BRUSH ENGINEERED MATERIALS INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period
from ________________ to ________________

Commission file number 1-15885

BRUSH ENGINEERED MATERIALS INC.
(Exact name of Registrant as specified in its charter)

OHIO 34-1919973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17876 ST. CLAIR AVENUE, CLEVELAND, OHIO 44110
(Address of principal executive offices) (Zip Code)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 216-486-4200

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- --------------------------------------------- ---------------------------------------------

Common Stock, no par value New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None

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 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. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [X] No [ ]

The aggregate market value of Common Stock, no par value, held by
non-affiliates of the registrant (based upon the closing sale price on the New
York Stock Exchange) on July 2, 2004 was approximately $315,915,631.

As of March 11, 2005, there were 19,212,822 shares of Common Stock, no par
value, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual report to shareholders for the year ended December
31, 2004 are incorporated by reference into Parts I, II and IV. Portions of the
proxy statement for the annual meeting of shareholders to be held on May 3, 2005
are incorporated by reference into Part III.

BRUSH ENGINEERED MATERIALS INC.

Index to Annual Report
On Form 10-K for
Year Ended December 31, 2004

PART I

Item 1. Business.................................................... 1

Item 2. Properties.................................................. 5

Item 3. Legal Proceedings........................................... 7

Item 4. Submission of Matters to a Vote of Security Holders......... 9

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities........... 10

Item 6. Selected Financial Data..................................... 10

Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 10

Item 7A. Quantitative and Qualitative Disclosures About Market
Risk........................................................ 10

Item 8. Financial Statements and Supplementary Data................. 10

Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.................................... 10

Item 9A. Controls and Procedures..................................... 10

Item 9B. Other Information........................................... 11

PART III

Item 10. Directors and Executive Officers of the Registrant.......... 12

Item 11. Executive Compensation...................................... 12

Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 12

Item 13 Certain Relationships and Related Transactions.............. 12

Item 14. Principal Accounting Fees and Services...................... 12

PART IV

Item 15. Exhibits, Financial Statement Schedules..................... 13

Signatures.................................................. 18

PART I

FORWARD-LOOKING STATEMENTS

Portions of the content set forth in this document that are not statements
of historical or current facts are forward-looking statements. The Company's
actual future performance, including performance in the near term, 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:

- The global economy;

- The condition of the markets which the Company serves, whether defined
geographically or by market, with the major markets being
telecommunications and computer, magnetic and optical data storage,
automotive electronics, semiconductor, industrial components, aerospace
and defense and appliance;

- Actual sales, operating rates and margins for the year 2005;

- Changes in product mix;

- The financial condition of particular customers;

- The Company's success in implementing its strategic plans and the timely
and successful completion of any capital projects;

- The availability of adequate lines of credit and associated interest
rates;

- Other factors, including, cost and availability of materials, exchange
rates, tax rates, pension costs, energy costs, regulatory compliance
costs and the cost and availability of insurance;

- Changes in government regulatory requirements and the enactment of any
new legislation that impacts the Company's obligations;

- The conclusion of pending litigation matters in accordance with the
Company's expectation that there will be no material adverse effects;

- The uncertainties related to the impact of war and terrorist activities;

- Additional risk factors that may affect the Company's results are
identified under the caption "Risk Factors" in the Company's Prospectus
filed with the Securities and Exchange Commission on July 1, 2004.

ITEM 1. BUSINESS

Brush Engineered Materials Inc., through its wholly owned subsidiaries, is
a leading manufacturer of high-performance engineered materials serving the
global telecommunications and computer, magnetic and optical data storage,
automotive electronics, industrial components, aerospace and defense and
appliance markets. As of December 31, 2004, the Company had 1,912 employees.

The Company's subsidiaries are organized under two reportable segments: the
Metal Systems Group and the Microelectronics Group. The Metal Systems Group
includes Brush Wellman Inc. (Alloy Products and Beryllium Products) and
Technical Materials, Inc. (TMI). The Microelectronics Group includes Williams
Advanced Materials Inc. (WAM) and Electronic Products, which in turn, consists
of Zentrix Technologies Inc. (Zentrix) and Brush Ceramic Products Inc., a wholly
owned subsidiary of Brush Wellman Inc. Portions of Brush International, Inc. are
included in both segments. Included in "All Other" in the Company's financial
statements included later in this Form 10-K are the operating results from BEM
Services, Inc. and Brush Resources Inc., two wholly owned subsidiaries of the
Company. BEM Services charges a management fee for services, such as
administrative and financial oversight, to the other businesses within the
Company on a cost-plus basis. Brush Resources sells beryllium hydroxide produced
through its Utah operations to outside customers and to businesses within the
Metal Systems Group. As of December 31, 2004 BEM Services, Inc. and Brush
Resources Inc. had 143 employees.

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METAL SYSTEMS GROUP

The Metal Systems Group is comprised of Alloy Products (primarily beryllium
copper), Beryllium Products and TMI. In 2004, 60% of the Company's sales were
from this segment (60% in 2003 and 61% in 2002). As of December 31, 2004 the
Metal Systems Group had 1,222 employees.

Alloy Products manufactures beryllium-containing and other high
performance-based alloys that are metallurgically tailored to meet specific
customer performance requirements. These products exhibit high electrical and
thermal conductivities, high strength and hardness, good formability and
excellent resistance to corrosion, wear and fatigue. These alloys, sold in strip
and bulk form, are ideal choices for demanding applications in the
telecommunications and computer, automotive electronics, aerospace, industrial
components including oil and gas, heavy equipment and plastic mold tooling and
appliances markets. These products are sold domestically through Brush
distribution centers and internationally through Company-owned and independent
distribution centers and independent sales representatives.

Beryllium Products manufactures products that include beryllium, AlBeMet(R)
and E-materials. Beryllium is a lightweight metal possessing unique mechanical
and thermal properties. Its specific stiffness is much greater than other
engineered structural materials such as aluminum, titanium and steel. Beryllium
is extracted from both bertrandite and imported beryl ore. In 2001, the Company
purchased land and mineral rights that were previously leased by its mining
operations in Utah. Beryllium products are used in a variety of high-performance
applications in the defense, electronics, automotive, medical and optical
scanning markets. Beryllium-containing products are sold throughout the world
through a direct sales organization and through Company-owned and independent
distribution centers. While Beryllium Products is the only domestic producer of
metallic beryllium, it competes with other fabricators as well as with designs
utilizing other materials.

