Exhibit 99.2
NEWMARKET CORPORATION AND SUBSIDIARIES
SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION
(In millions except per share amounts, unaudited)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Net sales: | ||||||||||||||||
Petroleum additives | $ | 323.9 | $ | 267.4 | $ | 948.4 | $ | 773.6 | ||||||||
Tetraethyl lead | 1.2 | 3.5 | 8.7 | 8.3 | ||||||||||||
Total | $ | 325.1 | $ | 270.9 | $ | 957.1 | $ | 781.9 | ||||||||
Segment operating profit: | ||||||||||||||||
Petroleum additives before special item | $ | 27.8 | $ | 16.8 | $ | 80.6 | $ | 42.4 | ||||||||
Special item (a) | 2.6 | — | 2.6 | — | ||||||||||||
Petroleum additives | 30.4 | 16.8 | 83.2 | 42.4 | ||||||||||||
Tetraethyl lead before special item | — | 5.5 | 2.5 | 15.3 | ||||||||||||
Special item (b) | — | — | — | 3.9 | ||||||||||||
Tetraethyl lead | — | 5.5 | 2.5 | 19.2 | ||||||||||||
Contract manufacturing and other | 0.9 | 0.2 | 3.2 | 1.8 | ||||||||||||
Segment operating profit | 31.3 | 22.5 | 88.9 | 63.4 | ||||||||||||
Corporate unallocated expense | (3.9 | ) | (3.6 | ) | (9.8 | ) | (9.8 | ) | ||||||||
Special items (c) | 5.3 | 2.9 | 13.0 | 2.9 | ||||||||||||
Interest expense | (3.9 | ) | (4.1 | ) | (11.7 | ) | (12.9 | ) | ||||||||
Other income (expense), net | 1.0 | — | 2.3 | (0.2 | ) | |||||||||||
Income before income taxes | $ | 29.8 | $ | 17.7 | $ | 82.7 | $ | 43.4 | ||||||||
Net income: | ||||||||||||||||
Earnings excluding special items | $ | 14.0 | $ | 10.3 | $ | 43.3 | $ | 25.6 | ||||||||
Special items (a) (b) (c) (d) | 4.9 | 3.1 | 9.8 | 5.6 | ||||||||||||
Net income | $ | 18.9 | $ | 13.4 | $ | 53.1 | $ | 31.2 | ||||||||
Basic earnings per share: | ||||||||||||||||
Earnings excluding special items | $ | 0.82 | $ | 0.61 | $ | 2.51 | $ | 1.51 | ||||||||
Special items (a) (b) (c) (d) | 0.28 | 0.18 | 0.57 | 0.33 | ||||||||||||
Basic earnings per share | $ | 1.10 | $ | 0.79 | $ | 3.08 | $ | 1.84 | ||||||||
Diluted earnings per share: | ||||||||||||||||
Earnings excluding special items | $ | 0.81 | $ | 0.59 | $ | 2.49 | $ | 1.48 | ||||||||
Special items (a) (b) (c) (d) | 0.28 | 0.18 | 0.56 | 0.32 | ||||||||||||
Diluted earnings per share | $ | 1.09 | $ | 0.77 | $ | 3.05 | $ | 1.80 | ||||||||
Notes to Segment Results and Other Financial Information
Certain prior period amounts have been reclassified to conform to the current presentation. There was no impact on net income in any period.
