Exhibit 99.1
Contacts:
Investors: | Stephen Forsyth | 203-573-3863 |
Media: | Mary Ann Dunnell | 203-573-3034 |
Chemtura Reports 2007 Third Quarter Results
• Net sales increase 9% as all businesses report increased revenues
• Polymer Additive business saw slowdown in electronics end markets and continuation of higher raw material costs, impacting gross profit margins
• Electronics orders for the fourth quarter have shown an upturn in September and October
• Operating profit rose 148% (GAAP basis) and 17% (non-GAAP basis)
MIDDLEBURY, CT – November 1, 2007 - Chemtura Corporation (NYSE: CEM; the “Company”) reported net earnings of $2 million, or $0.01 per share, for the third quarter of 2007 and net earnings on a non-GAAP basis of $19 million, or $0.08 per share.
Net earnings for the quarter include earnings from continuing operations of $4 million, or $0.02 per share; and loss on the sale of discontinued operations of $2 million, or $0.01 per share. On a non-GAAP basis, net earnings include income from continuing operations of $19 million, or $0.08 per share.
The discussion below includes information on both a GAAP and non-GAAP basis. The Company has presented the non-GAAP financial information because management uses non-GAAP information internally to evaluate and manage the performance of the Company’s operations, and believes that the non-GAAP financial information provides useful information to investors. A reconciliation of the GAAP and non-GAAP financial information has been provided in the supplemental schedules included in this release.
The following is a summary of the third quarter results:
(In millions, except per share data) | | Third quarter | |
| | 2007 | | 2006 | | % change | |
Net sales | | $ | 950 | | $ | 873 | | 9 | % |
Operating profit (loss) | | $ | 27 | | $ | (56 | ) | 148 | % |
Earnings (loss) from continuing operations | | $ | 4 | | $ | (89 | ) | 104 | % |
Earnings (loss) per share from continuing operations | | $ | 0.02 | | $ | (0.37 | ) | 105 | % |
Earnings per share from discontinued operations | | $ | — | | $ | 0.01 | | NM | |
Per share (loss) gain from sale of discontinued operations | | $ | (0.01 | ) | $ | 0.19 | | (105 | %) |
Net earnings (loss) per share | | $ | 0.01 | | $ | (0.17 | ) | 106 | % |
NM = Not Meaningful
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In the second quarter of 2007, certain international restructuring charges were classified as domestic charges for purposes of computing the Company’s second quarter tax expense. As a result, the Company inaccurately established a tax valuation allowance for these items. The impact is a reduction of $10 million to tax expense and net loss in the second quarter of 2007. The second quarter results have been amended in this presentation to reflect this change. The Company plans to amend its second quarter 2007 report on Form 10-Q to reflect this correction to its previously filed consolidated financial statements.
The following is a summary of the third quarter ended September 30, 2007 results on a non-GAAP basis as compared with the same quarter in 2006 results on a non-GAAP basis.
(In millions, except per share data) | | Third quarter | |
| |
2007
| |
2006
| | % change | |
Net sales | | $ | 950 | | $ | 873 | | 9 | % |
Operating profit | | $ | 56 | | $ | 48 | | 17 | % |
Earnings from continuing operations | | $ | 19 | | $ | 15 | | 27 | % |
Earnings per share from continuing operations | | $ | 0.08 | | $ | 0.07 | | 14 | % |
Earnings per share from discontinued operations | | $ | — | | $ | 0.01 | | NM | |
Net earnings per share | | $ | 0.08 | | $ | 0.08 | | — | |
NM = Not Meaningful
“Our third quarter results demonstrated revenue growth of 9%, a 17% improvement in operating income and pre-tax earnings up 38% on a non-GAAP basis compared with the third quarter of 2006”, said Robert L. Wood, chairman and CEO.
“Three of our four business units showed improvement in both revenue and operating income. Crop Protection and Consumer Products demonstrated particularly strong performance. Performance Specialties is also delivering on revenue and earnings growth as well as the initial benefits of the Kaufman acquisition.
“The shortfall in our earnings expectation was driven by a decline in gross profit margins from 24% to 22%. The decline was principally focused in our Polymer Additives business where we saw lower demand from electronics end markets (which impacts our flame retardant products line in particular), continuing weakness in building and construction, and higher raw material costs, served to erode margins. Despite the weakness in these markets, Polymer Additives revenue grew by 4% in the quarter led by a 19% increase in PVC Additives revenues. Looking forward to the fourth quarter, we are encouraged by increased orders in September and October from the electronics industry, which is usually seasonally strong in the fourth quarter.
“Finally, we continued to make progress with our cost reduction initiatives. SGA&R was down 7% compared to third quarter, 2006. SGA&R for the quarter was 12% of net sales compared to 13% of net sales in the same quarter of 2006. Our focus remains on performance improvement despite headwinds
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related to electronics, construction demand and continuing raw material cost pressure. I remain confident that our underlying performance will continue to improve and that the second half of 2007 will be better than the same period in 2006.”
Third Quarter 2007 Business Segment Highlights
• Polymer Additives revenues rose 4% compared with the third quarter of 2006. Net sales of brominated flame retardant products were negatively impacted by weak demand associated with electronics applications products. Sales of PVC additive products increased 19% compared with the prior year despite a continuation of the weakness in the building and construction industries. Declines in gross profit and operating profit margins were attributable to change in product mix, increases in the price of tin and natural oils, higher plant costs and the transitional impact of our Italian plant rationalization actions on operating costs.
• Performance Specialties revenues were up 43% compared with the third quarter of 2006 and operating income rose 12%. The Kaufman acquisition contributed approximately $49 million or 30% to the growth in revenues. Revenues in both petroleum additive and urethane products grew year-over year. Operating income growth was constrained by increased raw material costs and the effect of the weakening U.S. dollar. Gross profit and operating margins are lower than last year due to the Kaufman acquisition, but are expected to improve progressively as the business is integrated and synergies realized. During the quarter, the Company made significant progress in the integration of business functions and information technology systems.
• Consumer Products revenues were up 5% compared with third quarter of 2006, benefiting from good weather conditions in the United States which offset weak revenues in Europe due to the unseasonably wet summer. Operating income rose 35% as a result of increased volume and favorable changes to product mix.
• Crop Protection revenues were up 11% compared with the third quarter of 2006, primarily due to strong North American and European sales. Operating income rose 129% in the third quarter as compared with the same quarter of 2006. Included in the third quarter is the favorable benefit of approximately $7 million compared to the third quarter of 2006, related to its provision for the collection of Brazilian accounts receivable.
Third Quarter 2007 Significant Transactions and Events
• The Company continued to incur charges related to the company-wide restructuring plan and other restructuring initiatives announced in the second quarter of 2007. The Company recorded a third quarter pre-tax charge for severance and related costs of $9 million related to these actions.
• During the quarter, the Company recorded a $9 million charge for the impairment of certain long-lived assets in Europe.
