Greetings ladies and gentlemen and welcome to the Brush Engineered Materials first quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode and a brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Michael Hasychak, Vice President, Treasurer and Secretary for Brush Engineered Materials. Thank you. Mr. Hasychak, you may now begin.

Good morning. This is Mike Hasychak, with me today is Dick Hipple, Chairman, President and CEO; John Grampa, Senior Vice President, Finance and Chief Financial Officer; and Jim Marrotte, Vice President and Corporate Controller. Our format for today's conference call is as follows, John Grampa will comment on the first quarter 2009 results and the outlook, and Dick Hipple will give a market update. Thereafter, we will open up the teleconference call for questions. A recorded playback of this call will be available until May 15th by dialing area code 877 the number is 660-6853, account number 286 and conference ID number 319 480. The international replay number is 201 612 7415. The call will also be archived on the company's Web site beminc.com. To access the replay click on quarterly earnings conference call under the Investors page. The broadcast requires RealPlayer software, which is available as a free download from the icon as indicated. Any forward-looking statements made in this announcement including those in the outlook section and during the question-and-answer portion are based on current expectations. The company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release issued this morning. And now, I'll turn it over to John Grampa for comments.

Thank you, Mike. Good morning everyone and welcome to our call. Thanks for taking the time to join us today. Today's format is the same as that of our past calls. I'll review the quarter and then comment on the outlook. Then following my prepared comments, Dick Hipple will provide you with a market update and a review of other key company factors. Both Dick and I will comment on the effect that the economic developments of the past several months have had on our businesses, the aggressive actions that we've taken and will continue to take if necessary to ensure that the company remains healthy, and our current view of the economic environment which leads to the improved outlook for the second quarter and the second-half of the year, then we'll open the call for questions. I'll focus specifically on some on some of the key points identified in the press release, covering both the quarter and the outlook. I'll also comment briefly, only briefly on the year which while improving is in this environment simply too uncertain to be specific about. I'll also attempt to pre-answer certain specific questions which had come to us already. First, I will review the sales and earnings level along with the key items affecting them, the comparisons to the prior period including metal prices, currency, certain market factors and the items that are not expected to repeat. Second, I will review our cash flow and the state of our balance sheet which as you know is very strong and it ended the quarter where we thought it would and is expected to strengthen even further as the balance of 2009 unfolds. Then I will cover the cost reduction initiatives, their scale, and try to provide some added insight to how they will…

Thank you, John. We certainly have come through a very difficult first quarter with unprecedented demand destruction continuing from the fourth quarter of last year into the first quarter of 2009. Many recent earnings releases by our key customers in the electronic sector indicate sales revenues down 30% to 40% versus last year and we certainly saw similar demand declines as our customers drew down their inventories. In addition to the electronic sector, the oil and gas, automotive, and commercial aerospace markets have suffered similar declines. The rapid decline in oil prices has resulted in drilling activities declining over 40%, and air traffic miles have declined with a recession causing much lower airline rebuild maintenance activities, and we all know the sorry state of affairs in the auto industry. The only islands of serenity have been the defense and medical markets. I will say we have leveraged our position in the defense and medical markets particularly with our new acquisitions as we expect higher sales in 2009 than 2008 in these areas. We began aggressive cost reductions in the fourth quarter last year which have continued through April of this year. John has outlined the majority of these actions which I will not repeat but I would like to reinforce my appreciation to our global organization with respect to the speed of response and understanding as we battle our way through these tough market conditions. Fortunately we are beginning to see an increase in order rate particularly from the consumer electronics sector. At this time we are not reading this as an upturn in macro economic conditions but simply as a sign that the severe inventory correction by our customers is nearing completion where we will now be seeing actual market demand. Should standard annual hypos prevail, we should see additional demand in the third quarter as modest build for the holiday season begins. Other industrial markets have not shown any recovery at this point such as the oil and gas and commercial aerospace markets. Oil and gas drilling activity has declined close to 50% and is expected to remain flat for several quarters. The commercial aerospace market has seen a significant decline as air miles have fallen and normal rebuild activities have been reduced. It is expected that this sector should modestly rebound before year end as the new Boeing and Airbus plane platforms build to gain strength although at a level lower than originally expected. Strategically we continued to forge ahead in many areas to capture targeted growth opportunities particularly focused on medical new age energy technology, and consumer electronics with our strong liquidity positions, our aggressive cost reduction actions, and signs that a significant portion of our markets are improving from the first quarter lows we should begin to see a substantial improvement in our results. Obviously our visibility is limited and our main concern would be the recent order pickup to be short term in nature. Thank you and we will take questions now.