| (a) | The 2006 special item in petroleum additives represents the gain associated with a legal settlement related to transportation charges. The after tax gain amounted to $1.6 million. |
| (b) | The 2005 special item in TEL represents the gain associated with the insurance settlement related to premises asbestos liabilities. The after tax gain amounted to $2.5 million. |
| (c) | Both third quarter and nine months 2006 include a $5.3 million gain ($3.3 million after tax) related to an earn-out agreement for certain pharmaceutical intellectual property that we sold in 1994. Nine months 2006 also includes a $3.3 million gain ($2.0 million after tax) on the sale of property, as well as a $4.4 million gain for interest on an income tax settlement ($2.9 million after tax). The 2005 special item is a gain of $2.9 million ($1.8 million after tax) on the sale of corporate property. |
| (d) | Net income for the three and nine months ended September 30, 2005 includes a benefit of $1.3 million related to the settlement of certain tax years with the Internal Revenue Service. |
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts, unaudited)
| Three Months Ended September 30 | Nine Months Ended September 30 | |||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||
Net sales | $ | 325,119 | $ | 270,932 | $ | 957,135 | $ | 781,888 | ||||
Cost of goods sold | 258,955 | 217,761 | 757,266 | 633,443 | ||||||||
Gross profit | 66,164 | 53,171 | 199,869 | 148,445 | ||||||||
Operating profit from TEL marketing agreements services | 3,238 | 6,352 | 6,426 | 19,629 | ||||||||
Selling, general, and administrative expenses | 27,794 | 24,967 | 79,260 | 71,229 | ||||||||
Research, development, and testing expenses | 16,582 | 15,919 | 50,264 | 47,996 | ||||||||
Special items income (a) | 7,843 | 2,878 | 11,093 | 6,746 | ||||||||
Operating profit | 32,869 | 21,515 | 87,864 | 55,595 | ||||||||
Interest and financing expenses | 3,917 | 4,138 | 11,689 | 12,920 | ||||||||
Other income, net (b) | 859 | 372 | 6,502 | 743 | ||||||||
Income before income taxes | 29,811 | 17,749 | 82,677 | 43,418 | ||||||||
Income tax expense (c) | 10,890 | 4,348 | 29,615 | 12,188 | ||||||||
Net income | $ | 18,921 | $ | 13,401 | $ | 53,062 | $ | 31,230 | ||||
Basic earnings per share | $ | 1.10 | $ | 0.79 | $ | 3.08 | $ | 1.84 | ||||
Diluted earnings per share | $ | 1.09 | $ | 0.77 | $ | 3.05 | $ | 1.80 | ||||
Shares used to compute basic earnings per share | 17,257 | 17,042 | 17,204 | 17,013 | ||||||||
Shares used to compute diluted earnings per share | 17,409 | 17,317 | 17,405 | 17,312 | ||||||||
Notes to Consolidated Statements of Income
| (a) | Both third quarter and nine months 2006 include a $5.3 million gain ($3.3 million after tax) related to an earn-out agreement for certain pharmaceutical intellectual property that we sold in 1994. In addition, both 2006 periods also include a gain of $2.6 million ($1.6 million after tax) associated with a legal settlement related to transportation charges. Nine months 2006 also includes a $3.3 million gain ($2.0 million after tax) on the sale of property. |
Both third quarter and nine months 2005 include a gain of $2.9 million ($1.8 million after tax) on the sale of corporate property. Nine months 2005 also includes a gain of $3.9 million ($2.5 million after tax) associated with the insurance settlement related to premises asbestos liabilities.
| (b) | Other income, net for nine months 2006 includes a gain of $4.4 million for interest on an income tax settlement. The after tax gain amounted to $2.9 million. |
| (c) | Income tax expense for both 2005 periods includes a benefit of $1.1 million related to the settlement of certain open tax years with the Internal Revenue Service. |
NEWMARKET CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
| September 30 2006 | December 31 2005 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 86,670 | $ | 56,413 | ||||
Restricted cash | 240 | 1,419 | ||||||
Trade and other accounts receivable, less allowance for doubtful accounts ($832 - 2006; $1,045 - 2005) | 190,793 | 189,460 | ||||||
Inventories | 180,766 | 151,999 | ||||||
Deferred income taxes | 8,073 | 9,289 | ||||||
Prepaid expenses | 7,063 | 3,119 | ||||||
Total current assets | 473,605 | 411,699 | ||||||
Property, plant and equipment, at cost | 742,593 | 764,945 | ||||||
Less accumulated depreciation and amortization | 587,678 | 610,939 | ||||||
Net property, plant and equipment | 154,915 | 154,006 | ||||||
Prepaid pension cost | 17,663 | 18,316 | ||||||
Deferred income taxes | 19,791 | 23,157 | ||||||
Other assets and deferred charges | 39,987 | 44,480 | ||||||
Intangibles, net of amortization | 46,617 | 49,874 | ||||||
Total assets | $ | 752,578 | $ | 701,532 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 83,249 | $ | 88,350 | ||||
Accrued expenses | 59,823 | 58,847 | ||||||
Dividends payable | 2,167 | — | ||||||
Book overdraft | 4,266 | 4,222 | ||||||
Long-term debt, current portion | 671 | 640 | ||||||
Income taxes payable | 14,305 | 14,728 | ||||||
Total current liabilities | 164,481 | 166,787 | ||||||
Long-term debt | 152,675 | 153,189 | ||||||
Other noncurrent liabilities | 116,778 | 115,496 | ||||||
Shareholders’ equity | ||||||||
Common stock and paid in capital (without par value) Issued - 17,272,259 in 2006 and 17,081,559 in 2005 | 87,379 | 85,162 | ||||||
Accumulated other comprehensive loss | (26,734 | ) | (30,511 | ) | ||||
Retained earnings | 257,999 | 211,409 | ||||||
| 318,644 | 266,060 | |||||||
Total liabilities and shareholders’ equity | $ | 752,578 | $ | 701,532 | ||||