• On January 1, 2007, the Company employed 6,380 people (pro forma for its Kaufman acquisition in the first quarter of 2007). The number of employees reduced to 5,740 as of June 30, 2007 and to 5,406 at September 30, 2007 reflecting the impact of the Company’s restructuring activities, the divestiture of the Company’s organic peroxide products business and natural attrition. These actions have resulted in a 15% reduction since the beginning of the year. Additional reductions are expected as the Company completes its announced restructuring and divestiture actions.
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Third Quarter Results - GAAP
• Revenue for the quarter was $950 million, or 9% above third quarter 2006 revenue of $873 million. $49 million was attributable to the Kaufman acquisition with $14 million from higher selling prices and $15 million from positive foreign exchange.
• Gross profit improved $3 million compared with the same period of 2006. The Company benefited $15 million from higher volume and mix, $14 million from higher selling prices and $10 million from Kaufman. Those gains were offset by $25 million in higher raw material and energy costs, $5 million of asset write-offs, $2 million of unfavorable foreign exchange and other charges of $4 million.
• Operating profit increased $83 million in the third quarter of 2007 as compared with the same quarter last year. Operating profit benefited from a reduction of $65 million in impairment of long-lived assets (2006 includes a $74 million charge for the impairment of assets associated with the Fluorine business), $24 million decrease in antitrust costs, a $3 million increase in gross profit and other cost decreases of $6 million, offset by an increase of $8 million in facility closures, severance and related costs and $7 million increase in costs related to the change in the useful life of property, plant and equipment.
• Earnings from continuing operations for the third quarter of 2007 were $4 million, or $0.02 per share, compared with a loss of $89 million, or $0.37 per share, for the third quarter of 2006. The increase primarily reflects the $83 million increase in operating profit discussed above and $2 million in lower interest expense, offset by a $14 million decrease in income tax benefits and other cost increases of $2 million. Additionally, in 2006 the Company reported a $24 million loss on early extinguishment of debt.
• The GAAP income tax benefit of $4 million for the third quarter of 2007 reflects the impact of restructuring costs on international operations.
• Discontinued operations in 2007 reflect the loss of $2 million (net of $1 million of tax) related to an adjustment for the sale of the EPDM business. Discontinued operations for the third quarter of 2006 reflect a gain of $46 million (net of $21 million of tax) related to the sale of the OrganoSilicones business in 2003 and earnings from the EPDM business of $3 million (net of $2 million of tax).
Third Quarter Non-GAAP Results
• On a non-GAAP basis, third quarter 2007 operating profit was $56 million as compared with third quarter 2006 non-GAAP operating profit of $48 million, a 17% improvement.
• Non-GAAP earnings from continuing operations before income taxes in 2007 and 2006 exclude charges of $29 million and $128 million, respectively, primarily related to facility closures, severance and related costs, antitrust costs, losses on sales of businesses, impairment of long-lived assets, additional depreciation and a loss on early extinguishment of debt. The amounts associated with these charges are detailed on page 13 of this release.
• Chemtura’s non-GAAP tax rate of 35% represents the expected effective tax rate for the Company’s core operations. The Company has chosen to apply this rate to non-GAAP pre-tax income beginning in the third quarter of 2007 to better reflect underlying operating performance. Under our prior methodology the third quarter of 2007 would have resulted in a rate of 59% reflecting among other non-operating matters, the impact of repatriation of foreign earnings and the weakness of the U.S. dollar.
• Non-GAAP earnings from discontinued operations for the third quarter 2006 include earnings from the EPDM business of $3 million.
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Cash Flows
• Net cash provided by operations in the quarter was $124 million compared to $111 million in the third quarter, 2006. Accounts receivable, inventories and accounts payable all declined in the quarter from their seasonally high levels in the second quarter of 2007. Working capital increased by $50 million from June 30, 2007 to September 30, 2007 primarily related to the reduction in short-term debt and accounts payable offset by decreases in accounts receivable and inventories.
• Net cash provided by operations was $171 million for the nine months ended September 30, 2007 as compared with $282 million for the same period in 2006. The decrease in cash provided by operations in 2007 primarily reflects the increase in working capital from year end exclusive of the impact of the Company’s acquisition and disposition activity in 2007.
• Included in the Company’s accounts receivable balance is the sale of accounts receivable of $303 million as of September 30, 2007, $306 million as of June 30, 2007 and $279 million as of December 31, 2006.
• The Company’s total debt as of September 30, 2007 was $1,065 million as compared with $1,143 million at June 30, 2007. This decrease primarily reflects the repayment of certain of the Company’s uncommitted working capital facilities. Cash and cash equivalents increased from $76 million as of June 30, 2007 to $114 million as of September 30, 2007.
Third Quarter Earnings Q&A Teleconference
Copies of this release as well as informational slides will be available on the Investor Relations section of the Company’s website at www.chemtura.com. The Company will host a teleconference to review these results on Friday, November 2, at 9:00 a.m. EDT. Interested parties are asked to dial in approximately 10 minutes prior to the start time at (913) 312-0715. Replay of the call will be available for two weeks starting at 12:00 p.m. EDT on November 2. To access the replay, call (719) 457-0820 and enter access code 9014898.
Live Internet access to the 2007 third quarter conference call will be available through the Investor Relations section of the Company’s website. If you need further information pertaining to the call, please contact Ann Marie Biondo at (203) 573-2929.
Chemtura Corporation, with 2006 sales of $3.5 billion, is a global manufacturer and marketer of specialty chemicals, crop protection and pool, spa and home care products. Additional information concerning Chemtura is available at www.chemtura.com.
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Non-GAAP Financial Measures
The information presented in this press release and in the attached financial tables includes financial measures that are not calculated or presented in accordance with Generally Accepted Accounting Principles in the United States (GAAP). These non-GAAP financial measures consist of adjusted results of operations of the Company that exclude certain expenses, gains and losses that may not be indicative of the core operations of the Company. Excluded items include facility closures, severance and related costs, antitrust costs, Merger costs, increased depreciation due to the change in useful life of assets, unusual and non-recurring settlements, and the accelerated recognition of asset retirement obligations. In addition to the non-GAAP financial measures discussed above, the Company has applied a non-GAAP effective income tax rate to our non-GAAP income before taxes. Chemtura’s non-GAAP tax rate of 35% represents the expected effective tax rate for the Company’s core operations.
5
Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the attached financial tables. The Company believes that such non-GAAP financial measures provide useful information to investors and may assist them in evaluating the Company’s underlying performance and identifying operating trends. In addition, management uses these non-GAAP financial measures internally to allocate resources and evaluate the performance of the Company’s operations. While the Company believes that such measures are useful in evaluating the Company’s performance, investors should not consider them to be a substitute for financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures may differ from similarly titled non-GAAP financial measures used by other companies and do not provide a comparable view of the Company's performance relative to other companies in similar industries.