Alloy Products' primary direct competitor in strip form beryllium alloys is
NGK Insulators, Ltd. of Nagoya, Japan, with subsidiaries in the U.S. and Europe.
Alloy strip products also competes with alloy systems manufactured by Olin
Corporation, Wieland Electric, Inc., Stolberger Metallwerke GmbH, Nippon Mining,
PMX and also with other generally less expensive materials, including phosphor
bronze, stainless steel and other specialty copper and nickel alloys which are
produced by a variety of companies around the world. In the area of bulk
products (bar, plate, tube and rod), in addition to NGK Insulators, Brush
competes with several smaller regional producers such as Freedom Alloys in the
U.S., LaBronze Industriel in Europe, and Young Il in Asia.

TMI manufactures engineered material systems that are combinations of
precious and non-precious metals in continuous strip form, and are used in
complex electronic and electrical components in telecommunications systems,
automotive electronics, semiconductor and computers. TMI's products are sold
directly and through its sales representatives. TMI has limited competition in
the United States and several European manufacturers are competitors for the
sale of inlaid strip. Strip with selective electroplating is a competitive
alternative as are other design approaches.

METAL SYSTEMS GROUP -- SALES AND BACKLOG

The backlog of unshipped orders for the Metal Systems Group as of December
31, 2004, 2003 and 2002 was $52,759,000, $47,692,000 and $35,064,000,
respectively. Backlog is generally represented by purchase orders that may be
terminated under certain conditions. The Company expects that substantially all
of its backlog of orders for this segment at December 31, 2004 will be filled
during 2005.

Sales are made to approximately 1,871 customers. Direct sales to the
government were less than 1% of Metal Systems Group sales for each of 2004, 2003
and 2002. Sales outside the United States, principally to Europe, Canada and the
Pacific Rim, accounted for approximately 41% of the Metal Systems Group sales in
2004, 42% in 2003 and 35% in 2002. Other segment reporting and geographic
information set forth on page 49 in Note M to the consolidated financial
statements in the annual report to shareholders for the year ended December 31,
2004 is incorporated herein by reference.

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METAL SYSTEMS GROUP -- RESEARCH AND DEVELOPMENT

Active research and development programs seek new product compositions and
designs as well as process innovations. Expenditures for research and
development for the Metal Systems Group amounted to $3,373,000 in 2004,
$2,820,000 in 2003 and $2,522,000 in 2002. A staff of 21 scientists, engineers
and technicians was employed in this effort as of year-end 2004. Some research
and development projects, expenditures for which are not material, were
externally sponsored.

MICROELECTRONICS GROUP

The Microelectronics Group is comprised of WAM and Electronic Products,
which consists of Zentrix and Brush Ceramic Products Inc. In 2004, 39% of the
Company's sales were from this segment (39% in 2003, and 37% in 2002). As of
December 31, 2004 the Microelectronics Group had 547 employees.

WAM manufactures and fabricates precious and non-precious metal and
specialty metal products for the magnetic and optical data storage, medical,
wireless, semiconductor, photonic and hybrid segments of the microelectronics
market. WAM's major product lines include vapor deposition materials, clad and
precious metals preforms, high temperature braze materials, ultra fine wire,
sealing lids for the semiconductor/hybrid markets and restorative dental alloys.

WAM's products are sold directly from WAM's facilities in Buffalo, New
York; Brewster, New York; Wheatfield, New York; Singapore, Taiwan and the
Philippines, as well as through direct sales offices and independent sales
representatives throughout the world. Principal competition includes companies
such as Sumitomo Metals, Praxair, Inc., Honeywell International Inc. and a
number of smaller regional and national suppliers.

Zentrix produces electronic packaging, circuitry and powder metal products.
Production sites include Oceanside, California; Tucson, Arizona and Newburyport,
Massachusetts. These products are used in wireless telecommunication,
fiberoptics, automotive and defense applications. Zentrix's products are sold
directly and through its sales representatives. Zentrix's principal competitor
in the beryllia ceramics market is CBL Ltd. Other competitors of Zentrix include
Kyocera Corporation, Semx Corporation, Aeroflex, Inc., American Technical
Ceramics and Anaren Microwave, Inc. Competitive materials include alumina,
aluminum nitride and composites. Competitors of Brush Ceramic Products include
CBL Ceramics and American Beryllia Inc.

MICROELECTRONICS GROUP -- SALES AND BACKLOG

The backlog of unshipped orders for the Microelectronics Group as of
December 31, 2004, 2003 and 2002 was $15,455,000, $13,681,000 and $19,833,000,
respectively. Backlog is generally represented by purchase orders that may be
terminated under certain conditions. The Company expects that substantially all
of its backlog of orders for this segment at December 31, 2004 will be filled
during 2005.

Sales are made to approximately 1,626 customers. Direct sales to the
government were less than 1% of Microelectronics Group sales for each of 2004,
2003 and 2002. Sales outside the United States, principally to Western Europe,
Canada and the Pacific Rim, accounted for approximately 22% of Microelectronics
Group sales in 2004, 15% in 2003 and 18% in 2002. Other segment reporting and
geographic information set forth on page 49 in Note M to the consolidated
financial statements in the annual report to shareholders for the year ended
December 31, 2004 is incorporated herein by reference.

MICROELECTRONICS GROUP -- RESEARCH AND DEVELOPMENT

Active research and development programs seek new product compositions and
designs as well as process innovations. Expenditures for research and
development for the Microelectronics Group amounted to $1,154,000 for 2004;
$1,409,000 for 2003 and $1,743,000 for 2002. A staff of six scientists,
engineers and technicians was employed in this effort as of year-end 2004.

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GENERAL

AVAILABILITY OF RAW MATERIALS

The principal raw materials used by the Company are beryllium (extracted
from both imported beryl ore and bertrandite mined from the Company's Utah
properties), copper, gold, silver, nickel, platinum, palladium and aluminum. Ore
reserve data in Management's Discussion and Analysis on page 24 of the Company's
annual report to shareholders for the year ended December 31, 2004 is
incorporated herein by reference. The Company has agreements to purchase stated
quantities of beryl ore, beryllium metal and beryllium-copper master alloy from
the Defense Logistics Agency of the U.S. Government. In addition, the Company
has a long-term supply arrangement with Ulba/Kazatomprom of the Republic of
Kazakhstan and its marketing representative, Nukem, Inc. of New York, to
purchase quantities of beryllium-copper master alloy and beryllium vacuum cast
billet. The availability of these raw materials, as well as other materials used
by the Company, is adequate and generally not dependent on any one supplier.