(Operator instructions) Our first question is coming from Avinash Kant of D.A. Davidson & Co. Avinash Kant – D.A. Davidson & Co.: Good morning, Dick and John.

Good morning.

Good morning. Avinash Kant – D.A. Davidson & Co.: A few questions here, the guidance that you have given for the second quarter looking at 15% revenue upside, I believe your assumptions for the metal prices are flat in that guidance.

That is correct. Avinash Kant – D.A. Davidson & Co.: But of course you have noticed that copper prices have been going up meaningfully so you will need to add that to the guidance that you have in order to come to our revenue numbers, right?

Sure if you anticipate that they are going to go up and hold. Avinash Kant – D.A. Davidson & Co.: Right. Are you going to see assuming where the prices are at this point that it should be meaningfully higher than what it was the last quarter?

We had some higher metal prices in that forecast. The forecast was prepared near the end of the first quarter but we are assuming flat from that point, we don’t predict beyond that. Avinash Kant – D.A. Davidson & Co.: Okay so basically then you are saying that the metal prices that are in your guidance are based on what we have at this point not what it was during the last quarter?

Yes. Avinash Kant – D.A. Davidson & Co.: Okay. That is very helpful. Now in the sense of taking the cost out in the margins, could you give us some idea, once all these efforts are in place what kind of model are we looking at, if you could give us some idea at certain amount of margin we could do this much margin or this much net margin, where do you –

Well if that is adjusted $10 million of revenue generates between $0.10 and $0.14 per share in earnings so you should be able to calculate the OP percentages based off of that by backing off of the earnings level. From a gross margin perspective, which is what I think you are asking, as you know, we have high variable margin businesses so the gross margin will move around significantly depending upon our business mix, and where that business comes from, and the extent to which we are successful with the cost reductions that we have identified. If mix does not shift from our current assumptions and if everything holds, we would think that as the business grows through the next three quarters our gross margin should increase 300 basis points to 350 basis points per quarter on average. Avinash Kant – D.A. Davidson & Co.: Third quarter, right?

Per quarter on average if all those assumptions hold that would be the upside. Avinash Kant – D.A. Davidson & Co.: Right. And when you are talking about the $0.10 to $0.14 upside you are calling from Q3 onwards from Q2 levels?

No what I said was in my prepared comments was that $10 million movement in revenue is worth anywhere from $0.10 to $0.14 of earnings depending upon mix. Avinash Kant – D.A. Davidson & Co.: Right but I am saying given that the cost cutting efforts will be kind of halfway through into Q2 we should think of that starting from Q3 onwards, right?

That range would be effective each quarter. Avinash Kant – D.A. Davidson & Co.: From now on?

From now on and depending upon mix somewhere in that range including the cost reductions. Avinash Kant – D.A. Davidson & Co.: Okay and if you could just explain the charges that you took how much of that went into SG&A and how much was into cost of goods and everything?

Well the inventory charges would be in the cost of goods. Avinash Kant – D.A. Davidson & Co.: Right.

The severance would be split between cost of goods and SG&A. Avinash Kant – D.A. Davidson & Co.: Right that is what I want to –

And the pension would be in –

It is split as well.

It is split as well. Avinash Kant – D.A. Davidson & Co.: That is what I am looking –

(inaudible). Avinash Kant – D.A. Davidson & Co.: So could you give me the split?

The severance and the pension essentially offset each other in cost of sales and SG&A.

And the inventories are all in cost of sales. Avinash Kant – D.A. Davidson & Co.: Okay and a little bit about your disk drive business, where are you in terms of customer qualifications and do you think you are starting to see traction once again?

