.3 million for the third quarter of 2012. As reported in a Company press release on October 7, 2013, the decrease in value-added sales, when comparing to both the prior-year quarter and sequentially to the second quarter of the year, is primarily due to delayed high-margin defense and nuclear science shipments. It is anticipated at this time that these delayed orders will ship in the fourth quarter. Approximately 40% of the sequential decline is related to the shipment delays and the balance is due to seasonal factors and weaker than expected market conditions. Net income for the third quarter was $5.1 million, or $0.24 per share, diluted, compared to net income of $8.1 million, or $0.39 per share, diluted, for the third quarter of the prior year. Net Income in the second quarter of 2013 was $8.9 million or $0.43 per share, diluted. The decline in income is due to a number of factors, including weaker market conditions, high-margin shipment delays, seasonal factors and weaker manufacturing performance in the quarter. For the first nine months of 2013, sales were $880.7 million compared to sales of $969.3 million for the same period last year. Value-added sales for the first nine months of 2013 were $459.3 million compared to $464.2 million for the same period of last year. Year-to-date net income was $20.8 million compared to net income of $22.2 million for the same period of last year. BUSINESS SEGMENT REPORTING Advanced Material Technologies Advanced Material Technologies’ sales for the third quarter of 2013 were $176.3 million, which compares to sales of $190.5 million in the third quarter of 2012. Value-added sales were $68.4 million in the third quarter 2013 compared to $73.3 million in the third quarter of 2012. Weaker demand from consumer electronics, shipment delays in defense and science, and lower services revenue were offset, in part, by higher volumes in medical, and in phosphors and other non-precious metal alloys used in LED applications. Sequentially, value-added sales were down $3.6 million in the third quarter compared to the second quarter of 2013, primarily due to weaker demand from consumer electronics, telecom infrastructure, energy and defense offset, in part, by stronger demand in medical. Operating profit for the third quarter of 2013 was $4.8 million, compared to an operating profit of $9.2 million for the second quarter of 2012. Operating profit was 7.0% of value-added sales in the third quarter of 2013, compared to 12.6% of value-added sales in the third quarter of 2012. Sequentially, operating profit and operating profit as a percent of value-added sales improved, respectively, compared to the second quarter of 2013 levels. Operating profit and operating profit percent of value-added sales were negatively impacted in the quarter when compared to the prior year by a weaker product mix and increased pricing pressure on precious metal products and services. Planned cost reduction and margin improvement initiatives are expected to restore margins to double-digit levels. Performance Alloys Performance Alloys' sales for the third quarter of 2013 were $69.6 million compared to the third quarter of 2012 sales of $68.7 million. Value-added sales for the third quarter of 2013 were up approximately 6% to $57.3 million compared to $54.3 million for the third quarter of 2012. The primary drivers of the increase in third quarter 2013 value-added sales, when compared to the prior year, were stronger conditions in automotive electronics, consumer electronics and energy. Growth in these markets helped offset a decline in value-added sales to the telecom infrastructure, appliance and industrial components markets. Value-added sales for the third quarter of 2013 were down 2% from the second quarter of 2013 levels primarily due to seasonal factors in the industrial components and automotive electronics markets. Operating profit for the third quarter of 2013 was $4.5 million compared to an operating profit of $5.4 million in the third quarter of 2012. Operating profit was 7.9% of value-added sales in the third quarter compared to 10.0% for the same period last year. Margins in the quarter were unfavorably impacted by lower manufacturing volumes and a longer than expected maintenance shutdown at the