Forward-Looking Statement
This document includes forward-looking statements. These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will” and similar expressions and include references to assumptions and relate to our future prospects, developments and business strategies.
Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:
• General economic conditions;
• Significant international operations and interests;
• The ability to obtain increases in selling prices to offset increases in raw material and energy costs;
• The ability to retain sales volumes in the event of increasing selling prices;
• The ability to absorb fixed cost overhead in the event of lower volumes;
• Pension and other post-retirement benefit plan assumptions;
• The ability to continue to recover lost volume in our antioxidants products or execute other portions of the recovery plan for other businesses within Polymer Additives;
• The ability to sustain profitability in our Crop Protection business due to new generic competition, the failure to secure new products and technology. Additionally, the Crop Protection business is dependent on disease and pest conditions, as well as, local and regional economic conditions;
• The ability to sell methyl bromide due to regulatory restrictions;
• Changes in weather conditions which could adversely affect the seasonal selling cycles in both our Consumer Products and Crop Protection segments;
• Changes in the availability and/or quality of our energy and raw materials;
• Production capacity;
• The ability to collect our outstanding receivables, particularly in Brazil;
• Changes in interest rates and foreign currency exchange rates;
• Changes in technology, market demand and customer requirements;
• The enactment of more stringent domestic and international environmental laws and regulations;
• The ability to realize expected cost savings under our restructuring plans, Six Sigma and Lean manufacturing initiatives;
• The ability to successfully execute our portfolio divestiture plan;
• The ability to reduce our indebtedness levels;
• The ability to recover our deferred tax assets;
• The ability to remain compliant with our debt covenants or obtain necessary waivers; and
• Other risks and uncertainties detailed in Item 1A. Risk Factors or in our filings with the Securities and Exchange Commission.
These statements are based on the Company’s estimates and assumptions and on currently available information. The forward-looking statements include information concerning the Company’s possible or assumed future results of operations, and the Company’s actual results may differ significantly from the results discussed. Forward-looking information is intended to reflect opinions as of the date this press release was issued and such information will not necessarily be updated by the Company.
6
CHEMTURA CORPORATION
Index of Financial Statements and Schedules
| | | | Page |
| | | | |
Financial Statements | | |
| | | |
| Consolidated Statements of Operations (Unaudited) - Quarter and Nine Months ended September 30, 2007 and 2006 | | 8 |
| | | |
| Consolidated Balance Sheets - September 30, 2007 (Unaudited) and December 31, 2006 | | 9 |
| | | |
| Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months ended September 30, 2007 and 2006 | | 10 |
| | | |
| Segment Net Sales and Operating Profit (Unaudited) - Quarter and Nine Months ended September 30, 2007 and 2006 | | 11 |
| | | |
Supplemental Schedules | | |
| | | |
| Major Factors Affecting Net Sales and Operating Results (Unaudited) - Quarter and Nine Months ended September 30, 2007 versus 2006 | | 12 |
| | | |
| Non-GAAP Consolidated Statements of Operations (Unaudited) - Quarter ended September 30, 2007 and 2006 | | 13 |
| | | |
| Non-GAAP Consolidated Statements of Operations (Unaudited) - Nine months ended September 30, 2007 and 2006 | | 14 |
| | | |
| Non-GAAP Segment Net Sales and Operating Profit (Unaudited) - Quarter ended September 30, 2007 and 2006 | | 15 |
| | | |
| Non-GAAP Segment Net Sales and Operating Profit (Unaudited) - Nine months ended September 30, 2007 and 2006 | | 16 |
| | | |
Amended Second Quarter Financial Statements | | |
| | | |
| GAAP and Non-GAAP Consolidated Statements of Operations (Unaudited) -
Quarter and six months ended June 30, 2007 | | 17 |
| | | |
| Consolidated Balance Sheet - June 30, 2007 (Unaudited) | | 18 |
| | | |
| Condensed Consolidated Statement of Cash Flows (Unaudited) -
Six Months ended June 30, 2007 | | 19 |
| | | |
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CHEMTURA CORPORATION
Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)
| | Quarter Ended September 30, | | Nine Months Ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | | | | | | | | |
Net sales | | $ | 950 | | $ | 873 | | $ | 2,918 | | $ | 2,715 | |
| | | | | | | | | |
Cost of products sold | | 737 | | 663 | | 2,225 | | 2,012 | |
Selling, general and administrative | | 94 | | 101 | | 311 | | 300 | |
Depreciation and amortization | | 59 | | 49 | | 193 | | 143 | |
Research and development | | 15 | | 16 | | 47 | | 48 | |
Facility closures, severance and related costs | | 9 | | 1 | | 34 | | (2 | ) |
Antitrust costs | | 2 | | 26 | | 32 | | 71 | |
Merger costs | | — | | 1 | | — | | 16 | |
(Gain) loss on sale of assets and businesses | | (1 | ) | (1 | ) | 14 | | 11 | |
Impairment of long-lived assets | | 9 | | 74 | | 16 | | 80 | |
Equity income | | (1 | ) | (1 | ) | (2 | ) | (2 | ) |
| | | | | | | | | |
Operating profit (loss) | | 27 | | (56 | ) | 48 | | 38 | |
Interest expense | | 21 | | 23 | | 67 | | 81 | |
Loss on early extinguishment of debt | | — | | 24 | | — | | 44 | |
Other expense, net | | 6 | | 4 | | 11 | | 2 | |
| | | | | | | | | |
