SECURITIES AND EXCHANGE COMMISSION |
| Delaware (State or other jurisdiction of incorporation) | 1-8142 (Commission File Number) | 22-1586002 (I.R.S. Employer Identification No.) |
| 101 Wood Avenue, Iselin, New Jersey (Address of principal executive offices) | 08830 (Zip Code) | |
Registrant’s telephone number, including area code (732) 205-5000 |
Item 12. Results of Operations and Financial Condition.On February 3, 2004, Engelhard Corporation (the “Company”) issued a press release announcing its earnings for its fourth quarter of fiscal year 2003. A copy of the release is furnished herewith as Exhibit 99.1. The information furnished under this Item 12, including Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference. |
SIGNATURESPursuant to the requirements 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. |
ENGELHARD CORPORATION ——————————————————— (Registrant) | ||
| Date: February 3, 2004 | /s/ Michael A. Sperduto ——————————————————— Michael A. Sperduto Vice President and Chief Financial Officer |
EXHIBIT INDEX |
| Exhibit No. | Description | |
| 99.1 | Press Release, dated February 3, 2004 relating to Engelhard Corporation’s earnings release for the fourth quarter of 2003. |
EXHIBIT (99.1)  |
| News | Contact Ted Lowen (Media) 732-205-6360 Peter Martin (Investor Relations) 732-205-6106 Ref. #C1385 Engelhard Corporation 101 Wood Avenue P.O. Box 770 Iselin, NJ 08830-0770 |
| For immediate release | Iselin, NJ 08830-0770 |
ENGELHARD REPORTS FOURTH-QUARTER RESULTSISELIN, NJ, February 3, 2004 –Engelhard Corporation (NYSE: EC) today reported net earnings for the fourth quarter ended December 31 of $63.7 million, or 50 cents per share, compared with $56.1 million, or 44 cents, for the same period in 2002. Fourth-quarter sales were $1.0 billion compared with $911 million a year ago. Full-year net earnings were $234.2 million, or $1.84 per share, which included $4.9 million, or four cents per share of net-positive special items. Earnings in 2002 were $171 million, or $1.31 per share, which included a charge of $57.7 million, or 44 cents per share. Sales for the year were $3.7 billion compared with $3.8 billion in 2002. “New technology-based growth platforms and our companywide focus on productivity enabled us to deliver another year of solid financial results while continuing to fund R&D efforts for future growth,” said Barry W. Perry, chairman and chief executive officer. “We grew earnings, generated excellent cash flow and posted solid returns without appreciable economic recovery in some core markets.” Fourth-Quarter Operating ResultsOperating earnings from Environmental Technologies were up 51% to $32 million. Sales rose 10% to $206 million on increased revenue from automotive and diesel markets. The increase in sales primarily resulted from favorable exchange rates and higher pass-through costs of substrates. The sharply higher earnings resulted from strength in mobile markets and the absence of costs in the year-ago quarter related to rework for power-generation applications. |
Operating earnings from Process Technologies increased 5% to $33 million. Sales rose 4% to $167 million. Demand remained strong for new catalyst and additive technologies for petroleum refining as well as polyolefin catalysts. Demand from core chemical-process markets was below a strong year-ago quarter. Operating earnings from Appearance and Performance Technologies declined 29% to $14 million. Sales were down 2% to $153 million. The declines were primarily the result of lower volumes of mineral-based products sold to the paper market plus higher energy costs. Operating earnings from Materials Services declined to $1 million as expected, while sales were up 26% to $500 million. In spite of higher volumes, the low earnings resulted from reduced margins in sourcing metals for customers and a less favorable mix of metals in refining services. Earnings from equity investments were $12 million, compared with $4 million a year ago, primarily reflecting gains from assets sold under favorable market conditions as part of the liquidation of the company’s investment