Elmore, Ohio facility. Beryllium and Composites Beryllium and Composites' sales for the third quarter of 2013 were $13.7 million, a 5% decline, compared to sales of $14.4 million in the third quarter 2012. Beryllium and Composites does not directly pass through changes in the costs of its materials sold, and, therefore, value-added sales for this segment are the same as sales. Sequentially, sales were down approximately 15% from the second quarter of 2013 levels. The lower sales volume was due to the delayed high-margin defense and nuclear science shipments. The operating loss for the third quarter of 2013 was $3.3 million, compared to an operating loss of $0.5 million for the third quarter of 2012. The loss was primarily due to the delayed high-margin shipments and the cost associated with the use of higher-priced material purchased to supply the production needs of the business as the new beryllium pebble plant ramps up. This segment was also affected by a longer than expected maintenance shutdown at the Elmore, Ohio facility and lower yields in the quarter. At quarter end, the pebble plant was operating at its highest production level since start up and is ahead of fourth quarter targeted production levels. Technical Materials Technical Materials’ sales for the third quarter of 2013 were $15.9 million, compared to $17.0 million for the same period of last year. Value-added sales were $9.3 million in the third quarter 2013, compared to $10.3 million for the third quarter of 2012. Sequentially, value-added sales were down approximately 24% from the second quarter of 2013 levels due to lower shipments into the consumer electronics market as an expected phase out of an application for disk drive arms occurred. This was offset, in part, by increased demand from the energy and automotive electronics markets. Operating profit for the third quarter of 2013 was $1.4 million, compared to an operating profit of $1.1 million for the same period of last year. Most of the improvement in operating profit is due to improved manufacturing efficiencies and a favorable product mix offset, in part, by the impact of the lower sales volume. Operating profit as a percent of value-added sales for the third quarter of 2013 was 15.3% compared to 11.0% for the same period last year. OUTLOOK The combination of the delayed defense and nuclear science orders, which are expected to ship in the fourth quarter along with the increased shipment levels in the balance of our business, should result in the fourth quarter being well ahead of the third quarter. Excluding costs of up to $0.15 per share related to the facility and product rationalizations and assuming no significant changes to global economic conditions, the Company expects earnings for the year to be in the range of $1.40 to $1.45 per share. CHAIRMAN’S COMMENTS Richard J. Hipple, Chairman, President and CEO, stated, “While I am disappointed with our third quarter performance, I am confident that the cost reduction and margin improvement initiatives that we are undertaking in the fourth quarter will position the Company well for a solid start and significant improvement in profitability for 2014. Our breadth of new products and technologies is the strongest it has been over the last ten years and should enhance our ability to grow in the future.” CONFERENCE CALL Materion Corporation will host a conference call with analysts at 9:00 a.m. Eastern Time, October 24, 2013. The conference call will be available via webcast through the Company’s website at www.materion.com or through www.InvestorCalendar.com. By phone, please dial (877) 407-0778, callers outside the U.S. can dial (201) 689-8565. A replay of the call will be available until November 8, 2013 by dialing (877) 660-6853 or (201) 612-7415; please reference Conference ID Number 100466. The call will also be archived on the Company’s website. FORWARD-LOOKING STATEMENTS Portions of the narrative set forth in this document that are not statements of historical or current facts are forward-looking statements, in particular, the outlook provided above. Our actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. These factors include, in addition to those mentioned elsewhere herein: *Actual sales, operating rates and margins for 2013 