Loss from continuing operations before
income taxes | | | | | | | | | |
| — | | (107 | ) | (30 | ) | (89 | ) |
Income tax (benefit) expense | | (4 | ) | (18 | ) | 4 | | (8 | ) |
| | | | | | | | | |
Earnings (loss) from continuing operations | | 4 | | (89 | ) | (34 | ) | (81 | ) |
Earnings from discontinued operations | | — | | 3 | | 6 | | 9 | |
(Loss) gain on sale of discontinued operations | | (2 | ) | 46 | | 25 | | 46 | |
| | | | | | | | | |
Net earnings (loss) | | $ | 2 | | $ | (40 | ) | $ | (3 | ) | $ | (26 | ) |
| | | | | | | | | |
Basic earnings (loss) per common share: | | | | | | | | | |
Earnings (loss) from continuing operations | | $ | 0.02 | | $ | (0.37 | ) | $ | (0.14 | ) | $ | (0.34 | ) |
Earnings from discontinued operations | | — | | 0.01 | | 0.03 | | 0.04 | |
(Loss) gain on sale of discontinued operations | | (0.01 | ) | 0.19 | | 0.10 | | 0.19 | |
Net earnings (loss) | | $ | 0.01 | | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.11 | ) |
| | | | | | | | | |
Diluted earnings (loss) per common share: | | | | | | | | | |
Earnings (loss) from continuing operations | | $ | 0.02 | | $ | (0.37 | ) | $ | (0.14 | ) | $ | (0.34 | ) |
Earnings from discontinued operations | | — | | 0.01 | | 0.03 | | 0.04 | |
(Loss) gain on sale of discontinued operations | | (0.01 | ) | 0.19 | | 0.10 | | 0.19 | |
Net earnings (loss) | | $ | 0.01 | | $ | (0.17 | ) | $ | (0.01 | ) | $ | (0.11 | ) |
| | | | | | | | | |
Weighted average shares outstanding - basic | | 241.9 | | 240.6 | | 241.4 | | 240.4 | |
| | | | | | | | | |
Weighted average shares outstanding - diluted | | 241.9 | | 240.6 | | 241.4 | | 240.4 | |
| | | | | | | | | | | | | | | |
8
CHEMTURA CORPORATION
Consolidated Balance Sheets
(In millions of dollars)
| | September 30,
2007 | | December 31,
2006 | |
| | (Unaudited) | | | |
ASSETS | | | | | |
CURRENT ASSETS | | | | | |
Cash and cash equivalents | | $ | 114 | | $ | 95 | |
Accounts receivable | | 348 | | 342 | |
Inventories | | 661 | | 660 | |
Other current assets | | 213 | | 288 | |
Total current assets | | 1,336 | | 1,385 | |
| | | | | |
NON-CURRENT ASSETS | | | | | |
Property, plant and equipment, net | | 1,049 | | 1,147 | |
Cost in excess of acquired net assets | | 1,277 | | 1,177 | |
Intangible assets, net | | 595 | | 551 | |
Other assets | | 156 | | 139 | |
| | | | | |
| | $ | 4,413 | | $ | 4,399 | |
| | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | |
| | | | | |
CURRENT LIABILITIES | | | | | |
Short-term borrowings | | $ | 5 | | $ | 48 | |
Accounts payable | | 270 | | 285 | |
Accrued expenses | | 381 | | 461 | |
Income taxes payable | | 45 | | 94 | |
Total current liabilities | | 701 | | 888 | |
| | | | | |
NON-CURRENT LIABILITIES | | | | | |
Long-term debt | | 1,060 | | 1,063 | |
Pension and post-retirement health care liabilities | | 437 | | 440 | |
Other liabilities | | 421 | | 329 | |
| | | | | |
STOCKHOLDERS’ EQUITY | | | | | |
Common stock | | 3 | | 3 | |
Additional paid-in capital | | 3,025 | | 3,005 | |
Accumulated deficit | | (1,167 | ) | (1,128 | ) |
Accumulated other comprehensive income (loss) | | 100 | | (34 | ) |
Treasury stock at cost | | (167 | ) | (167 | ) |
Total stockholders’ equity | | 1,794 | | 1,679 | |
| | | | | |
| | $ | 4,413 | | $ | 4,399 | |
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CHEMTURA CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In millions of dollars)
| | Nine Months Ended September 30, | |
Increase (decrease) to cash | | 2007 | | 2006 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | |
Net loss | | $ | (3 | ) | $ | (26 | ) |
Adjustments to reconcile net loss to net cash provided by operations: | | | | | |
Loss on sale of assets and businesses | | 14 | | 11 | |
Gain on sale of discontinued operations | | (25 | ) | (46 | ) |
Impairment of long-lived assets | | 16 | | 80 | |
Loss on early extinguishment of debt | | — | | 44 | |
Depreciation and amortization | | 197 | | 148 | |
Stock-based compensation expense | | 8 | | 10 | |
Equity income | | (2 | ) | (7 | ) |
Changes in assets and liabilities, net: | | (34 | ) | 68 | |
Net cash provided by operations | | 171 | | 282 | |
| | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | |
Net proceeds from divestments | | 157 | | 136 | |
Payments for acquisitions, net of cash acquired | | (164 | ) | (7 | ) |
Merger transaction costs paid | | — | | (8 | ) |
Capital expenditures | | (73 | ) | (78 | ) |
Net cash (used in) provided by investing activities | | (80 | ) | 43 | |
| | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | |
Payments on credit facility, net | | — | | (414 | ) |
Proceeds from long term borrowings | | — | | 497 | |
Payments on long term borrowings | | — | | (324 | ) |
Payments on short term borrowings | | (46 | ) | (14 | ) |
Premium paid on early extinguishment of debt | | — | | (36 | ) |
Payments for debt issuance costs | | — | | (6 | ) |
Dividends paid | | (36 | ) | (36 | ) |
Repayment of life insurance policy loan | | — | | (10 | ) |
Proceeds from exercise of stock options | | 7 | | 3 | |
Other financing activities | | (1 | ) | (2 | ) |
Net cash used in financing activities | | (76 | ) | (342 | ) |
| | | | | |
CASH | | | | | |
Effect of exchange rates on cash and cash equivalents | | 4 | | 5 | |
| | | | | |
Change in cash and cash equivalents | | 19 | | (12 | ) |
Cash and cash equivalents at beginning of period | | 95 | | 139 | |
| | | | | |
Cash and cash equivalents at end of period | | $ | 114 | | $ | 127 | |
10
CHEMTURA CORPORATION
Segment Net Sales and Operating Profit (Loss) (Unaudited)
(In millions of dollars)
| | Quarter Ended September 30, | | Nine Months Ended September 30, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
NET SALES | | | | | | | | | |