PATENTS AND LICENSES

The Company owns patents, patent applications and licenses relating to
certain of its products and processes. While the Company's rights under the
patents and licenses are of some importance to its operations, the Company's
business is not materially dependent on any one patent or license or on all of
its patents and licenses as a group.

REGULATORY MATTERS

The Company is subject to a variety of laws which regulate the manufacture,
processing, use, handling, storage, transport, treatment, emission, release and
disposal of substances and wastes used or generated in manufacturing. For
decades the Company has operated its facilities under applicable standards of
inplant and outplant emissions and releases. The inhalation of airborne
beryllium particulate may present a health hazard to certain individuals. The
Occupational Safety and Health Administration is currently reviewing its
beryllium standards.

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EXECUTIVE OFFICERS OF THE REGISTRANT

The following table shows the name, age and position of each of our
executive officers as of December 31, 2004:

ITEM 2. PROPERTIES

The material properties of the Company, all of which are owned in fee
except as otherwise indicated, are as follows:

MANUFACTURING FACILITIES

BREWSTER, NEW YORK -- A 35,000 square foot leased facility on a 6.0 acre
site for manufacturing services relating to non-precious metals.

BUFFALO, NEW YORK -- A complex of approximately 97,000 square feet on a 3.8
acre site providing facilities for manufacturing, refining and laboratory
services relating to high purity precious metals.

DELTA, UTAH -- An ore extraction plant consisting of 86,000 square feet of
buildings and large outdoor facilities situated on a 4,400 acre site. This plant
extracts beryllium from bertrandite ore from the Company's mines as well as from
imported beryl ore.

5

ELMORE, OHIO -- A complex containing approximately 856,000 square feet of
building space on a 439 acre plant site. This facility employs diverse chemical,
metallurgical and metalworking processes in the production of beryllium,
beryllium oxide, beryllium alloys and related products.

FREMONT, CALIFORNIA -- A 16,800 square foot leased facility for the
fabrication of precision electron beam welded, brazed and diffusion bonded
beryllium structures.

JUAB COUNTY, UTAH -- 7,500 acres with respective mineral rights from which
the beryllium-bearing ore, bertrandite, is mined by the open pit method. A
portion of the mineral rights is held under lease. Ore reserve data set forth on
page 24 in the annual report to shareholders for the year ended December 31,
2004 is incorporated herein by reference.

LINCOLN, RHODE ISLAND -- A manufacturing facility consisting of 140,000
square feet located on 7.5 acres. This facility produces reel-to-reel strip
metal products which combine precious and non-precious metals in continuous
strip form and related metal systems products.

LORAIN, OHIO -- A manufacturing facility consisting of 55,000 square feet
located on 15 acres. This facility produces non-beryllium metal alloys in
electronic induction furnaces which are continually cast into bar stock and heat
treated.

NEWBURYPORT, MASSACHUSETTS -- A 30,000 square foot manufacturing facility
on a 4 acre site that produces alumina, beryllia ceramic and direct bond copper
products.

OCEANSIDE, CALIFORNIA -- Two leased facilities totaling 20,200 square feet
on 1.25 acres of leased land. Over three-quarters of these facilities are
comprised of clean rooms for the production of thick-film circuits and other
complex circuits.

READING, PENNSYLVANIA -- A 123,000 square foot plant on a 55 acre site that
produces thin precision strips of beryllium copper and other alloys and
beryllium copper rod and wire.

SANTA CLARA, CALIFORNIA -- A 5,800 square foot leased facility that
provides bonding services relating to physical vapor deposition (PVD) materials.

SINGAPORE -- A 4,500 square foot leased facility for the assembly and sale
of precious metal hermetic sealing lids.

SUBIC BAY, PHILIPPINES -- A 5,000 square foot leased facility that
manufactures Combo-Lid(R) and performs preform assembly, inspection and
packaging.

TAIPEI, TAIWAN -- A 5,000 square foot service/bonding center supporting the
PVD product market in Asia.

TUCSON, ARIZONA -- A complex containing approximately 53,000 square feet of
building space on a 7 acre site for the production of beryllium oxide ceramic
substrates.

WHEATFIELD, NEW YORK -- A 29,000 square foot facility on a 10.2 acre site
for manufacturing services relating to braze material and specialty alloys.

RESEARCH FACILITIES AND ADMINISTRATIVE OFFICES

CLEVELAND, OHIO -- A 110,000 square foot building on an 18 acre site
housing corporate and administrative offices, data processing and research and
development facilities.

SERVICE AND DISTRIBUTION CENTERS

ELMHURST, ILLINOIS -- A 28,500 square foot leased facility principally for
distribution of beryllium copper alloys.

FAIRFIELD, NEW JERSEY -- A 24,500 square foot leased facility principally
for distribution of beryllium copper alloys.

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FUKAYA, JAPAN -- A 35,500 square foot facility on 1.8 acres of land in
Saitama Prefecture principally for distribution of beryllium copper alloys.

SINGAPORE -- A 2,500 square foot leased sales office that houses employees
of Alloy Products and WAM Far East.

STUTTGART, GERMANY -- A 24,750 square foot leased facility principally for
distribution of beryllium copper alloys.

THEALE, ENGLAND -- A 19,700 square foot leased facility principally for
distribution of beryllium copper alloys.

WARREN, MICHIGAN -- A 34,500 square foot leased facility principally for
distribution of beryllium copper alloys.

ITEM 3. LEGAL PROCEEDINGS

The Company and our subsidiaries are subject, from time to time, to a
variety of civil and administrative proceedings arising out of our normal
operations, including, without limitation, product liability claims, health,
safety and environmental claims and employment-related actions. Among such
proceedings are the cases described below.