and 2014; *Uncertainties relating to the fourth quarter 2012 physical inventory and possible theft at our Albuquerque facility, including (i) the costs and outcome of our investigations and (ii) the timing and amount, if any, of any insurance proceeds that we might receive; *The global economy; *The impact of the Federal Government shutdowns and sequestrations; *The condition of the markets which we serve, whether defined geographically or by segment, with the major market segments being: consumer electronics, industrial components and commercial aerospace, defense and science, automotive electronics, medical, energy and telecommunications infrastructure; *Changes in product mix and the financial condition of customers; *Our success in developing and introducing new products and new product ramp-up rates; *Our success in passing through the costs of raw materials to customers or otherwise mitigating fluctuating prices for those materials, including the impact of fluctuating prices on inventory values; *Our success in integrating acquired businesses; *Our success in moving the microelectronics packaging operations to Singapore; *Our success in completing the announced facility consolidations and the product line rationalizations and achieving the expected benefits; *Our success in implementing our strategic plans and the timely and successful completion and start-up of any capital projects, including the primary beryllium facility in Elmore, Ohio; *The availability of adequate lines of credit and the associated interest rates; *The impact of the results of acquisitions on our ability to achieve fully the strategic and financial objectives related to these acquisitions; *Other financial factors, including the cost and availability of raw materials (both base and precious metals), physical inventory valuations, metal financing fees, tax rates, exchange rates, pension costs and required cash contributions and other employee benefit costs, energy costs, regulatory compliance costs, the cost and availability of insurance, and the impact of the Company’s stock price on the cost of incentive compensation plans; *The uncertainties related to the impact of war, terrorist activities and acts of God; *Changes in government regulatory requirements and the enactment of new legislation that impacts our obligations and operations; *The conclusion of pending litigation matters in accordance with our expectation that there will be no material adverse effects; *The timing and ability to achieve further efficiencies and synergies resulting from our name change and product line alignment under the Materion name and Materion brand; and *The risk factors set forth in Part 1, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2012. Materion Corporation is headquartered in Mayfield Heights, Ohio. The Company, through its wholly owned subsidiaries, supplies highly engineered advanced enabling materials to global markets. Products include precious and non-precious specialty metals, inorganic chemicals and powders, specialty coatings, specialty engineered beryllium alloys, beryllium and beryllium composites, and engineered clad and plated metal systems. Materion Corporation Value-Added Sales Ratios Third Quarter 2013 Third Third Second First First Nine Nine Quarter Quarter Quarter Months Months 2013 2012 2013 of of 2013 2012 Gross Margin as a Percent of Value-Added Sales Advanced Material 37.3 % 41.1 % 36.3 % 36.6 % 39.7 % Technologies Performance 27.1 % 29.5 % 30.3 % 28.9 % 29.9 % Alloys Beryllium and 5.1 % 23.4 % 27.8 % 18.9 % 16.9 % Composites Technical 37.3 % 31.7 % 37.4 % 36.0 % 34.5 % Materials All Other - - - - - Total 30.3 % 34.4 % 33.1 % 31.9 % 33.3 % Operating Profit as a Percent of Value-Added Sales Advanced Material 7.0 % 12.6 % 6.3 % 6.1 % 10.2 % Technologies Performance 7.9 % 10.0 % 11.7 % 10.6 % 10.8 % Alloys Beryllium and -24.2 % -3.6 % 4.9 % -9.0 % -8.9 % Composites Technical 15.3 % 11.0 % 19.5 % 16.1 % 14.6 % Materials All Other - - - - - Total 4.0 % 8.8 % 8.4 % 6.3 % 7.7 % Value-added sales is a non-GAAP measure. See attached reconciliation. Materion Corporation Value-Added Sales - Reconciliation of Non-GAAP Measure Third Quarter 2013 Dollars in Millions Third Third Second First First Nine Nine Quarter Quarter