| | | | | | | | | |
Polymer Additives | | $ | 447 | | $ | 431 | | $ | 1,366 | | $ | 1,293 | |
Performance Specialties | | 237 | | 166 | | 680 | | 509 | |
Consumer Products | | 139 | | 132 | | 456 | | 450 | |
Crop Protection | | 83 | | 75 | | 261 | | 239 | |
Other | | 44 | | 69 | | 155 | | 224 | |
Total Net Sales | | $ | 950 | | $ | 873 | | $ | 2,918 | | $ | 2,715 | |
| | | | | | | | | |
OPERATING PROFIT | | | | | | | | | |
| | | | | | | | | |
Polymer Additives | | $ | 10 | | $ | 24 | | $ | 79 | | $ | 113 | |
Performance Specialties | | 33 | | 30 | | 101 | | 89 | |
Consumer Products | | 23 | | 17 | | 65 | | 64 | |
Crop Protection | | 16 | | 8 | | 57 | | 44 | |
Other | | 5 | | — | | 6 | | 9 | |
| | 87 | | 79 | | 308 | | 319 | |
| | | | | | | | | |
General corporate expense, including amortization | | (40 | ) | (31 | ) | (127 | ) | (96 | ) |
Change in useful life of property, plant and equipment | | (1 | ) | (3 | ) | (37 | ) | (9 | ) |
Facility closures, severance and related costs | | (9 | ) | (1 | ) | (34 | ) | 2 | |
Antitrust costs | | (2 | ) | (26 | ) | (32 | ) | (71 | ) |
Merger costs | | — | | (1 | ) | — | | (16 | ) |
Gain (loss) on sale of assets and businesses | | 1 | | 1 | | (14 | ) | (11 | ) |
Impairment of long-lived assets | | (9 | ) | (74 | ) | (16 | ) | (80 | ) |
Total Operating Profit (Loss) | | $ | 27 | | $ | (56 | ) | $ | 48 | | $ | 38 | |
11
CHEMTURA CORPORATION
Major Factors Affecting Net Sales and Operating Results (Unaudited)
Quarter and Nine Months ended September 30, 2007 versus 2006
(In millions of dollars)
The following table summarizes the major factors contributing to the changes in operating results versus the prior year:
| | Quarter Ended September 30, | | Nine Months Ended September 30, | |
| | | | Pre-tax | | | | Pre-tax | |
| | | | (Loss) | | | | (Loss) | |
| | | | Earnings from | | | | Earnings from | |
| | Net | | Continuing | | Net | | Continuing | |
| | Sales | | Operations | | Sales | | Operations | |
| | | | | | | | | |
2006 | | $ | 873 | | $ | (107 | ) | $ | 2,715 | | $ | (89 | ) |
| | | | | | | | | |
2006 Change in useful life of property, plant and equipment | | — | | 3 | | — | | 9 | |
2006 Favorable settlement of contractual matter | | — | | — | | — | | (4 | ) |
2006 Facility closures, severance and related costs | | — | | 1 | | — | | (2 | ) |
2006 Antitrust costs | | — | | 26 | | — | | 71 | |
2006 Merger expense | | — | | 1 | | — | | 16 | |
2006 (Gain) loss on sale of assets and businesses | | — | | (1 | ) | — | | 11 | |
2006 Asset impairment | | — | | 74 | | — | | 80 | |
2006 Loss on early extinguishment of debt | | — | | 24 | | — | | 44 | |
2006 Interest income on tax settlement | | — | | — | | — | | (4 | ) |
| | 873 | | 21 | | 2,715 | | 132 | |
| | | | | | | | | |
Higher selling prices | | 14 | | 14 | | 26 | | 26 | |
Increased unit volume, net of Celogen® foaming agents | | 1 | | 15 | | 12 | | 23 | |
Foreign currency impact | | 15 | | (4 | ) | 43 | | (3 | ) |
Industrial Water Additives divested business | | 1 | | — | | (12 | ) | (2 | ) |
Kaufman acquisition | | 49 | | 7 | | 131 | | 14 | |
Manufacturing variances net of cost savings | | — | | 3 | | — | | 12 | |
Higher raw materials/energy costs | | — | | (25 | ) | — | | (76 | ) |
Higher A/R securitization fees | | — | | (1 | ) | — | | (6 | ) |
Lower interest expense | | — | | 2 | | — | | 14 | |
Other | | (3 | ) | (3 | ) | 3 | | (15 | ) |
| | 950 | | 29 | | 2,918 | | 119 | |
| | | | | | | | | |
2007 Change in useful life of property, plant and equipment | | — | | (10 | ) | — | | (46 | ) |
2007 Accelerated recognition of asset retirement obligation | | — | | — | | — | | (7 | ) |
2007 Facility closures, severance and related costs | | — | | (9 | ) | — | | (34 | ) |
2007 Antitrust costs | | — | | (2 | ) | — | | (32 | ) |
2007 Gain (loss) on sale of assets and businesses | | — | | 1 | | — | | (14 | ) |
2007 Asset impairment | | — | | (9 | ) | — | | (16 | ) |
| | | | | | | | | |
2007 | | $ | 950 | | $ | — | | $ | 2,918 | | $ | (30 | ) |
12
CHEMTURA CORPORATION
Non-GAAP Consolidated Statement of Operations (Unaudited)
(In millions, except per share data)
| | Quarter Ended September 30, 2007 | | Quarter Ended September 30, 2006 | |
| | | | Non-GAAP | | | | | | Non-GAAP | | | |
| | GAAP | | Adj. | | Non-GAAP | | GAAP | | Adj. | | Non-GAAP | |
| | | | | | | | | | | | | |
Net sales | | $ | 950 | | $ | — | | $ | 950 | | $ | 873 | | $ | — | | $ | 873 | |
| | | | | | | | | | | | | |
Cost of products sold | | 737 | | — | | 737 | | 663 | | — | | 663 | |
Selling, general and administrative | | 94 | | — | | 94 | | 101 | | — | | 101 | |
Depreciation and amortization | | 59 | | (10 | ) | 49 | | 49 | | (3 | ) | 46 | |
Research and development | | 15 | | — | | 15 | | 16 | | — | | 16 | |
Facility closures, severance and related costs | | 9 | | (9 | ) | — | | 1 | | (1 | ) | — | |
Antitrust costs | | 2 | | (2 | ) | — | | 26 | | (26 | ) | — | |
Merger costs | | — | | — | | — | | 1 | | (1 | ) | — | |
Gain on sale of assets and businesses | | (1 | ) | 1 | | — | | (1 | ) | 1 | | — | |
Impairment of long-lived assets | | 9 | | (9 | ) | — | | 74 | | (74 | ) | — | |
Equity income | | (1 | ) | — | | (1 | ) | (1 | ) | — | | (1 | ) |
| | | | | | | | | | | | | |
Operating profit (loss) | | 27 | | 29 | | 56 | | (56 | ) | 104 | | 48 | |
Interest expense | | 21 | | — | | 21 | | 23 | | — | | 23 | |
Loss on early extinguishment of debt | | — | | — | | — | | 24 | | (24 | ) | — | |
Other expense, net | | 6 | | — | | 6 | | 4 | | — | | 4 | |
| | | | | | | | | | | | | |
(Loss) earnings from continuing operations before income taxes | | — | | 29 | | 29 | | (107 | ) | 128 | | 21 | |
Income tax (benefit) expense | | (4 | ) | 14 | | 10 | | (18 | ) | 24 | | 6 | |