BERYLLIUM CLAIMS

As of December 31, 2004, our subsidiary, Brush Wellman Inc., was a
defendant in 12 proceedings in various state and federal courts brought by
plaintiffs alleging that they have contracted, or have been placed at risk of
contracting, chronic beryllium disease or other lung conditions as a result of
exposure to beryllium. Plaintiffs in beryllium cases seek recovery under
negligence and various other legal theories and seek compensatory and punitive
damages, in many cases of an unspecified sum. Spouses of some plaintiffs claim
loss of consortium.

During 2004, the number of beryllium cases changed from 15 (involving 33
plaintiffs) as of December 31, 2003 to 12 cases (involving 56 plaintiffs) as of
December 31, 2004. During 2004, an aggregate of six cases (involving 10
plaintiffs) were settled and dismissed. Three cases (involving eight plaintiffs)
were voluntarily dismissed by the plaintiffs. Five cases involving 36 plaintiffs
were filed in 2004. In one case (involving one plaintiff) which was previously
reported as being voluntarily dismissed by the plaintiff, the plaintiff's
employer filed a motion to intervene, which was granted by the court, although
the court also granted the voluntary dismissal by the plaintiff. In one
purported class action that was previously reported on, an amended complaint was
filed (involving five additional named plaintiffs). In one purported class
action that was previously reported on, class certification was denied, although
the case remains pending as a third-party claim. In that case, the Company
learned during the year that a Suggestion of Death of one plaintiff was filed
during a previous reporting period.

The 12 pending beryllium cases as of December 31, 2004 fall into two
categories: nine cases involving third-party individual plaintiffs, with 17
individuals (and five spouses who have filed claims as part of their spouse's
case and two children who have filed claims as part of their parent's case); and
three purported class actions, involving 32 plaintiffs, as discussed more fully
below. Claims brought by third party plaintiffs (typically employees of our
customers or contractors) are generally covered by varying levels of insurance.

The first purported class action is Manuel Marin, et al. v. Brush Wellman
Inc., filed in Superior Court of California, Los Angeles County, case number
BC299055, on July 15, 2003. The named plaintiffs are Manuel Marin, Lisa Marin,
Garfield Perry and Susan Perry. The defendants are Brush Wellman, Appanaitis
Enterprises, Inc. and Doe Defendants 1 through 100. A First Amended Complaint
was filed on September 15, 2004, naming five additional plaintiffs. The five
additional named plaintiffs are Robert Thomas, Darnell White, Leonard Joffrion,
James Jones and John Kesselring. The plaintiffs allege that they have been
sensitized to beryllium while employed at the Boeing Company. The plaintiffs'
wives claim loss of consortium. The plaintiffs purport to represent two classes
of approximately 250 members each, one consisting of workers

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who worked at Boeing or its predecessors and are beryllium sensitized and the
other consisting of their spouses. They have brought claims for negligence,
strict liability -- design defect, strict liability -- failure to warn,
fraudulent concealment, breach of implied warranties, and unfair business
practices. The plaintiffs seek injunctive relief, medical monitoring, medical
and health care provider reimbursement, attorneys' fees and costs, revocation of
business license, and compensatory and punitive damages. Messrs. Marin, Perry,
Thomas, White, Joffrion, Jones and Kesselring represent current and past
employees of Boeing in California; and Ms. Marin and Ms. Perry are spouses.

The second purported class action is Neal Parker, et al. v, Brush Wellman
Inc., filed in Superior Court of Fulton County, State of Georgia, case number
2004CV80827, on January 29, 2004. The case was removed to the U.S. District
Court for the Northern District of Georgia, case number 04-CV-606, on March 4,
2004. The named plaintiffs are Neal Parker, Wilbert Carlton, Stephen King, Ray
Burns, Deborah Watkins, Leonard Ponder, Barbara King and Patricia Burns. The
defendants are Brush Wellman; Schmiede Machine and Tool Corporation;
Thyssenkrupp Materials NA Inc., d/b/a Copper and Brass Sales; Axsys
Technologies, Inc.; Alcoa, Inc.; McCann Aerospace Machining Corporation; Cobb
Tool, Inc.; and Lockheed Martin Corporation. Messrs. Parker, Carlton, King and
Burns and Ms. Watkins are current employees of Lockheed. Mr. Ponder is a retired
employee, and Ms. King and Ms. Burns are family members. The plaintiffs have
brought claims for negligence, strict liability, fraudulent concealment, civil
conspiracy and punitive damages. The plaintiffs seek a permanent injunction
requiring the defendants to fund a court-supervised medical monitoring program,
attorneys' fees and punitive damages.

The third purported class action is George Paz, et al. v. Brush Engineered
Materials Inc., et al., filed in the U.S. District Court for the Southern
District of Mississippi, case number 1:04CV597 on June 30, 2004. The named
plaintiffs are George Paz, Barbara Faciane, Joe Lewis, Donald Jones, Ernest
Bryan, Gregory Condiff, Karla Condiff, Odie Ladner, Henry Polk, Roy Tootle,
William Stewart, Margaret Ann Harris, Judith Lemon, Theresa Ladner and Yolanda
Paz. The defendants are Brush Engineered Materials Inc; Brush Wellman Inc.;
Wess-Del, Inc.; and the Boeing Company. Plaintiffs seek the establishment of a
medical monitoring trust fund as a result of their alleged exposure to products
containing beryllium, attorneys' fees and expenses, and general and equitable
relief. The plaintiffs purport to sue on behalf of a class of present or former
Defense Contract Management Administration (DCMA) employees who conducted
quality assurance work at Stennis Space Center and the Boeing Company at its
facility in Canoga Park, California; present and former employees of Boeing at
Stennis; and spouses and children of those individuals. Messrs. Paz and Lewis
and Ms. Faciane represent current and former DCMA employees at Stennis. Mr.
Jones represents DCMA employees at Canoga Park. Messrs. Bryan, Condiff, Ladner,
Park, Polk, Tootle and Stewart and Ms. Condiff represent Boeing employees at
Stennis. Ms. Harris, Ms. Lemon, Ms. Ladner and Ms. Paz are family members. The
Company filed a Motion to Dismiss on September 28, 2004.

