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

FORM 10-K

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes  X   No

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

The aggregate market value of the registrant's common stock (its only voting stock) held by non-affiliates of the registrant, based on the closing sales price for the registrant's common stock as reported on the New York Stock Exchange on March 18, 2002, was approximately $44.5 million. As of March 18, 2002, there were 27,035,325 shares of common stock of the registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this report on Form 10-K incorporates by reference information, to the extent specific sections are referred to herein, from the registrant's proxy statement for its annual meeting of stockholders to be held on May 9, 2002.

TABLE OF CONTENTS

PART I

            Certain statements contained in this report are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the Safe Harbor provisions created by the statutes.  These statements relate to our current views with respect to non-historical information and include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements.  These statements are not guarantees of future performance and are subject to certain risks and uncertainties - such as those discussed in the section entitled "Factors That May Affect Future Results" below - that could cause, and in certain instances have caused, actual results to differ materially from those expressed or forecasted.  You should not rely on these forward-looking statements, which reflect only our opinion as of the date of this 10-K.  These factors should not be considered an exhaustive list.  We do not undertake the responsibility to update any forward-looking statement that may be made from time to time by us or on our behalf. 

Item 1.  Business

(a)        General Development of Business.

BMC Industries, Inc., a Minnesota corporation ("BMC," "we," "our" or "us"), is a multinational manufacturer and distributor of a variety of products in two reportable segments: Buckbee-Mears and Optical Products, which operates under the Vision-Ease trade name.  Buckbee-Mears is comprised of Mask Operations and Micro-Technology Operations.  Mask Operations produces aperture masks, which are critical components of color television and computer monitor picture tubes.  Micro-Technology Operations, formerly Buckbee-Mears St. Paul or "BMSP", is the leading producer of precision photo-etched metal and electroformed components.  Micro-Technology Operations produces a variety of component parts used in the medical, electronic, telecommunication, automotive and filtration market segments.  We changed the name of BMSP to Micro-Technology Operations in March 2001 to reflect the broad capabilities resident in this operation's core technology.  In response to difficult economic conditions and industry changes during 2001 and continuing into 2002, Buckbee-Mears has undertaken efforts to consolidate its operations and reduce costs to align its operation with the market.  In furtherance of this effort, Mask Operations began to exit the computer monitor segment of the mask market in late 2001 and intends to completely exit this segment by the end of 2002.  Micro-Technology Operations is continuing in 2002 to reduce operating expenses as a result of particularly difficult economic conditions that have affected its business.  We are pursuing various options available to maximize the value of Micro-Technology Operations, including efforts underway to sell portions of the business and consolidate portions of the St. Paul, Minnesota operations into the Mask Operations facilities in Cortland, New York and Mullheim, Germany.

Optical Products designs, manufactures and distributes polycarbonate, glass and hard-resin plastic eyeglass lenses under the trade name of "Vision-Ease."  Similar to the actions taken by Buckbee-Mears, Optical Products continues into 2002 to implement efforts begun in 2001 to reduce its cost structure, consolidate its operations and focus its resources on higher margin, value-added products. In January 2002, Optical Products sold its Optifacts division, a developer and distributor of software used in the optical products industry, to Essilor of America, Inc.  In February 2002, Optical Products announced the closing of its Azusa, California polycarbonate manufacturing facility and the transfer of production to Vision-Ease's existing facilities in Jakarta, Indonesia and Ramsey, Minnesota.

(b)        Financial Information About Industry Segments.

Financial information about our operating segments for the three most recent fiscal years appear on pages 41-42.

(c)        Narrative Description of Business.

Buckbee-Mears

Products and Marketing. Buckbee-Mears has manufacturing operations in Cortland, New York, Mllheim, Germany and St. Paul, Minnesota, all of which are ISO 9002 certified, which is a critical prerequisite to supplying a broad base of customers.  Mask Operations manufactures aperture masks at the Cortland and Mullheim facilities and operates a low-cost mask inspection facility in Tatabanya, Hungary.  The St. Paul facility is primarily dedicated to Micro-Technology Operations for research and development activities and small batch or specialty manufacturing, including precision photo-etched metal parts, specialty printed circuits, precision electroformed components and precision etched and filled glass products. Micro-Technology Operations also has production operations in Cortland and Mullheim.