| | | | | | | | | | | | | |
Earnings (loss) from continuing operations | | 4 | | 15 | | 19 | | (89 | ) | 104 | | 15 | |
Earnings from discontinued operations | | — | | — | | — | | 3 | | — | | 3 | |
(Loss) gain on sale of discontinued operations | | (2 | ) | 2 | | — | | 46 | | (46 | ) | — | |
| | | | | | | | | | | | | |
Net earnings (loss) | | $ | 2 | | $ | 17 | | $ | 19 | | $ | (40 | ) | $ | 58 | | $ | 18 | |
| | | | | | | | | | | | | |
Diluted earnings from continuing operations | | | | | | $ | 0.08 | | | | | | $ | 0.07 | |
Diluted earnings from discontinued operations | | | | | | — | | | | | | 0.01 | |
Diluted net earnings | | | | | | $ | 0.08 | | | | | | $ | 0.08 | |
| | | | | | | | | | | | | |
Diluted weighted average shares outstanding | | | | | | 241.9 | | | | | | 240.9 | |
| | Quarter | | Quarter | |
| | Ended | | Ended | |
Non-GAAP Adjustments consist of the following: | | September 30, 2007 | | September 30, 2006 | |
| | | | | |
Change in useful life of property, plant and equipment | | $ | 10 | | $ | 3 | |
Facility closures, severance and related costs | | 9 | | 1 | |
Antitrust costs | | 2 | | 26 | |
Merger costs | | — | | 1 | |
Gain on sale of assets and businesses | | (1 | ) | (1 | ) |
Asset impairment | | 9 | | 74 | |
Loss on early extinguishment of debt | | — | | 24 | |
Pre-Tax | | 29 | | 128 | |
| | | | | |
Adjustment to apply a non-GAAP effective tax rate | | 14 | | 24 | |
After-Tax | | 15 | | 104 | |
| | | | | |
Gain on sale of discontinued operations | | 2 | | (46 | ) |
Net Earnings | | $ | 17 | | $ | 58 | |
13
CHEMTURA CORPORATION
Non-GAAP Consolidated Statement of Operations (Unaudited)
(In millions, except per share data)
| | Nine Months Ended September 30, 2007 | | Nine Months Ended September 30, 2006 | |
| | | | Non-GAAP | | | | | | Non-GAAP | | | |
| | GAAP | | Adj. | | Non-GAAP | | GAAP | | Adj. | | Non-GAAP | |
| | | | | | | | | | | | | |
Net sales | | $ | 2,918 | | $ | — | | $ | 2,918 | | $ | 2,715 | | $ | — | | $ | 2,715 | |
| | | | | | | | | | | | | |
Cost of products sold | | 2,225 | | (7 | ) | 2,218 | | 2,012 | | — | | 2,012 | |
Selling, general and administrative | | 311 | | — | | 311 | | 300 | | 4 | | 304 | |
Depreciation and amortization | | 193 | | (46 | ) | 147 | | 143 | | (9 | ) | 134 | |
Research and development | | 47 | | — | | 47 | | 48 | | — | | 48 | |
Facility closures, severance and related costs | | 34 | | (34 | ) | — | | (2 | ) | 2 | | — | |
Antitrust costs | | 32 | | (32 | ) | — | | 71 | | (71 | ) | — | |
Merger costs | | — | | — | | — | | 16 | | (16 | ) | — | |
Loss on sale of assets and businesses | | 14 | | (14 | ) | — | | 11 | | (11 | ) | — | |
Impairment of long-lived assets | | 16 | | (16 | ) | — | | 80 | | (80 | ) | — | |
Equity income | | (2 | ) | — | | (2 | ) | (2 | ) | — | | (2 | ) |
| | | | | | | | | | | | | |
Operating profit | | 48 | | 149 | | 197 | | 38 | | 181 | | 219 | |
Interest expense | | 67 | | — | | 67 | | 81 | | — | | 81 | |
Loss on early extinguishment of debt | | — | | — | | — | | 44 | | (44 | ) | — | |
Other expense, net | | 11 | | — | | 11 | | 2 | | 4 | | 6 | |
| | | | | | | | | | | | | |
(Loss) earnings from continuing operations before income taxes | | (30 | ) | 149 | | 119 | | (89 | ) | 221 | | 132 | |
Income tax expense (benefit) | | 4 | | 39 | | 43 | | (8 | ) | 54 | | 46 | |
| | | | | | | | | | | | | |
(Loss) earnings from continuing operations | | (34 | ) | 110 | | 76 | | (81 | ) | 167 | | 86 | |
Earnings from discontinued operations | | 6 | | — | | 6 | | 9 | | — | | 9 | |
Gain on sale of discontinued operations | | 25 | | (25 | ) | — | | 46 | | (46 | ) | — | |
| | | | | | | | | | | | | |
Net (loss) earnings | | $ | (3 | ) | $ | 85 | | $ | 82 | | $ | (26 | ) | $ | 121 | | $ | 95 | |
| | | | | | | | | | | | | |
Diluted earnings from continuing operations | | | | | | $ | 0.32 | | | | | | $ | 0.36 | |
Diluted earnings from discontinued operations | | | | | | 0.02 | | | | | | 0.04 | |
Diluted net earnings | | | | | | $ | 0.34 | | | | | | $ | 0.40 | |
| | | | | | | | | | | | | |
Diluted weighted average shares outstanding | | | | | | 242.1 | | | | | | 241.1 | |
| | Nine Months | | Nine Months | |
| | Ended | | Ended | |
Non-GAAP Adjustments consist of the following: | | September 30, 2007 | | September 30, 2006 | |
| | | | | |
Change in useful life of property, plant and equipment | | $ | 46 | | $ | 9 | |
Accelerated recognition of asset retirement obligation | | 7 | | — | |
Favorable settlement on contractual matter | | — | | (4 | ) |
Facility closures, severance and related costs | | 34 | | (2 | ) |
Antitrust costs | | 32 | | 71 | |
Merger costs | | — | | 16 | |
Loss on sale of assets and businesses | | 14 | | 11 | |
Asset impairment | | 16 | | 80 | |
Loss on early extinguishment of debt | | — | | 44 | |
Interest income on tax settlement | | — | | (4 | ) |
Pre-Tax | | 149 | | 221 | |
| | | | | |
Adjustment to apply a non-GAAP effective tax rate | | 39 | | 54 | |
After-Tax | | 110 | | 167 | |
| | | | | |
Gain on sale of discontinued operations | | (25 | ) | (46 | ) |
Net Earnings | | $ | 85 | | $ | 121 | |
14
CHEMTURA CORPORATION
Non-GAAP Segment Net Sales and Operating Profit (Loss) (Unaudited)
(In millions of dollars)
| | Quarter Ended September 30, 2007 | | Quarter Ended September 30, 2006 | |
| | | | Non-GAAP | | | | | | Non-GAAP | | | |
| | GAAP | | Adjustments | | Non-GAAP | | GAAP | | Adjustments | | Non-GAAP | |
NET SALES | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Polymer Additives | | $ | 447 | | $ | — | | $ | 447 | | $ | 431 | | $ | — | | $ | 431 | |
Performance Specialties | | 237 | | — | | 237 | | 166 | | — | | 166 | |
Consumer Products | | 139 | | — | | 139 | | 132 | | — | | 132 | |