The Company had one purported class action that has now been finally
decided. That case was John Wilson, et al. v. Brush Wellman Inc., originally
filed in Court of Common Pleas, Cuyahoga County, Ohio, case number 00-401890-CV,
on February 14, 2000. The named plaintiffs were John Wilson, Daniel A. Martin,
Joseph A. Szenderski, Larry Strang, Hubert Mays, Michael Fincher and Reginald
Hohenberger. Mr. Szenderski was voluntarily dismissed by the court on September
27, 2000. Mr. Szenderski filed a separate claim, which is now settled and
dismissed. A Suggestion of Death for Mr. Mays was filed in May 2002. The only
defendant is Brush Wellman. The trial court denied class certification on
February 12, 2002, and the Court of Appeals, Ohio 8th District, remanded on
October 17, 2002. The case was appealed to the Ohio Supreme Court, case number
03-0048, and oral arguments were heard on December 16, 2003. The Ohio Supreme
Court reversed the appellate court judgment and reinstated the trial court's
order denying class certification on November 17, 2004. The plaintiffs purported
to sue on behalf of a class of workers who belonged to unions in the
Northwestern Ohio Building Construction Trades Council who worked in Brush
Wellman's Elmore plant from 1953-1999. They brought claims for negligence,
strict liability, statutory product liability, ultrahazardous activities and
punitive damages and sought establishment of a fund for medical surveillance and
screening. The plaintiffs were seeking that Brush Wellman pay for a reasonable
medical surveillance and screening program for plaintiffs and class members,
punitive damages, interest, costs

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and attorneys' fees. The case has been remanded to the trial court, where it
remains pending as a third-party case (involving five plaintiffs).

From January 1, 2005 to February 28, 2005, three third-party cases
(involving four plaintiffs) were filed. In addition, the Company received a
summons and class action initiation order in one case, although no complaint has
been filed; however, the Company has filed a motion to vacate the class action
initiation order and to strike the praecipe for writ of summons and summons
itself, on the ground that no class action was commenced because plaintiff did
not file a complaint. In one purported class action, George Paz, et al. v. Brush
Engineered Materials Inc., et al., the Company's Motion to Dismiss was granted
and judgment was entered on January 11, 2005; however, the plaintiffs have filed
an appeal.

OTHER CLAIMS

As previously reported, the Company, one of its subsidiaries, Brush Wellman
Inc., and the Brush Beryllium Co., were defendants in Robert Schultz v. Brush
Engineered Materials Inc., et al., filed in Circuit Court, Third Judicial
Circuit, Madison County, Illinois, case number 04-L-191 on May 14, 2004. There
were 73 other named defendants. Plaintiff alleged that he contracted
asbestos-related diseases as a result of working with and around the products of
the defendants. On September 24, 2004, defendants Brush Engineered Materials
Inc., Brush Wellman Inc., and the Brush Beryllium Co. were dismissed. The case
remains pending as to the other defendants.

One of the Company's subsidiaries, Williams Advanced Materials Inc. (WAM),
is a party to patent litigation with Target Technology Company, LLC (Target). In
first actions filed in April 2003 by WAM against Target in the United States
District Court, Western District of New York, consolidated under case number
03-CV-0276A(SR), WAM has asked the court for a judgment declaring certain Target
patents as invalid and/or unenforceable and awarding WAM damages in related
cases. Target has counterclaimed alleging infringement and seeking a judgment
for infringement, an injunction against further infringement and damages for
past infringement. In September 2004, Target filed a separate action for patent
infringement in United States District Court, Central District of California,
case number SACV04-1083 DOC (MLGx), which action named as defendants, among
others, WAM and WAM customers who purchase certain WAM alloys used in the
production of DVDs. In the California action, Target alleges that the patent at
issue, which is related to the patents at issue in the New York action, protects
the use of certain silver alloys to make the semi-reflective layer in DVDs, and
that in DVD-9s, a metal film is applied to the semi-reflective layer by a
sputtering process, and that raw material for the procedure is called a
sputtering target. Target alleges that WAM manufactures and sells sputtering
targets made of a silver alloy to DVD manufacturers with knowledge that these
targets are used by its customers to manufacture the semi-reflective layer of a
DVD-9. In that action, Target seeks judgment that its patent is valid and that
it is being infringed by the defendants, an injunction permanently restraining
the defendants, damages adequate to compensate plaintiff for the infringement,
treble damages, and attorneys' fees and costs.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

9

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company's Common Stock is traded on the New York Stock Exchange. As of
March 11, 2005 there were 1,636 shareholders of record. Information as to stock
price set forth on page 51 in Note P to the consolidated financial statements in
the annual report to shareholders for the year ended December 31, 2004 is
incorporated herein by reference. The Company's ability to pay dividends is
restricted as provided in its subordinated term note agreement dated December 4,
2003.

We did not purchase any of our shares of common stock or other securities
during the year ended December 31, 2004.

ITEM 6. SELECTED FINANCIAL DATA

Selected Financial Data on pages 52 and 53 of the annual report to
shareholders for the year ended December 31, 2004 is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The management's discussion and analysis of financial condition and results
of operations on pages 14 through 27 of the annual report to shareholders for
the year ended December 31, 2004 is incorporated herein by reference.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The market risk disclosures on pages 26 and 27 of the annual report to
shareholders for the year ended December 31, 2004 are incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The report of independent registered accounting firm and the following
consolidated financial statements of the Company included in the annual report
to shareholders for the year ended December 31, 2004 are incorporated herein by
reference:

Consolidated Balance Sheets -- December 31, 2004 and 2003.

Consolidated Statements of Income -- Years ended December 31, 2004, 2003
and 2002.

Consolidated Statements of Shareholders' Equity -- Years ended December 31,
2004, 2003 and 2002.

Consolidated Statements of Cash Flows -- Years ended December 31, 2004,
2003 and 2002.

Notes to Consolidated Financial Statements.

Quarterly Data on page 51 in Note P to the consolidated financial
statements in the annual report to shareholders for the year ended December 31,
2004 is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

We carried out an evaluation under the supervision and with participation
of management, including the Chief Executive Officer and Chief Financial
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of December 31, 2004 pursuant to Rule 13a-15(b) under
the Securities
10

Exchange Act of 1934, as amended. Based upon that evaluation, our management,
including the Chief Executive Officer and Chief Financial Officer, concluded
that our disclosure controls and procedures were effective as of the evaluation
date.