Two customers of Buckbee-Mears each accounted for more than 10% of our total consolidated revenues for 2001. Thomson, S.A. of France, including its U.S. based operations, accounted for approximately 16% of our 2001 consolidated revenues. Samsung Display Co., Ltd., of South Korea accounted for approximately 14% of our 2001 consolidated revenues.  Thomson produces televisions in North America and Europe under various trademarks, including RCA and GE.  Samsung produces televisions in the Americas, Europe and Asia and computer monitors in South American and Asia under the Samsung trade name.

Aperture masks are photo-chemically etched fine screen grids found in color television and computer monitor picture tubes and consist of thousands of precise, conically shaped holes designed to focus the electron beam on the proper phosphor color stripe to produce a crisp image.  Aperture masks are made from steel or invar, a nickel and iron alloy, and range in size from 6-inch to 40-inch diagonal dimensions.  We manufacture aperture masks ranging from 14-inch to 36-inch diagonal dimensions.  Our facilities employ an automated continuous photochemical etching process that we originally developed.  We sell aperture masks directly to color television and computer monitor tube manufacturers in North America, Europe, India and Asia through an in-house sales organization.  Sales of aperture masks comprised 52%, 55% and 55% of our consolidated total revenues in 2001, 2000 and 1999, respectively.

Mask Operations is engaged in ongoing efforts to develop future manufacturing and technical expertise in a variety of new mask products, including high definition television ("HDTV"), multimedia, widescreen (16 x 9) and pure flat mask products.  We have made significant process capability gains on advanced mask products, particularly in entertainment masks, with success in qualifying masks in the flat, widescreen and HDTV categories.

Micro-Technology Operations manufactures a variety of precision photo-etched metal and electroformed components.  We sell these components through both an in-house sales organization and independent manufacturer representatives to customers in the medical, electronics, automotive, telecommunications and filtration market segments.  Micro-Technology Operations' products include switch contacts, ignition components, medical device components, reusable filtration devices and precision sorting sieves.  Over the past few years, Micro-Technology Operations has pursued a strategy of leveraging its high-volume precision technologies and production capabilities to attract large end-product manufacturers for joint research and product development projects.  These efforts have resulted in the development of new technology and new customers with significant potential future revenue opportunities.  In March 2001, Buckbee-Mears signed separate agreements with Visteon Corporation and Cordis Corporation, a wholly-owned unit of Johnson & Johnson, which grant to BMC technology rights and/or production opportunities in the circuit board and implantable stent markets.  The underlying technology of these agreements has broad potential applications and we have ongoing efforts to market this technology.  These efforts, however, have been hampered by weak economic conditions that continue into 2002.

During 2001, Mask Operations experienced a decline in demand for entertainment masks, particularly medium and large-sized television masks.  Medium and large size mask sales declined 43% year-over-year, resulting from a mix shift in Europe from large to jumbo-sized masks, an overall weak NAFTA market and a comparison to prior year sales made difficult due to particularly strong fourth quarter 2000 sales enhanced by the sale of masks to a customer in China.  Sales of jumbo-sized masks (those 30" and larger) increased 14% in the fourth quarter of 2001 as compared to the same period in 2000.

During portions of the third and fourth quarters of 2001, Buckbee-Mears temporarily shut down aperture mask production lines at its Cortland manufacturing facility.  We timed these shutdowns to occur in conjunction with previously scheduled maintenance shutdowns to minimize the impact to employees and operations.  In 2002, Mask Operations intends to exit the computer monitor segment of the aperture mask business and focus its operations on development and production of more profitable entertainment mask products. 