Crop Protection | | 83 | | — | | 83 | | 75 | | — | | 75 | |
Other | | 44 | | — | | 44 | | 69 | | — | | 69 | |
Total Net Sales | | $ | 950 | | $ | — | | $ | 950 | | $ | 873 | | $ | — | | $ | 873 | |
| | | | | | | | | | | | | |
OPERATING PROFIT (LOSS) | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Polymer Additives | | $ | 10 | | $ | 8 | | $ | 18 | | $ | 24 | | $ | — | | $ | 24 | |
Performance Specialties | | 33 | | — | | 33 | | 30 | | — | | 30 | |
Consumer Products | | 23 | | — | | 23 | | 17 | | — | | 17 | |
Crop Protection | | 16 | | — | | 16 | | 8 | | — | | 8 | |
Other | | 5 | | 1 | | 6 | | — | | — | | — | |
| | 87 | | 9 | | 96 | | 79 | | — | | 79 | |
| | | | | | | | | | | | | |
General corporate expense, including amortization | | (40 | ) | — | | (40 | ) | (31 | ) | — | | (31 | ) |
Change in useful life of property, plant and equipment | | (1 | ) | 1 | | — | | (3 | ) | 3 | | — | |
Facility closures, severance and related cost | | (9 | ) | 9 | | — | | (1 | ) | 1 | | — | |
Antitrust costs | | (2 | ) | 2 | | — | | (26 | ) | 26 | | — | |
Merger costs | | — | | — | | — | | (1 | ) | 1 | | — | |
Gain on sale of assets and businesses | | 1 | | (1 | ) | — | | 1 | | (1 | ) | — | |
Impairment of long—lived assets | | (9 | ) | 9 | | — | | (74 | ) | 74 | | — | |
| | | | | | | | | | | | | |
Total operating profit (loss) | | $ | 27 | | $ | 29 | | $ | 56 | | $ | (56 | ) | $ | 104 | | $ | 48 | |
| | Quarter | | Quarter | |
| | Ended | | Ended | |
Non-GAAP Adjustments consist of the following: | | September 30, 2007 | | September 30, 2006 | |
| | | | | |
Change in useful life of property, plant and equipment | | $ | 10 | | $ | 3 | |
Facility closures, severance and related costs | | 9 | | 1 | |
Antitrust costs | | 2 | | 26 | |
Merger costs | | — | | 1 | |
Gain on sale of assets and businesses | | (1 | ) | (1 | ) |
Asset impairment | | 9 | | 74 | |
| | $ | 29 | | $ | 104 | |
15
CHEMTURA CORPORATION
Non—GAAP Segment Net Sales and Operating Profit (Unaudited)
(In millions of dollars)
| | Nine Months Ended September 30, 2007 | | Nine Months Ended September 30, 2006 | |
| | | | Non-GAAP | | | | | | Non-GAAP | | | |
| | GAAP | | Adjustments | | Non-GAAP | | GAAP | | Adjustments | | Non-GAAP | |
NET SALES | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Polymer Additives | | $ | 1,366 | | $ | — | | $ | 1,366 | | $ | 1,293 | | $ | — | | $ | 1,293 | |
Performance Specialties | | 680 | | — | | 680 | | 509 | | — | | 509 | |
Consumer Products | | 456 | | — | | 456 | | 450 | | — | | 450 | |
Crop Protection | | 261 | | — | | 261 | | 239 | | — | | 239 | |
Other | | 155 | | — | | 155 | | 224 | | — | | 224 | |
Total Net Sales | | $ | 2,918 | | $ | — | | $ | 2,918 | | $ | 2,715 | | $ | — | | $ | 2,715 | |
| | | | | | | | | | | | | |
OPERATING PROFIT | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Polymer Additives | | $ | 79 | | $ | 9 | | $ | 88 | | $ | 113 | | $ | — | | $ | 113 | |
Performance Specialties | | 101 | | — | | 101 | | 89 | | — | | 89 | |
Consumer Products | | 65 | | — | | 65 | | 64 | | — | | 64 | |
Crop Protection | | 57 | | — | | 57 | | 44 | | — | | 44 | |
Other | | 6 | | 5 | | 11 | | 9 | | — | | 9 | |
| | 308 | | 14 | | 322 | | 319 | | — | | 319 | |
| | | | | | | | | | | | | |
General corporate expense, including amortization | | (127 | ) | 2 | | (125 | ) | (96 | ) | (4 | ) | (100 | ) |
Change in useful life of property, plant and equipment | | (37 | ) | 37 | | — | | (9 | ) | 9 | | — | |
Facility closures, severance and related cost | | (34 | ) | 34 | | — | | 2 | | (2 | ) | — | |
Antitrust costs | | (32 | ) | 32 | | — | | (71 | ) | 71 | | — | |
Merger costs | | — | | — | | — | | (16 | ) | 16 | | — | |
Loss on sale of assets and businesses | | (14 | ) | 14 | | — | | (11 | ) | 11 | | — | |
Impairment of long-lived assets | | (16 | ) | 16 | | — | | (80 | ) | 80 | | — | |
| | | | | | | | | | | | | |
Total operating profit | | $ | 48 | | $ | 149 | | $ | 197 | | $ | 38 | | $ | 181 | | $ | 219 | |
| | Nine Months | | Nine Months | |
| | Ended | | Ended | |
Non—GAAP Adjustments consist of the following: | | September 30, 2007 | | September 30, 2006 | |
| | | | | |
Change in useful life of property, plant and equipment | | $ | 46 | | $ | 9 | |
Accelerated recognition of asset retirement obligation | | 7 | | — | |
Favorable settlement on contractual matter | | — | | (4 | ) |
Facility closures, severance and related costs | | 34 | | (2 | ) |
Antitrust costs | | 32 | | 71 | |
Merger costs | | — | | 16 | |
Loss on sale of assets and businesses | | 14 | | 11 | |
Asset impairment | | 16 | | 80 | |
| | $ | 149 | | $ | 181 | |
16
CHEMTURA CORPORATION
GAAP and Non-GAAP Consolidated Statements of Operations (Unaudited)
(In millions, except per share data)
| | Quarter Ended June 30, 2007 | | Six Months Ended June 30, 2007 | |
| | | | Non-GAAP | | | | | | Non-GAAP | | | |
| | GAAP | | Adj. | | Non-GAAP | | GAAP | | Adj. | | Non-GAAP | |
| | | | | | | | | | | | | |
Net sales | | $ | 1,059 | | $ | — | | $ | 1,059 | | $ | 1,968 | | $ | — | | $ | 1,968 | |
| | | | | | | | | | | | | |
Cost of products sold | | 793 | | (4 | ) | 789 | | 1,488 | | (7 | ) | 1,481 | |
Selling, general and administrative | | 114 | | — | | 114 | | 217 | | — | | 217 | |
Depreciation and amortization | | 71 | | (22 | ) | 49 | | 134 | | (36 | ) | 98 | |
Research and development | | 15 | | — | | 15 | | 32 | | — | | 32 | |
Facility closures, severance and related costs | | 22 | | (22 | ) | — | | 25 | | (25 | ) | — | |
Antitrust costs | | 18 | | (18 | ) | — | | 30 | | (30 | ) | — | |
Gain on sale of assets and businesses | | 15 | | (15 | ) | — | | 15 | | (15 | ) | — | |
Impairment of long-lived assets | | 7 | | (7 | ) | — | | 7 | | (7 | ) | — | |