We basically have products that have now qualified in all three of the major players and we are clawing our way back into the marketplace. It is a slow crawl obviously for two reasons, one is due to our trips in the market last year and also that the market itself was extremely low in the first quarter as far as the demand side and we do see that turning at this point but the good news is we have a product that is accepted by the marketplace right now and we are about battling our way back in. Avinash Kant – D.A. Davidson & Co.: So Dick when you talk about the second half recovery you are I believe talking primarily from consumer electronic side.

Well the only visibility we have right now is primarily for this company would be the upturn that we are seeing in the consumer area. And again as I mentioned before we have to be very careful here because of the lack of visibility everywhere and my particular view of this is that we must be careful about turning to forecast economic turnarounds and recovery right now there is good logic to say we should see additional volume from inventory correction being pretty much completed because as you take a look at some of these numbers that when you have the demand side down in a lot of customers 50 to 60 firms [ph], 40%, 50%, 60% the consumer is not down that much. So obviously there is a mismatch and we should start to see demand follow-through simply because of that particular mismatch and then we are seeing some of that now. Avinash Kant – D.A. Davidson & Co.: One more question, you talked about being profitable in the second half, I believe earlier you had said that you will stay make money for the year, does that still hold or not?

Well again with the visibility we have that is a difficult call right now. But you know anything is possible I think as you have heard John say that our leverage right now of additional sales is quite high as far as what drops down to the bottom line with how much costs we have out of the company. So we will see how this unfolds and it is impossible at this point in time to be forecasting out for the next nine months in the year because we have to see how this all (inaudible) out but we are well positioned right now to see some nice earnings flow through with an increase in sales. Avinash Kant – D.A. Davidson & Co.: What should we model for the tax rate going forward?

Model 33%. Avinash Kant – D.A. Davidson & Co.: 33%. Okay thanks so much I would let other people ask questions.

Thank you. Our next question is coming from Richard Dearnley of Longport Partners. Richard Dearnley – Longport Partners: Good morning.

Good morning. Richard Dearnley – Longport Partners: Your $20.5 million of pension and incentive pay suggest – the incentive pay was $8.4 million, what was that?

Those would have been incentives from prior year performance throughout the organization from the shop floor up through middle management. So those were tied to 2008 performance. Richard Dearnley – Longport Partners: And given the current plan for ’09, what would that incentive number be? I realize this was a guess.

That is not a question that I think is helpful for us to attempt to pick [ph] because it would always obviously depend upon performance and certainly performance is significantly below what we had – Richard Dearnley – Longport Partners: You are right indefinitely put.

Okay. Richard Dearnley – Longport Partners: But your operating income was down 65% or so where did most of that incentive go, was that top floor?

Combination of above the gross profit line and below the gross profit line I don’t have the split here with me. Richard Dearnley – Longport Partners: Okay, thank you.

Thank you. Our next question is coming from Rob Young of WM Smith and companies. Rob Young – WM Smith Securities: Hi guys good morning.

Good morning. Rob Young – WM Smith Securities: I was just hoping that you could talk a little bit on the cost reductions. Was there any excess attrition that you have experienced as a result of these reductions or is that fairly the same?

Same, almost none. Rob Young – WM Smith Securities: Almost none, okay.

No excess attrition, no. Rob Young – WM Smith Securities: Okay. And then relative to pension contribution obviously you made some in this most recent quarter, do you have an outlook in terms of further pension contributions that you are expecting for the remaining of the fiscal year?

Yes for the balance of the year we are going to contribute just shy of about $6 million according to our most recent estimate. Rob Young – WM Smith Securities: Okay that is all I have, thank you very much.

You are welcome.

(Operator instructions) Thank you, gentlemen there are no further questions at this time, I would like to hand the floor back over to you for any closing comments.

Yes, this is Mike Hasychak, We would like to thank all of you for participating on the call this morning. I would be around this afternoon to answer any further questions. My direct dial number is area code 216 and the number is 383 6823. Thank you.

Thank you. This concludes the call, you may now disconnect. Have a nice day.