Raw Materials.  Buckbee-Mears procures raw materials from multiple suppliers.  Steel and invar are the main raw materials used by Buckbee-Mears.  Our Cortland facility imports all of its steel and invar requirements from suppliers in Japan and Germany.  Our Mullheim facility obtains a majority of its steel and invar raw material from a supplier within Germany and the remaining portion from a vendor in Japan.  Importation of steel into the United States is subject to certain restrictions imposed by U.S. federal trade legislation and regulations.  In addition, steel imports are the subject of occasional domestic trade disputes and investigations that have resulted in the imposition of tariffs by the U.S. federal government.  We have successfully obtained exclusions from these tariffs to date, most recently as March 2002, based on our inability to source aperture mask steel in the U.S.  We do not anticipate difficulty in obtaining steel or any other raw materials.  Our inability to obtain these materials, however, would have a material adverse effect on production and results of operations.

Intellectual Property.  We have a number of patents and license rights that are important to the success of our Buckbee-Mears operations.  These patents range in their expiration dates from 2002 to 2018.  We believe that the loss of any single patent would not have a material adverse effect on our business as a whole.  We believe that improvement of existing products and processes and a reliance on trade secrets and unpatented proprietary know-how are as important as patent protection in establishing and maintaining our competitive position.  At the same time, we continue to seek patent protection for our products and processes on a selective basis.  There can be no assurance, however, that any issued patents will provide substantial protection or commercial value.  We require our consultants and employees to agree in writing to maintain the confidentiality of our information and, within certain limits, to assign to us any inventions, and any patent or other intellectual property rights, relating to our business.  In addition, we have an Intellectual Property program that enhances our ability to identify and protect intellectual property from the development stage through the life of our products and processes.

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

Competition.  The precision etched metal and electroformed parts business is intensely competitive, with no one competitor dominating the market. We are one of five independent mask manufacturers in the world and the only independent mask manufacturer with production facilities in the United States.  Our primary mask competitors operate in Japan and Korea.  In addition, several color picture tube manufacturers operate captive mask production facilities and two state directed ventures operate in China.  Independent mask manufacturers supply approximately 86%of the global mask market, with BMC among the largest at an estimated 16% of the combined television and monitor mask market share.  We supplied approximately 18% of the worldwide demand for television masks and 8% of the demand for monitor masks in 2001. Our customer, Philips Components B.V., announced in November 2000 that it was merging with one of Buckbee-Mears' independent competitors, LG. Electronics of South Korea.  If completed, this transaction will result in vertical integration of LG's mask production into a captive supply arrangement with Philips' operations.

In addition to competition from other mask manufacturers, Mask Operations competes against rival technologies such as LCD monitors, plasma displays and projection televisions.  LCD monitors accounted for 16% of total monitors in 2001, up from 5% in 2000, and laptops grew to 20% of PC's purchased from 18% in 2000, both reducing the need for CRT tubes.  Sales of projection televisions in the U.S. have grown over the last year due to rapidly dropping prices, contributing in the decline in sales of jumbo CRT televisions.  Further, many consumers identify HDTV with projection televisions, further contributing to the growth in sales of projection televisions.  Nevertheless, rival product technologies such as plasma and LCD are still very expensive compared to CRT technology and therefore we believe they are not a practical substitute to CRT technology for much of the global consumer monitor market.

Many producers compete in the market for precision photo-etched and electroformed metal parts that are produced by Micro-Technology Operations, including some that also manufacture aperture masks.  There is no clear market share leader in this fragmented industry.  We compete principally on the basis of price, product quality and product availability.   We also attempt to build preferred supplier and research and development arrangements with customers to best meet their current and new product requirements.  In order to pursue new products and technology while maintaining competitive on existing products, we engage in ongoing cost reduction measures, including the development of automated processes. 

Backlog.  As of December 31, 2001, the firm backlog of Buckbee-Mears sales orders was $14.9 million, compared with $19.7 million as of December 31, 2000.  We expect that all of the December 31, 2001 backlog orders will be filled within the current fiscal year.

Employees.  As of March 18, 2002, Buckbee-Mears had approximately 1,237 employees in the United States and Europe.  The majority of U.S. employees are not represented by labor unions. In compliance with local laws, production employees in Europe are represented by labor unions.  Labor relations generally are considered to be good and there have been no significant labor disputes in the past ten years.