There have been no changes in our internal controls over financial
reporting identified in connection with the evaluation required by Rule 13a-15
under the Securities Exchange Act of 1934, as amended, that occurred during the
quarter ended December 31, 2004 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

Management's assessment on our internal control over financial reporting is
contained in Management's Report on Internal Control over Financial Reporting on
page 29 in our annual report to shareholders for the year ended December 31,
2004 and is incorporated herein by reference.

The Report of Independent Registered Public Accounting Firm on our internal
control over financial reporting opining on management's assessment, included in
Management's Report on Internal Control over Financial Reporting, and opining on
the effectiveness of our internal control over financial reporting is contained
on page 29 in the annual report to shareholders for the year ended December 31,
2004 and is incorporated herein by reference.

ITEM 9B. OTHER INFORMATION

None.

11

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information under "Election of Directors" in the Proxy Statement for
the Company's 2005 Annual Meeting of Shareholders, to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A, is incorporated
herein by reference. The information required by this item relating to our
executive officers is included under the caption "Executive Officers of the
Registrant" in Part I of this report and is incorporated by reference into this
section. The information required by Item 10 with respect to directors, the
Audit Committee of the Board of Directors and Audit Committee financial experts
is incorporated herein by reference from the section entitled "Corporate
Governance; Committees of the Board of Directors" in the Proxy Statement for the
Company's 2005 Annual Meeting of Shareholders to be filed with the Securities
and Exchange Commission pursuant to Regulation 14A.

The Company has adopted a Policy Statement on Significant Corporate
Governance Issues and a Code of Ethics Policy that applies to our chief
executive officer, chief operating officer and senior financial officers,
including the principal financial and accounting officer, controller and other
persons performing similar functions in compliance with applicable New York
Stock Exchange and Securities and Exchange Commission requirements. These
materials, along with the charters of the Audit, Governance, Organization and
Compensation and Retirement Plan Review Committees of the Company's Board of
Directors, which also comply with applicable requirements, are available on the
Company's website at www.beminc.com, and copies are also available upon request
by any shareholder to Secretary, Brush Engineered Materials Inc., 17876 St.
Clair Avenue, Cleveland, Ohio 44110. The Company makes its reports on Forms
10-K, 10-Q and 8-K available on its website, free of charge, as soon as
reasonably practicable after these reports are filed with the Securities and
Exchange Commission, and any amendments or waivers to the Company's Code of
Ethics Policy and Policy Statement on Significant Corporate Governance Issues
will also be made available on the Company's website. The information on our
website is not incorporated by reference into this annual report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this heading is incorporated by reference
from the section entitled "Executive Compensation" and "Director Compensation"
on pages 8, 11, 12 and 17-18 in the Proxy Statement for the Company's 2005
Annual Meeting of Shareholders to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required under this heading is incorporated by reference
from the sections entitled "Beneficial Ownership Table" and "Equity Compensation
Plan Information" in the Proxy Statement on pages 9 and 12 to be filed with the
Securities and Exchange Commission pursuant to Regulation 14A.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Not applicable.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required under this heading is incorporated by reference
from the section entitled "Relationship with Independent Auditors" in the Proxy
Statement on page 20 for the Company's 2005 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission pursuant to Regulation 14A.

12

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) 1. FINANCIAL STATEMENTS AND SUPPLEMENTAL INFORMATION

Included in Part II of this Form 10-K annual report incorporated by
reference to the annual report to shareholders for the year ended December
31, 2004 are the following consolidated financial statements:

Consolidated Balance Sheets -- December 31, 2004 and 2003.

Consolidated Statements of Income -- Years ended December 31, 2004, 2003
and 2002.

Consolidated Statements of Shareholders' Equity -- Years ended December 31,
2004, 2003 and 2002.

Consolidated Statements of Cash Flows -- Years ended December 31, 2004,
2003 and 2002.

Notes to Consolidated Financial Statements.

Report of Independent Registered Accounting Firm.

(a) 2. FINANCIAL STATEMENT SCHEDULES

The following consolidated financial information for the years ended
December 31, 2004, 2003 and 2002 is submitted herewith:

Schedule II -- Valuation and qualifying accounts.

All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.

(a) 3. EXHIBITS

(3a) Amended and Restated Articles of Incorporation of Brush
Engineered Materials Inc. (filed as Annex B to the
Registration Statement on Form S-4 filed by the Company on
February 1, 2000, Registration No. 333-95917), incorporated
herein by reference.
(3b) Amended and Restated Code of Regulations of Brush Engineered
Materials Inc. (filed as Exhibit 4(b) to the Current Report
on Form 8-K filed by Brush Wellman Inc. on May 16, 2000),
incorporated herein by reference.
(4a) Rights Agreement, dated as of May 10, 2000, by and between
Brush Engineered Materials Inc. and National City Bank, N.A.
as Rights Agent (filed as Exhibit 4(a) to the Current Report
on Form 8-K filed by Brush Engineered Materials Inc. on May
16, 2000), incorporated herein by reference.
(4b) First Amendment to Rights Agreement, dated as of December 7,
2004, by and between Brush Engineered Materials Inc. and
LaSalle Bank, N.A. as Rights Agent (filed as Exhibit 4.1 to
the Current Report on Form 8-K filed by Brush Engineered
Materials Inc. on December 13, 2004), incorporated herein by
reference.
(4c) Indenture Modification between Toledo-Lucas County Port
Authority, dated as of May 30, 2003 (filed as Exhibit 4 to
the Quarterly Report on Form 10-Q filed by Brush Engineered
Materials Inc. on August 11, 2003), incorporated herein by
reference.
(4d) Lease Modification from National City Bank, Trustee as
Lessor to Brush Wellman Inc. as Lessee, dated as of May 30,
2003 (filed as Exhibit 4.1 to the Quarterly Report on Form
10-Q filed by Brush Engineered Materials Inc. on August 11,
2003), incorporated herein by reference.
(4e) Pursuant to Regulation S-K, Item 601 (b)(4), the Company
agrees to furnish to the Commission, upon its request, a
copy of the instruments defining the rights of holders of
long-term debt of the Company that are not being filed with
this report.

13

(4f) Credit Agreement dated December 4, 2003 among Brush
Engineered Materials Inc. and other borrowers and Bank One,
N.A, acting for itself and as agent for certain other
banking institutions as lenders (filed as Exhibit 99.1 to
the Company's Form 8-K on December 5, 2003), incorporated
herein by reference.