Quarter Months of Months of 2013 2012 2013 2013 2012 Sales Advanced Material $ 176.3 $ 190.5 $ 196.0 $ 566.2 $ 654.2 Technologies Performance 69.5 68.7 74.3 218.4 216.4 Alloys Beryllium and 13.7 14.4 16.2 42.2 43.1 Composites Technical 15.9 17.0 19.6 53.9 55.5 Materials All Other - - - - 0.1 Total 275.4 290.6 306.1 880.7 969.3 Less: Pass-through Metal Cost Advanced Material 107.9 117.2 124.0 357.1 437.9 Technologies Performance 12.2 14.4 15.5 43.0 46.1 Alloys Beryllium and - - - - - Composites Technical 6.6 6.7 7.3 21.3 21.1 Materials All Other - - - - - Total 126.7 138.3 146.8 421.4 505.1 Value-Added Sales (non-GAAP) Advanced Material 68.4 73.3 72.0 209.1 216.3 Technologies Performance 57.3 54.3 58.8 175.4 170.3 Alloys Beryllium and 13.7 14.4 16.2 42.2 43.1 Composites Technical 9.3 10.3 12.3 32.6 34.4 Materials All Other - - - - 0.1 Total 148.7 152.3 159.3 459.3 464.2 Gross Margin Advanced Material 25.5 30.1 26.1 76.5 85.9 Technologies Performance 15.5 16.0 17.8 50.7 50.9 Alloys Beryllium and 0.7 3.4 4.5 7.9 7.3 Composites Technical 3.5 3.3 4.6 11.8 11.8 Materials All Other (0.1 ) (0.4 ) (0.2 ) (0.6 ) (1.1 ) Total 45.1 52.4 52.8 146.3 154.8 Operating Profit Advanced Material 4.8 9.2 4.5 12.7 22.0 Technologies Performance 4.5 5.4 6.9 18.7 18.3 Alloys Beryllium and (3.3 ) (0.5 ) 0.8 (3.8 ) (3.8 ) Composites Technical 1.4 1.1 2.4 5.2 5.0 Materials All Other (1.4 ) (1.8 ) (1.2 ) (3.9 ) (5.8 ) Total 6.0 13.4 13.4 28.9 35.7 The cost of gold, silver, platinum, palladium and copper is passed through to customers and therefore the trends and comparisons of sales are affected by movements in the market price of these metals. Internally, management reviews sales on value added basis. Value-added sales is a non-GAAP measure that deducts the value of the pass-through metals sold from sales. Value-added sales allows management to assess the impact of differences in sales between periods or segments and analyze the resulting margins and profitability without the distortion of the movements in pass-through metal prices. The dollar amount of gross margin and operating profit is not affected by the value-added sales calculation. The Company sells other metals and materials that are not considered direct pass throughs and their costs are not deducted from sales to calculate value-added sales. The Company's pricing policy is to pass the cost of these metals on to customers in order to mitigate the impact of price volatility on the Company's results from operations and value-added information is being presented since changed in metal prices may not directly impact profitability. It is the Company's intent to allow users of the financial statements to review sales with and without the impact of the pass-through metals. Materion Corporation Digest of Earnings September 27, 2013 2013 2012 Third Quarter Net Sales $275,434,000 $290,601,000 Net Income $5,123,000 $8,114,000 Share Earnings - Basic $0.25 $0.40 Average Shares - Basic 20,604,000 20,432,000 Share Earnings - Diluted $0.24 $0.39 Average Shares - Diluted 20,931,000 20,697,000 Year-to-date Net Sales $880,744,000 $969,319,000 Net Income $20,817,000 $22,161,000 Share Earnings - Basic $1.01 $1.08 Average Shares - Basic 20,551,000 20,434,000 Share Earnings - Diluted $1.00 $1.07 Average Shares - Diluted 20,874,000 20,639,000 Materion Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) Third Quarter Ended Nine Months Ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, (Thousands, except per 2013 2012 2013 2012 share amounts) Net sales $ 275,434 $ 290,601 $ 880,744 $ 969,319 Cost of sales 230,297 238,232 734,447 814,507 Gross margin 45,137 52,369 146,297 154,812 Selling, general and 31,804 32,832 97,910 98,938 administrative expense Research and 3,190 3,019 9,901 9,310 development expense Other - net 4,161 3,129 9,592 10,846 Operating profit 5,982 13,389 28,894 35,718 Interest expense-net 715 779 2,356 2,297 Income before income 5,267 12,610 26,538 33,421 taxes Income tax expense 144 4,496 5,721 11,260 Net income $ 5,123 $ 8,114 $ 20,817 $ 22,161 Basic earnings per share: Net income per share $ 0.25 $ 0.40 $ 1.01 $ 1.08 of common stock Diluted earnings per share: Net income per share $ 0.24 $ 0.39 $ 1.00 $ 1.07 of common stock Cash dividends per $ 0.080 $ 0.075 $ 0.235 $ 0.150 share