in a French-based, precious-metal-fabrication venture. The company also benefited in the quarter from a lower than anticipated tax rate due to the favorable resolution of certain state income tax issues. Performance Outlook“Our business plan calls for modest growth in 2004 with net earnings per share in the range of $1.80 to $1.90,” Mr. Perry said. “We expect to overcome the absence of 15 cents per share of earnings delivered in 2003 by the French joint venture as well as continued weakness in several of our served markets. Growth from new technologies and our ongoing focus on productivity in our technology segments provide a strong underlying financial base, and we look ahead to the resumption of double-digit earnings growth beyond 2004.” Engelhard Corporation is a surface and materials science company that develops technologies to improve customers’ products and processes. AFortune 500 company, Engelhard is a world-leading provider of technologies for environmental, process, appearance and performance applications. For more information, visit Engelhard on the Internet atwww.engelhard.com. Forward-looking statements: This document contains forward-looking statements in management’s comments. There are a number of factors that could cause Engelhard’s actual results to vary materially from those projected in the forward-looking statements. For a more thorough discussion of these factors, please refer to page 26 of Engelhard’s 2002 Form 10-K, dated March 25, 2003. # # # |
ENGELHARD CORPORATION |
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||
| Net sales | $ | 1,039,323 | $ | 910,862 | $ | 3,714,493 | $ | 3,753,571 | ||||
| Cost of sales | 871,835 | 750,699 | 3,080,408 | 3,099,806 | ||||||||
| Gross profit | 167,488 | 160,163 | 634,085 | 653,765 | ||||||||
| Selling, administrative and other expenses | 95,883 | 87,912 | 364,490 | 350,137 | ||||||||
| Special credit, net | — | — | (11,978 | ) | (7,862 | ) | ||||||
| Operating earnings | 71,605 | 72,251 | 281,573 | 311,490 | ||||||||
| Equity in earnings of affiliates | 11,674 | 4,267 | 39,368 | 16,207 | ||||||||
| Equity investment impairment | — | — | — | (57,704 | ) | |||||||
| Loss on investments | — | — | — | (6,659 | ) | |||||||
| Interest expense, net | (4,475 | ) | (5,642 | ) | (20,295 | ) | (25,410 | ) | ||||
| Earnings before income taxes | 78,804 | 70,876 | 300,646 | 237,924 | ||||||||
| Income tax expense | 15,115 | 14,823 | 64,154 | 66,516 | ||||||||
| Net earnings before cumulative effect of a | ||||||||||||
| change in accounting principle, net of | ||||||||||||
| tax | 63,689 | 56,053 | 236,492 | 171,408 | ||||||||
| Cumulative effect of a change in | ||||||||||||
| accounting principle, net of tax of | ||||||||||||
| $1,390 | — | — | (2,269 | ) | — | |||||||
| Net earnings | $ | 63,689 | $ | 56,053 | $ | 234,223 | $ | 171,408 | ||||
| Earnings per share – basic: | ||||||||||||
| Earnings before cumulative effect of a | ||||||||||||
| change in accounting principle | $ | 0.51 | $ | 0.44 | $ | 1.89 | $ | 1.34 | ||||
| Cumulative effect of a change in | ||||||||||||
| accounting principle, net of tax | — | — | (0.02 | ) | — | |||||||
| Earnings per share – basic | $ | 0.51 | $ | 0.44 | $ | 1.87 | $ | 1.34 | ||||
| Earnings per share – diluted: | ||||||||||||
| Earnings before cumulative effect of a | ||||||||||||
| change in accounting principle | $ | 0.50 | $ | 0.44 | $ | 1.86 | $ | 1.31 | ||||
| Cumulative effect of a change in | ||||||||||||
| accounting principle, net of tax | — | — | (0.02 | ) | — | |||||||
| Earnings per share - diluted | $ | 0.50 | $ | 0.44 | $ | 1.84 | $ | 1.31 | ||||
| Cash dividends paid per share | $ | 0.11 | $ | 0.10 | $ | 0.41 | $ | 0.40 | ||||
| Average number of shares outstanding - basic | 124,643 | 127,146 | 125,359 | 128,089 | ||||||||
| Average number of shares outstanding - diluted | 127,177 | 128,772 | 127,267 | 130,450 | ||||||||
| Actual number of shares outstanding at end of year | 124,866 | 127,757 | 124,866 | 127,757 | ||||||||