Optical Products

Products and Marketing.   Optical Products, operating under the Vision-Ease trade name, designs, manufactures and distributes a full line of eyeglass lenses.  The group is headquartered in Brooklyn Park, Minnesota and operates production facilities in Azusa, California; Ramsey, Minnesota; and Jakarta, Indonesia. Vision-Ease also has polycarbonate laboratory operations in the U.S. and Europe and five distribution centers in the U.S., Canada and England. Optical Products announced early in 2002 a significant consolidation of operations, including the closure during the year of our manufacturing facility in Azusa and the consolidation of its headquarters with BMC's corporate office space in Minneapolis.  The process of transferring polycarbonate lens production from the Azusa facility to our facilities in Ramsey and Jakarta is underway.

Vision-Ease manufactures lenses in two principal materials, polycarbonate and glass, and sources hard-resin plastic lenses.  Within each of these lens materials, we offer single-vision lenses, which have a constant corrective power at all points; multi-focal lenses, which have two or more distinct areas of different corrective power; progressive lenses, which are a type of multi-focal lens with a continuous gradient of different corrective power without the line or "jump" generally associated with other multi-focal lenses; and prescription and non-prescription lenses that are used primarily for sunwear.  We also produce lenses with value-added features such as anti-reflective and scratch-resistant coatings to meet increasing demand for value-added products.

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

Vision-Ease has pursued a core strategy of converting domestic and international ophthalmic markets to polycarbonate and is a technological leader in the design and manufacture of polycarbonate lenses.   Although domestic polycarbonate lens sales contracted slightly in 2001, sales during 2001 in Europe grew by double digits and it continues to be the world's fastest growing lens material, with sales growth in North America of approximately 15% annually for the prior 15 years.

In early 2000, the Optical Products group established a lens laboratory network in Europe to pursue growth of polycarbonate in that market. This network is made up of administration/customer service in Mullheim, Germany and a processing facility in Brou, France.  The Brou laboratory specializes in grinding, edging and applying anti-reflective coatings to polycarbonate lenses for sale in the European market.  Over the course of 2000 and 2001, we qualified our polycarbonate products and laboratory processing capabilities with a broad cross-section of retailers in Europe.  We began similar efforts in the U.S. during 2001 through the establishment of operations to process and distribute polycarbonate lenses at the laboratory level.

We continue to experience diminishing sales of lenses made from glass as the lens market continues to move toward polycarbonate and hard-resin plastic lenses.  We produce semi-finished glass multi-focal and finished and semi-finished single-vision glass lenses at our Jakarta facility.  In 2001, we transferred the production of specialty glass lens products from our former St. Cloud, Minnesota production facility to the Jakarta facility.   We complete our product offerings through sourcing of hard-resin plastic lenses from a low cost manufacturer in Southeast Asia. This sourcing arrangement allows Vision-Ease to focus manufacturing capabilities on higher-margin products while offering a complete line of lens products at cost competitive prices.

In January 2002, Optical Products completed the sale of its Optifacts division to Essilor of American, Inc. of Dallas, Texas.  Optifacts is a developer and distributor of software used in the ophthalmic lens industry, including lab management software used by a number of retail and wholesale optical laboratories.  In connection with the sale of Optifacts, Vision-Ease retained rights to license Optifacts software for laboratory operations and other internal purposes.  We used the proceeds of the Optifacts sale to repay debt.

Intellectual Property.  Vision-Ease holds several patents protecting certain products and manufacturing processes.  These patents have expiration dates ranging from 2002 to 2019.  Vision-Ease has built a strong patent position in certain product categories, including polycarbonate polarizing and photochromic lenses and production processes. We believe the loss of any single patent would not have a material adverse effect on our business as a whole.  We believe that improvement of existing products and processes, the development of new lens products and a reliance on trade secrets and unpatented proprietary know-how are as important as patent protection in establishing and maintaining our competitive position.  At the same time, we continue to seek patent protection for our products and processes on a selective basis.  There can be no assurance, however, that any issued patents will provide substantial protection or commercial value.  We require our consultants and employees to agree in writing to maintain the confidentiality of our information and, within certain limits, to assign to us any inventions, and any patent or other intellectual property rights, relating to our business.  We own several trademarks, including SunRx®, Tegra®, Diamonex®, Vivid™, Outlook™, Continua™ and SunSport®.  As part of our marketing strategy to build sales of branded products, we have increased our use of trademarks during the past few years.  Although there are no assurances as to the strength or scope of our trademarks, we believe that these trademarks have been and will be useful in developing and protecting market recognition for our products.  In addition, we have an Intellectual Property program that enhances our ability to identify and protect intellectual property from the development stage through the life of our products and processes.