Weighted-average number of shares of common stock outstanding Basic 20,604 20,432 20,551 20,434 Diluted 20,931 20,697 20,874 20,639 See Notes to Consolidated Financial Statements. Materion Corporation and Subsidiaries Consolidated Statements of Comprehensive Income (Unaudited) Third Quarter Ended Nine Months Ended Sept. 27, Sept. 28, Sept. 27, Sept. 28, (Thousands) 2013 2012 2013 2012 Net income $ 5,123 $ 8,114 $ 20,817 $ 22,161 Other comprehensive income: Foreign currency translation 478 1,271 (2,902 ) 449 adjustment Derivative and hedging activity, (428 ) (521 ) (273 ) (858 ) net of tax Pension and post employment benefit 1,232 835 3,671 2,504 adjustment, net of tax Net change in accumulated other 1,282 1,585 496 2,095 comprehensive income Comprehensive income $ 6,405 $ 9,699 $ 21,313 $ 24,256 See Notes to Consolidated Financial Statements. Materion Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) Sept. 27, Dec. 31, (Thousands) 2013 2012 Assets Current assets Cash and cash equivalents $ 20,157 $ 16,056 Accounts receivable 121,987 126,482 Other receivables 384 405 Inventories 212,784 206,125 Prepaid expenses 36,995 41,685 Deferred income taxes 9,195 10,236 Total current assets 401,502 400,989 Related-party notes receivable 11 51 Long-term deferred income taxes 20,749 19,946 Property, plant and equipment - cost 779,870 779,785 Less allowances for depreciation, (514,562 ) (507,243 ) depletion and amortization Property, plant and equipment - net 265,308 272,542 Intangible assets 25,908 28,869 Other assets 3,767 3,767 Goodwill 88,753 88,753 Total assets $ 805,998 $ 814,917 Liabilities and shareholders' equity Current liabilities Short-term debt $ 36,013 $ 49,432 Accounts payable 30,972 42,281 Other liabilities and accrued items 50,778 55,811 Unearned revenue 461 1,543 Total current liabilities 118,224 149,067 Other long-term liabilities 16,515 16,173 Retirement and post-employment benefits 122,000 125,978 Unearned income 57,664 61,184 Long-term income taxes 1,510 1,510 Deferred income taxes 384 1,130 Long-term debt 52,423 44,880 Shareholders' equity 437,278 414,995 Total liabilities and shareholders' $ 805,998 $ 814,917 equity See Notes to Consolidated Financial Statements. Materion Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended Sept. 27, Sept. 28, (Thousands) 2013 2012 Cash flows from operating activities: Net income $ 20,817 $ 22,161 Adjustments to reconcile net income to net cash used in operating activities: Depreciation, depletion and amortization 30,842 28,923 Amortization of deferred financing costs in 501 487 interest expense Stock-based compensation expense 4,103 4,343 Changes in assets and liabilities net of acquired assets and liabilities: Decrease (increase) in accounts receivable 3,122 (20,451 ) Decrease (increase) in other receivables 21 4,393 Decrease (increase) in inventory (7,496 ) (23,795 ) Decrease (increase) in prepaid and other 4,653 (4,852 ) current assets Decrease (increase) in deferred income taxes 249 (812 ) Increase (decrease) in accounts payable and (21,216 ) (12,805 ) accrued expenses Increase (decrease) in unearned revenue (1,082 ) (1,316 ) Increase (decrease) in interest and taxes 108 (577 ) payable Increase (decrease) in long-term liabilities 1,152 (3,618 ) Other-net 2,741 545 Net cash used in operating activities 38,515 (7,374 ) Cash flows from investing activities: Payments for purchase of property, plant and (19,830 ) (25,335 ) equipment Payments for mine development (4,407 ) (4,992 ) Reimbursements for capital equipment under - 991 government contracts Payments for purchase of business net of - (3,894 ) cash received Proceeds from sale of property, plant and 23 - equipment Other investments-net 20 1,742 Net cash used in investing activities (24,194 ) (31,488 ) Cash flows from financing activities: Proceeds from issuance (repayments) of (13,263 ) 16,505 short-term debt Proceeds from issuance of long-term debt 70,333 32,305 Repayment of long-term debt (62,789 ) (7,740 ) Debt issuance costs (1,554 ) - Principal payments under capital lease (491 ) (580 ) obligations Repurchase of common stock - (119 ) Cash dividends paid (4,847 ) (3,083 ) Issuance of common stock under stock option 1,075 144 plans Tax benefit from stock compensation 1,664 77 realization Net cash