(4g) Post-Closing Letter Agreement dated December 4, 2003 among
the Company, Bank One, N.A., as agent, and the other parties
to the Credit Agreement dated as of the date hereof, and
Associated Waivers (filed as Exhibit 4(a) to the Quarterly
Report on Form 10-Q for the quarter ended July 2, 2004),
incorporated herein by reference.

(4h) First Amendment to Credit Agreement dated March 1, 2004
among Brush Engineered Materials Inc. and other borrowers
and Bank One, N.A., acting for itself and as agent for
certain other banking institutions as lenders (filed as
Exhibit 4f to the Company's Form 10-K Annual Report for the
year ended December 31, 2003), incorporated herein by
reference.

(4i) Second Amendment to Credit Agreement dated December 22, 2004
among Brush Engineered Materials Inc. and other borrowers
and Bank One, N.A., acting for itself and as agent for
certain other banking institutions as lenders (filed as
Exhibit 99.1 to the Current Report on Form 8-K filed by
Brush Engineered Materials Inc. on December 27, 2004),
incorporated herein by reference.

(4j) Loan Agreement dated December 4, 2003 among Brush Engineered
Materials Inc. and other borrowers party hereto and
Guggenheim Corporate Funding, LLC, as Collateral Agent
(filed as Exhibit 99.1 to the Company's Form 8-K on December
16, 2003), incorporated herein by reference.
(4k) First Amendment to Loan Agreement dated December 4, 2003
among Brush Engineered Materials Inc. and the other
borrowers party hereto and Guggenheim Corporate Funding,
LLC, as Collateral Agent.

(10a)* Form of Indemnification Agreement entered into by the
Company and its executive officers (filed as Exhibit 10g to
the Company's Form 10-K Annual Report for the year ended
December 31, 1994), incorporated herein by reference.

(10b)* Form of Indemnification Agreement entered into by the
Company and its directors (filed as Exhibit 10h to the
Company's Form 10-K Annual Report for the year ended
December 31, 1994), incorporated herein by reference.

(10c)* Form of Severance Agreement entered into by the Company and
Messrs. Gordon D. Harnett, Daniel A. Skoch and John D.
Grampa dated October 8, 2001 (filed as Exhibit 10f to the
Company's Form 10-K Annual Report for the year ended
December 31, 2001), incorporated herein by reference.

(10d)* Form of Severance Agreement entered into by the Company and
Mr. Richard J. Hipple dated March 4, 2003.

(10e)* Form of Executive Insurance Agreement entered into by the
Company and certain employees dated January 2, 2002 (filed
as Exhibit 10g to the Company's Form 10-K Annual Report for
the year ended December 31, 1994), incorporated herein by
reference.

(10f)* Form of Trust Agreement between the Company and Key Trust
Company of Ohio, N.A. (formerly Ameritrust Company National
Association) on behalf of the Company's executive officers
(filed as Exhibit 10e to the Company's Form 10-K Annual
Report for the year ended December 31, 1994), incorporated
herein by reference.

(10g)* 2004 Management Performance Compensation Plan (filed as
Exhibit 10.1 to the Current Report on Form 8-K filed on
February 7, 2005), incorporated herein by reference.
(10h)* 2005 Management Performance Compensation Plan II (filed as
Exhibit 10.2 to the Current Report on Form 8-K filed on
February 7, 2005), incorporated herein by reference.

(10i)* Long-term Incentive Plan for the performance period January
1, 2003 through December 31, 2004 (filed as Exhibit 10.3 to
the Current Report on Form 8-K filed on February 7, 2005),
incorporated herein by reference.

14

(10j)* Long-term Incentive Plan for the performance period January
1, 2005 through December 31, 2007 (filed as Exhibit 10.5 to
the Current Report on Form 8-K filed on February 7, 2005)
incorporated herein by reference.

(10k)* 1979 Stock Option Plan, as amended pursuant to approval of
shareholders on April 21, 1982 (filed by Brush Wellman Inc.
as Exhibit 15A to Post-Effective Amendment No. 3 to
Registration Statement No. 2-64080), incorporated herein by
reference.

(10l)* Amendment, effective May 16, 2000, to the 1979 Stock Option
Plan (filed as Exhibit 4(b) to Post-Effective Amendment No.
5 to Registration Statement on Form S-8, No. 2-64080),
incorporated herein by reference.

(10m)* 1984 Stock Option Plan as amended by the Board of Directors
on April 18, 1984 and February 24, 1987 (filed by Brush
Wellman Inc. as Exhibit 4.4 to Registration Statement on
Form S-8, No. 33-28605), incorporated herein by reference.

(10n)* Amendment, effective May 16, 2000, to the 1984 Stock Option
Plan (filed as Exhibit 4(b) to Post-Effective Amendment No.
1 to Registration Statement on Form S-8, No. 2-90724),
incorporated herein by reference.

(10o)* 1989 Stock Option Plan (filed as Exhibit 4.5 to Registration
Statement on Form S-8, No. 33-28605), incorporated herein by
reference.

(10p)* Amendment, effective May 16, 2000, to the 1989 Stock Option
Plan (filed as Exhibit 4(b) to Post- Effective Amendment No.
1 to Registration Statement on Form S-8, No. 33-28605),
incorporated herein by reference.

(10q)* 1995 Stock Incentive Plan (As Amended March 3, 1998) (filed
as Exhibit A to the Company's Proxy Statement dated March
16, 1998), incorporated herein by reference.

(10r)* Amendment, effective May 16, 2000, to the 1995 Stock
Incentive Plan (filed as Exhibit 4(b) to Post-Effective
Amendment No. 1 to Registration Statement on Form S-8, No.
333-63357), incorporated herein by reference.

(10s)* Amendment No. 2, effective February 1, 2005, to the 1995
Stock Incentive Plan (filed as Exhibit 10.4 to the Current
Report on Form 8-K filed on February 7, 2005) incorporated
herein by reference.

(10t)* Form of Nonqualified Stock Option Agreement.

(10u)* Form of Nonqualified Stock Option Agreement (filed as
Exhibit 10.7 to the Current Report on Form 8-K filed on
February 7, 2005) incorporated herein by reference.

(10v)* Form of Nonqualified Stock Option Agreement for Mr. Harnett
(filed as Exhibit 10.6 to the Current Report on Form 8-K
filed on February 7, 2005) incorporated herein by reference.