Equity income | | (1 | ) | — | | (1 | ) | (1 | ) | — | | (1 | ) |
| | | | | | | | | | | | | |
Operating profit | | 5 | | 88 | | 93 | | 21 | | 120 | | 141 | |
Interest expense | | 23 | | — | | 23 | | 46 | | — | | 46 | |
Other expense, net | | 6 | | — | | 6 | | 5 | | — | | 5 | |
| | | | | | | | | | | | | |
(Loss) earnings from continuing operations before income taxes | | (24 | ) | 88 | | 64 | | (30 | ) | 120 | | 90 | |
Income tax (benefit) expense | | (4 | ) | 28 | | 24 | | 8 | | 25 | | 33 | |
| | | | | | | | | | | | | |
(Loss) earnings from continuing operations | | (20 | ) | 60 | | 40 | | (38 | ) | 95 | | 57 | |
Earnings from discontinued operations | | 3 | | — | | 3 | | 6 | | — | | 6 | |
Gain on sale of discontinued operations | | 25 | | (25 | ) | — | | 27 | | (27 | ) | — | |
| | | | | | | | | | | | | |
Net earnings (loss) | | $ | 8 | | $ | 35 | | $ | 43 | | $ | (5 | ) | $ | 68 | | $ | 63 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Basic (loss) earnings from continuing operations | | $ | (0.08 | ) | | | | | $ | (0.16 | ) | | | | |
Basic earnings from discontinued operations | | 0.01 | | | | | | 0.03 | | | | | |
Basic gain on sale of discontinued operations | | 0.10 | | | | | | 0.11 | | | | | |
Basic net earnings (loss) | | $ | 0.03 | | | | | | $ | (0.02 | ) | | | | |
| | | | | | | | | | | | | |
Basic weighted average shares outstanding | | 241.4 | | | | | | 241.2 | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Diluted (loss) earnings from continuing operations | | $ | (0.08 | ) | | | $ | 0.17 | | $ | (0.16 | ) | | | $ | 0.24 | |
Diluted earnings from discontinued operations | | 0.01 | | | | 0.01 | | 0.03 | | | | 0.02 | |
Diluted gain on sale of discontinued operations | | 0.10 | | | | — | | 0.11 | | | | — | |
Diluted net earnings (loss) | | $ | 0.03 | | | | $ | 0.18 | | $ | (0.02 | ) | | | $ | 0.26 | |
| | | | | | | | | | | | | |
Diluted weighted average shares outstanding | | 241.4 | | | | 242.2 | | 241.2 | | | | 242.2 | |
| | | | Quarter | | | | | | Six Months | | | |
| | | | Ended | | | | | | Ended | | | |
Non-GAAP Adjustments consist of the following: | | | | June 30, 2007 | | | | | | June 30, 2007 | | | |
| | | | | | | | | | | | | |
Change in useful life of property, plant and equipment | | | | $ | 22 | | | | | | $ | 36 | | | |
Accelerated recognition of asset retirement obligation | | | | 4 | | | | | | 7 | | | |
Facility closures, severance and related costs | | | | 22 | | | | | | 25 | | | |
Antitrust costs | | | | 18 | | | | | | 30 | | | |
Gain on sale of assets and businesses | | | | 15 | | | | | | 15 | | | |
Asset impairment | | | | 7 | | | | | | 7 | | | |
Pre-Tax | | | | 88 | | | | | | 120 | | | |
| | | | | | | | | | | | | |
Adjustment to apply a non-GAAP effective tax rate | | | | 28 | | | | | | 25 | | | |
After-Tax | | | | 60 | | | | | | 95 | | | |
| | | | | | | | | | | | | |
Gain on sale of discontinued operations | | | | (25 | ) | | | | | (27 | ) | | |
Net Earnings | | | | $ | 35 | | | | | | $ | 68 | | | |
17
CHEMTURA CORPORATION
Consolidated Balance Sheet
(In millions of dollars)
| | June 30, 2007 | |
ASSETS | | (Unaudited) | |
| | | |
CURRENT ASSETS | | | |
Cash and cash equivalents | | $ | 76 | |
Accounts receivable | | 453 | |
Inventories | | 684 | |
Other current assets | | 214 | |
Total current assets | | 1,427 | |
| | | |
NON-CURRENT ASSETS | | | |
Property, plant and equipment, net | | 1,077 | |
Cost in excess of acquired net assets | | 1,261 | |
Intangible assets, net | | 596 | |
Other assets | | 144 | |
| | | |
| | $ | 4,505 | |
| | | |
LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| | | |
CURRENT LIABILITIES | | | |
Short-term borrowings | | $ | 81 | |
Accounts payable | | 337 | |
Accrued expenses | | 394 | |
Income taxes payable | | 30 | |
Total current liabilities | | 842 | |
| | | |
NON-CURRENT LIABILITIES | | | |
Long-term debt | | 1,062 | |
Pension and post-retirement health care liabilities | | 437 | |
Other liabilities | | 430 | |
| | | |
STOCKHOLDERS' EQUITY | | | |
Common stock | | 3 | |
Additional paid-in capital | | 3,019 | |
Accumulated deficit | | (1,157 | ) |
Accumulated other comprehensive income (loss) | | 36 | |
Treasury stock at cost | | (167 | ) |
Total stockholders' equity | | 1,734 | |
| | | |
| | $ | 4,505 | |
18
CHEMTURA CORPORATION
Condensed Consolidated Statement of Cash Flows (Unaudited)
(In millions of dollars)
| | Six Months Ended | |
Increase (decrease) to cash | | June 30, 2007 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | |
Net loss | | $ | (5 | ) |
Adjustments to reconcile net loss to net
cash provided by operations: | | 15 | |
Loss on sale of assets and businesses | | | |
Gain on sale of discontinued operations | | (27 | ) |
Impairment of long-lived assets | | 7 | |
Depreciation and amortization | | 138 | |
Stock-based compensation expense | | 5 | |
Equity income | | (1 | ) |
Changes in assets and liabilities, net: | | (85 | ) |
Net cash provided by operations | | 47 | |
| | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | |
Net proceeds from divestments | | 132 | |
Payments for acquisitions, net of cash acquired | | (164 | ) |
Capital expenditures | | (46 | ) |
Net cash (used in) provided by investing activities | | (78 | ) |
| | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | |
Payments on short term borrowings | | 31 | |
Dividends paid | | (24 | ) |
Proceeds from exercise of stock options | | 4 | |
Net cash used in financing activities | | 11 | |
| | | |
CASH | | | |
Effect of exchange rates on cash and cash equivalents | | 1 | |
| | | |
Change in cash and cash equivalents | | (19 | ) |
Cash and cash equivalents at beginning of period | | 95 | |
| | | |
Cash and cash equivalents at end of period | | $ | 76 | |
19