The Optical Products group dedicates the significant portion of its process and product research and development resources in polycarbonate lens and higher margin, value-added product development.  These investments resulted in the achievement of a significant milestone in December 2001 with the issuance of U.S. Patent No. 6,328,446 covering technology inclusive of our proprietary polarizing product as well as our proprietary photochromic polycarbonate lenses, which are scheduled for availability in the third quarter of 2002.  This patent covers technological advances in the design and manufacture of premium polycarbonate sunwear.  This patent adds to a growing intellectual property portfolio and represents our commitment to leading the industry in the development of premium polycarbonate products and related film technologies.  We intend to continue making significant investments in product and process design and development for all lens materials as well as leverage our core technologies to diversify into new and non-optical products.

Competition.  The ophthalmic lens industry is highly competitive.  We compete principally on the basis of product offerings, pricing, product quality and customer service.  Vision-Ease is the third largest ophthalmic lens manufacturer and distributor in North America, with a substantially smaller share of the global lens market.  Our largest competitors are Essilor International and Sola International Inc., who have a combined share of approximately 70% of the ophthalmic lens sales in North America and 50% of the world-wide lens market.  Many of our competitors, particularly Essilor and Sola, have greater financial resources than Vision-Ease with which to fund research, development and capital expenditures.  These competitors also own and operate a substantial number of domestic vertically integrated wholesale laboratories.

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

Raw Materials.  Vision-Ease procures raw materials from multiple suppliers.  There are multiple domestic and foreign sources of polycarbonate resin. We obtain hard-resin plastic lenses from a single source in Southeast Asia.    In addition, we source film used in the production of polarizing lenses from a single source in Japan.  The importation of raw materials and products into and out of foreign territories is subject to certain trade restrictions imposed by foreign and United States trade regulations that could result in the disruption of supply.  Although we do not anticipate any disruption to our supply of raw materials or lenses produced or sourced outside the U.S., the inability to obtain these supplies could have a material adverse effect on Vision-Ease's results of operations.

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

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

Employees.  As of March 18, 2002, Vision-Ease had approximately 1,637 employees in the United States, Europe and Indonesia.  None of the employees in the United States are represented by labor unions.  In compliance with local laws, production employees in Europe and Indonesia are represented by labor unions.  Labor relations are considered to be good at all operations and there have been no significant labor disputes in this group's history of operations.

Environmental

As part of our manufacturing processes in both Buckbee-Mears and Optical Products, we use hazardous chemical substances that must be handled in accordance with federal, state, local and foreign environmental and safety laws and regulations.  These processes also generate wastewater and wastes, some of which are classified as hazardous under applicable environmental laws and regulations.  The wastewater is treated using on-site wastewater treatment systems.  We employ systems for either disposing of wastes in accordance with applicable laws or regulations or recycling the chemicals we use through the manufacturing process.  Environmental and other government agencies monitor the wastes and the wastewater treatment systems to ensure compliance with applicable standards.  Although we attempt to operate within all applicable laws and follow sound environmental procedures, environmental regulations place responsibility for waste on the generator even after proper disposal.   There can be no assurance, therefore, that we will not incur future liability for waste disposal despite our best efforts.  As of March 18, 2002, we were involved in a total of eight (8) environmental investigations and/or remedial actions in which final settlement had not been reached, of which one (1) relates to a discontinued operation, five (5) relate to Buckbee-Mears operations and two (2) relate to Optical Products operations.