provided from financing activities (9,872 ) 37,509 Effects of exchange rate changes (348 ) (8 ) Net change in cash and cash equivalents 4,101 (1,361 ) Cash and cash equivalents at beginning of 16,056 12,255 period Cash and cash equivalents at end of period $ 20,157 $ 10,894 See Notes to Consolidated Financial Statements. Materion Corporation and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) Note A - Accounting Policies In management's opinion, the accompanying consolidated financial statements contain all adjustments necessary to present fairly the financial position as of September 27, 2013 and December 31, 2012 and the results of operations for the third quarter and nine months ended September 27, 2013 and September 28, 2012. All adjustments were of a normal and recurring nature. Note B - Inventories Inventories on the Consolidated Balance Sheets are summarized as follows: Sept. 27, Dec. 31, (Thousands) 2013 2012 Principally average cost: Raw materials and supplies $ 43,645 $ 42,751 Work in process 199,254 203,179 Finished goods 53,386 51,094 Gross inventories 296,285 297,024 Excess of average cost over LIFO inventory 83,501 90,899 value Net inventories $ 212,784 $ 206,125 Materion Corporation and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) Note C - Pensions and Other Post-employment Benefits The following is a summary of the third quarter and first nine months 2013 and 2012 net periodic benefit cost for the domestic defined benefit pension plans and supplemental retirement plans and the domestic retiree medical plan. Pension Benefits Other Benefits Third Quarter Ended Third Quarter Ended Sept. 27, Sept. 28, Sept. Sept. 27, 28, (Thousands) 2013 2012 2013 2012 Components of net periodic benefit cost Service cost $ 2,356 $ 1,966 $ 76 $ 93 Interest cost 2,353 2,341 311 360 Expected return on (2,996 ) (2,926 ) - - plan assets Amortization of prior (85 ) (118 ) 29 - service cost (benefit) Amortization 1,951 1,402 - - of net loss Net periodic $ 3,579 $ 2,665 $ 416 $ 453 benefit cost Pension Benefits Other Benefits Nine Months Ended Nine Months Ended Sept. 27, Sept. 28, Sept. Sept. 27, 28, (Thousands) 2013 2012 2013 2012 Components of net periodic benefit cost Service cost $ 7,066 $ 5,900 $ 229 $ 279 Interest cost 7,060 7,013 932 1,080 Expected return on (8,989 ) (8,778 ) - - plan assets Amortization of prior (255 ) (354 ) 86 - service cost (benefit) Amortization 5,816 4,206 - - of net loss Net periodic $ 10,698 $ 7,987 $ 1,247 $ 1,359 benefit cost The Company made contributions to the domestic defined benefit pension plan of $9.2 million in the first nine months of 2013. Materion Corporation and Subsidiaries Notes to Consolidated Financial Statements (Unaudited) Note D - Segment Reporting Advanced Material Performance Beryllium Technical All and (Thousands) Technologies Alloys Composites Materials Subtotal Other Total Third Quarter 2013 Sales to external $ 176,294 $ 69,578 $ 13,685 $ 15,877 $ 275,434 $ - $ 275,434 customers Intersegment 523 443 67 156 1,189 - 1,189 sales Operating profit 4,800 4,520 (3,306 ) 1,421 7,435 (1,453 ) 5,982 (loss) Third Quarter 2012 Sales to external $ 190,508 $ 68,700 $ 14,418 $ 16,975 $ 290,601 $ - $ 290,601 customers Intersegment 520 599 245 119 1,483 - 1,483 sales Operating profit 9,212 5,404 (515 ) 1,135 15,236 (1,847 ) 13,389 (loss) First Nine Months 2013 Sales to external $ 566,158 $ 218,435 $ 42,194 $ 53,957 $ 880,744 $ - $ 880,744 customers Intersegment 2,048 1,484 200 600 4,332 - 4,332 sales Operating profit 12,694 18,654 (3,780 ) 5,246 32,814 (3,920 ) 28,894 (loss) Assets 319,593 267,232 142,183 23,734 752,742 53,256 805,998 First Nine Months 2012 Sales to external $ 654,245 $ 216,434 $ 43,102 $ 55,459 $ 969,240 $ 79 $ 969,319 customers Intersegment 1,691 1,968 574 590 4,823 - 4,823 sales Operating profit 22,011 18,349 (3,823 ) 4,995 41,532 (5,814 ) 35,718 (loss) Assets 366,190 257,825 134,787 23,094 781,896 36,463 818,359 Contact: Materion Corporation Investor Contact: Michael C. Hasychak, 216-383-6823 firstname.lastname@example.org or Media Contact: Patrick S. Carpenter, 216-383-6835 email@example.com or http://www.materion.com Mayfield Hts-g
Materion Corporation Reports Third Quarter Financial Results
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