(10w)* Form of Special Restricted Stock Agreement.

(10x)* Form of 2004 Special Restricted Stock Agreement.

(10y)* Form of 2005 Performance Share Agreement.

(10z)* Supplemental Retirement Plan as amended and restated
December 1, 1992 (filed as Exhibit 10n to the Company's Form
10-K Annual Report for the year ended December 31, 1992),
incorporated herein by reference.

(10aa)* Amendment Number 2, adopted January 1, 1996, to Supplemental
Retirement Benefit Plan as amended and restated December 1,
1992 (filed as Exhibit 10o to the Company's Form 10-K Annual
Report for the year ended December 31, 1995), incorporated
herein by reference.

(10bb)* Amendment Number 3, adopted May 5, 1998, to Supplemental
Retirement Benefit Plan as amended and restated December 1,
1992 (filed as Exhibit 10s to the Company's Form 10-K Annual
Report for the year ended December 31, 1998), incorporated
herein by reference.

(10cc)* Amendment Number 4, adopted December 1, 1998, to
Supplemental Retirement Benefit Plan as amended and restated
December 1, 1992 (filed as Exhibit 10t to the Company's Form
10-K Annual Report for the year ended December 31, 1998),
incorporated herein by reference.

15

(10dd)* Amendment Number 5, adopted December 31, 1998, to
Supplemental Retirement Benefit Plan as amended and restated
December 1, 1992 (filed as Exhibit 10u to the Company's Form
10-K Annual Report for the year ended December 31, 1998),
incorporated herein by reference.

(10ee)* Amendment Number 6, adopted September, 1999, to Supplemental
Retirement Benefit Plan as amended and restated December 1,
1992. (filed as Exhibit 10u to the Company's Form 10-K
Annual Report for the year ended December 31, 2000),
incorporated herein by reference.

(10ff)* Amendment Number 7, adopted May, 2000, to Supplemental
Retirement Benefit Plan as amended and restated December 1,
1992. (filed as Exhibit 10v to the Company's Form 10-K
Annual Report for the year ended December 31, 2000),
incorporated herein by reference.

(10gg)* Amendment Number 8, adopted December 21, 2001, to
Supplemental Retirement Benefit Plan as amended and restated
December 1, 1992. (filed as Exhibit 10-u to the Company's
Form 10-K Annual Report for the year ended December 31,
1994), incorporated herein by reference.

(10hh)* Amendment Number 9, adopted December 22, 2003, to
Supplemental Retirement Benefit Plan as amended and restated
December 1, 1992. (filed as Exhibit 10s to the Company's
Form 10-K Annual Report for the year ended December 31,
2003), incorporated herein by reference.

(10ii)* Key Employee Share Option Plan (filed as Exhibit 4.1 to the
Registration Statement on Form S-8 No. 333-52141 filed by
Brush Wellman Inc. on May 5, 1998), incorporated herein by
reference.

(10jj)* Amendment No. 1 to the Key Employee Share Option Plan,
(effective May 16, 2000) (filed as Exhibit 4(b) to
Post-Effective Amendment No. 1 to Registration Statement on
Form S-8, No. 333-52141), incorporated herein by reference.

(10kk)* 1997 Stock Incentive Plan for Nonemployee Directors, (As
Amended and Restated as of May 1, 2001) filed as Appendix B
to the Company's Proxy Statement dated March 19, 2001),
incorporated herein by reference.

(10ll)* Amendment No. 1 to the 1997 Stock Incentive Plan for
Nonemployee Directors (filed as Exhibit 10gg to the
Company's Form 10-K Annual Report for the year ended
December 31, 2003), incorporated herein by reference.

(10mm)* Form of Nonqualified Stock Option Agreement for Nonemployee
Directors.

(10nn)* Deferred Compensation Plan for Nonemployee Directors (As
Amended and Restated as of December 2, 1997) (filed as
Exhibit 4(d) to the Registration Statement on Form S-8, No.
333-63353, filed by Brush Wellman Inc.), incorporated herein
by reference.

(10oo)* 2000 Reorganization Amendment, dated May 16, 2000, to the
1997 Deferred Compensation Plan for Nonemployee Directors
(filed as Exhibit 4(b) to Post-Effective Amendment No. 1 to
Registration Statement on Form S-8, No. 333-63353),
incorporated herein by reference.

(10pp)* Amendment No. 1 (effective September 11, 2001) to the 1997
Deferred Compensation Plan for Nonemployee Directors (filed
as Exhibit 4(c) to the Company's Post-Effective Amendment
No. 1 to Registration Statement No. 333-74296), incorporated
herein by reference.

(10qq)* Amendment No. 2 (effective September 13, 2004) to the 1997
Deferred Compensation Plan for Nonemployee Directors (filed
as Exhibit 10.1 to the Company's Form 10-Q Quarterly Report
for the quarter ended October 1, 2004), incorporated herein
by reference.

(10rr)* Amendment No. 3 (effective January 1, 2005) to the 1997
Deferred Compensation Plan for Nonemployee Directors.

(10ss)* 2005 Deferred Compensation Plan for Nonemployee Directors
(effective January 1, 2005) (filed as Exhibit 10.2 to the
Current Report on Form 8-K filed by Brush Engineered
Materials Inc. on December 13, 2004), incorporated herein by
reference.

- ---------------

* Reflects management contract or other compensatory arrangement required to be
filed as an Exhibit pursuant to Item 15(c) of this Report.

17

SIGNATURES

Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

BRUSH ENGINEERED MATERIALS INC.

By: /s/ GORDON D. HARNETT By: /s/ JOHN D. GRAMPA
----------------------------------------- -----------------------------------------
Gordon D. Harnett John D. Grampa
Chairman of the Board, President Vice President Finance
and Chief Executive Officer and Chief Financial Officer

March 14, 2005

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

- ---------------

* The undersigned, by signing his name hereto, does sign and execute this report
on behalf of each of the above-named officers and directors of Brush
Engineered Materials Inc., pursuant to Powers of Attorney executed by each
such officer and director filed with the Securities and Exchange Commission.

19

SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

BRUSH ENGINEERED MATERIALS INC. AND SUBSIDIARIES
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002

- ---------------

Note A -- Bad debts written-off, net of recoveries.

Note B -- Inventory write-off.

20