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

We estimate that Buckbee-Mears incurred approximately $5.3 million in 2001 and $5.4 million in 2000 on expenditures, including capital expenditures, related to efforts to comply with applicable laws and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.  We anticipate that Buckbee-Mears will spend approximately $5.2 million in 2002 and $1.0 million in 2003 on capital expenditures for environmental control facilities and response costs.  Vision-Ease incurred approximately $0.2 million in 2001 and $0.1 million in 2000 on expenditures, including capital expenditures, related to efforts to comply with applicable laws and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment.  We estimate that Vision-Ease will make approximately $0.1 million in capital expenditures for environmental control facilities during each of 2002 and 2003.

(d)        Financial Information About Geographic Areas.

Financial information about our operations in different geographic areas for the three most recent fiscal years appears on page 43.

(e)        Risk Factors

Restructuring.  BMC suffered a financial loss in 2001 and, partly in response, is exiting the computer monitor mask business, consolidating its manufacturing facilities and reducing its number of employees and other costs significantly, leading to restructuring related charges to earnings of $6.0 million in 2001. We expect additional charges of $2.0 to $3.0 million relating to closure of the Azusa facility in the first quarter of 2002. It is possible that additional cost-reduction or other restructuring related measures will be needed that could require additional charges to future earnings.

Adoption of SFAS No. 142.  In assessing the recoverability of BMC's goodwill and other intangible assets, we are required to make assumptions regarding estimated future cash flows and other factors to determine the fair value of the respective assets.  If these estimates or their related assumptions change in the future, BMC may be required to record impairment charges for these assets not previously recorded.  Effective January 1, 2002, BMC will adopt Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, and will be required to analyze its goodwill for impairment issues during the first six months of fiscal 2002, and on a periodic basis thereafter.  BMC did not record any impairment losses related to goodwill and other intangible assets during the year-ended December 31, 2001.  Based on preliminary analysis, however, we anticipate that Optical Products will incur a goodwill impairment write-off between $35 million and $50 million on implementation of SFAS No. 142.  Further charges may be necessary in the future.

Pricing and Margins.  Many market and economic factors, as well as internal operating performance, have adversely affected, and could continue to affect, our financial performance and projected future results. Since each of our operations supply components to manufacturers of end products, imbalances in supplies and demand at all levels of product distribution could have, and in some instances have had, a significant impact on our pricing and margins.  Capacity expansions by aperture mask manufacturers helped create this type of imbalance in the mask market a few years ago, which resulted in pricing pressures that continue to impact pricing.  In addition, margins are affected by the need to develop new technology. Our ability to meet the market demand for new products in a timely fashion requires the investment of resources, which, coupled with pricing pressures, decrease our margins. To offset these pressures and costs, we have implemented several cost reduction measures and are pursuing sales of higher margin products and have taken major steps to reduce our fixed and variable costs in all of our operations, including the transfer of additional lens manufacturing to our Jakarta facility and yield improvement initiatives.  These efforts may not be enough to improve revenues, operating performance or margins.

Reliance on key customers.  Both Optical Products and Mask Operations rely on sales to key customers for a large share of sales.  The loss of any of these customers could have a material adverse effect on our results of operations.  Although we strive to differentiate our products and services from those of the competition, we may lose customers due to vertical integration of these customers into competitors.

Competition/New Product Development and Introduction.  Each of our operations faces competition from other companies in the same technology as well as competition with alternative technologies.  As a result, we invest significantly in new product development.  Vision-Ease has invested substantial resources toward new lens offerings, particularly in polycarbonate.  These efforts have resulted in many new products that have experienced success to date, including our Tegra® high-performance polycarbonate product line, Outlook™ progressive lenses, and polarizing sunwear. Buckbee-Mears continues its efforts to develop new high-volume product opportunities.  In addition, Buckbee-Mears will continue to dedicate resources towards development of HDTV and multimedia masks.  We must develop these and other new products and technologies at competitive prices and quality in order to compete in each of the markets we serve.  There are no assurances, however, that we will succeed in these efforts, that competitors will not develop better quality and less expensive products, that we will develop or introduce new products within our anticipated time schedule or that alternative technologies, such as laser eye surgery, will not replace our products.

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

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

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

International Markets.  Buckbee-Mears has a manufacturing facility located in Mullheim, Germany and an aperture mask inspection facility in Tatabanya, Hungary. Vision-Ease has optical lens laboratory operations in Europe, a supply arrangement with hard-resin plastic lens manufacturer in Southeast Asia, and a joint venture in Indonesia for glass and polycarbonate lens manufacturing.  In addition, we have many international customers and are dedicating significant resources to increase business with international customers at all of our operations.  Our international operations and sales could be adversely affected by governmental regulations, political instability, economic changes or instability and competitive conditions in other countries in which, and with which, we conduct business.  Economic difficulty has been experienced in Asia during the recent past and globally during the past year, which serves as an example of international conditions that can adversely affect financial performance.  Future downturns in the global economy or in certain areas of the world could affect our operations without advance warning.  Further, there are no assurances that our efforts to grow our business, such as penetration of polycarbonate lens sales in Europe through laboratory operations, will be successful.

Item 2.  Properties

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

We lease approximately 14,000 square feet in suburban Minneapolis, Minnesota for our corporate headquarters.  We also lease approximately 10,939 square feet in Brooklyn Park, Minnesota for our Vision-Ease headquarters; however, we will vacate that location in 2002 and consolidate personnel at BMC's headquarters in Minneapolis.  We lease approximately 82,000 square feet for customer service, administration and distribution in St. Cloud, Minnesota pursuant to a lease that expires in 2005.  Our plant lease in St. Paul expires in February 2004.   Vision-Ease has the option to purchase the Azusa facility for $1.00 at anytime.  We anticipate that Vision-Ease will exercise this option and sell the Azusa property in connection with the facility closure and transfer of operations to Ramsey and Jakarta.  We believe our existing facilities are sufficient to meet our current and foreseeable production and other needs.

In addition to the properties listed above, we operate other smaller domestic and international warehouse, distribution, laboratory and administrative offices. For additional information concerning our leased properties, see Note 8 to Notes to Consolidated Financial Statements on page 34.

Item 3.  Legal Proceedings

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

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

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

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

Item 4A.  Executive Officers of the Registrant

The names and ages of our executive officers, all of whose terms expire in May 2002, the year first elected or appointed as an executive officer and the offices held as of March 18, 2002 are listed below:

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

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

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

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

Mr. Dobson joined BMC in April 1995 as Director of Legal Services.  In December 1997, he was appointed General Counsel and Secretary.  In November 1999, Mr. Dobson was appointed Vice President of Human Resources, General Counsel and Secretary.  In November 2001, he was appointed Vice President, General Counsel and Secretary.  Prior to joining BMC, Mr. Dobson was an associate with Lindquist & Vennum PLLP, a Minneapolis law firm, practicing exclusively in corporate and securities law.

Mr. Petersen joined BMC in August 2001 as Executive Vice President, Finance and Administration, of the Optical Products group.  In December 2001, he was appointed Senior Vice President and Chief Financial Officer of BMC.  Prior to joining BMC, Mr. Petersen served as Senior Vice President and Chief Financial Officer of Rivertown Trading Company, a retail catalog producer, and later of Target.Direct.Inc., an internet-based retailer, from September 1996 to March 2001.  Prior to that, he served in numerous executive positions in finance, accounting and operations with Rosemount, Inc., a division of Emerson Electric Company, a process instrumentation manufacturer, and Diversified Energies, Inc., a holding company with interests in natural gas, prior to its merger into Arkla, Inc.

Part II

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

BMC's common stock is traded on the New York Stock Exchange under the ticker symbol "BMM".  The table below sets forth the high and low reported sales prices of BMC stock by quarter for the years 2001 and 2000.  At March 18, 2002, there were approximately 1,100 stockholders of record.

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

Item 6.  Selected Financial Data

The following selected financial data is derived from the consolidated financial statements of the Company and should be read in conjunction with the consolidated financial statements, related notes, and other financial information included herein.

HISTORICAL FINANCIAL SUMMARY

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