Had compensation cost for Engelhard’s stock option plans been determined based on the fair value at grant date consistent with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation,” as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure,” (assuming SFAS No. 123 was adopted on its effective date of October 1995), Engelhard would have reported net earnings and diluted earnings per share as follows: |
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
| Pro forma information (in millions, except per-share data) | 2003 | 2002 | 2003 | 2002 | ||||||||
| Net earnings – as reported | $ | 63.7 | $ | 56.1 | $ | 234.2 | $ | 171.4 | ||||
| Net earnings – pro forma | 62.2 | 54.5 | 228.4 | 165.1 | ||||||||
| Diluted earnings per share - as reported | 0.50 | 0.44 | 1.84 | 1.31 | ||||||||
| Diluted earnings per share - pro forma | 0.49 | 0.42 | 1.79 | 1.27 | ||||||||
ENGELHARD CORPORATION |
| Three Months Ended December 31, | Change | Twelve Months Ended December 31, | Change | ||||||||||||||
| 2003 | 2002 | 2003 | 2002 | ||||||||||||||
| Net Sales | |||||||||||||||||
| Environmental Technologies | $ | 206,485 | $ | 187,204 | 10 | % | $ | 831,403 | $ | 680,406 | 22 | % | |||||
| Process Technologies | 167,304 | 161,291 | 4 | % | 569,225 | 538,778 | 6 | % | |||||||||
| Appearance and Performance | |||||||||||||||||
| Technologies | 153,355 | 155,952 | -2 | % | 653,830 | 650,836 | 1 | % | |||||||||
| Technology segments | 527,144 | 504,447 | 4 | % | 2,054,458 | 1,870,020 | 10 | % | |||||||||
| Materials Services | 499,552 | 397,660 | 26 | % | 1,608,302 | 1,836,033 | -12 | % | |||||||||
| All other | 12,627 | 8,755 | 44 | % | 51,733 | 47,518 | 9 | % | |||||||||
| Total net sales | $ | 1,039,323 | $ | 910,862 | 14 | % | $ | 3,714,493 | $ | 3,753,571 | -1 | % | |||||
| Operating Earnings | |||||||||||||||||
| Environmental Technologies | $ | 32,285 | $ | 21,416 | 51 | % | $ | 119,331 | (A) | $ | 109,163 | (E) | 9 | % | |||
| Process Technologies | 33,154 | 31,576 | 5 | % | 95,874 | (B) | 92,956 | 3 | % | ||||||||
| Appearance and Performance | |||||||||||||||||
| Technologies | 14,339 | 20,217 | -29 | % | 69,544 | (C) | 87,113 | -20 | % | ||||||||
| Technology segments | 79,778 | 73,209 | 9 | % | 284,749 | 289,232 | -2 | % | |||||||||
| Materials Services | 1,329 | 6,973 | -81 | % | 10,108 | 52,684 | (F) | -81 | % | ||||||||
| All other | (9,502 | ) | (7,931 | ) | -20 | % | (13,284 | )(D) | (30,426 | ) | 56 | % | |||||
| Total operating earnings | 71,605 | 72,251 | -1 | % | 281,573 | 311,490 | -10 | % | |||||||||
| Equity in earnings of affiliates | 11,674 | 4,267 | 174 | % | 39,368 | 16,207 | 143 | % | |||||||||
| Equity investment impairment | — | — | — | — | (57,704 | ) | — | ||||||||||
| Loss on investments | — | — | — | — | (6,659 | ) | — | ||||||||||
| Interest expense, net | (4,475 | ) | (5,642 | ) | -21 | % | (20,295 | ) | (25,410 | ) | -20 | % | |||||
| Earnings before income taxes | 78,804 | 70,876 | 11 | % | 300,646 | 237,924 | 26 | % | |||||||||
| Income tax expense | 15,115 | 14,823 | 2 | % | 64,154 | 66,516 | -4 | % | |||||||||
| Net earnings before cumulative effect | |||||||||||||||||
| of a change in accounting principle, | |||||||||||||||||
| net of tax | 63,689 | 56,053 | 14 | % | 236,492 | 171,408 | 38 | % | |||||||||
| Cumulative effect of a change in | |||||||||||||||||
| accounting principle, net of tax of | |||||||||||||||||
| $1,390 | — | — | — | (2,269 | ) | — | — | ||||||||||
| Net earnings | $ | 63,689 | $ | 56,053 | 14 | % | $ | 234,223 | $ | 171,408 | 37 | % | |||||
| (A) | – Includes a restructuring charge of $5.3 million ($3.5 million after tax or $0.03 per share) in 2003. |
| (B) | – Includes a restructuring charge of $2.6 million ($1.6 million after tax or $0.01 per share) in 2003. |
| (C) | – Includes a charge of $7.8 million ($4.8 million after tax or $0.04 per share) in 2003 related to lease commitments for idle facilities. |
| (D) | – Includes a royalty settlement gain of $28.4 million ($17.6 million after tax or $0.14 per share) and a Corporate restructuring charge of $0.8 million ($0.5 million after tax or less than $0.01 per share) in 2003. |
| (E) | – Includes a restructuring charge of $3.1 million ($1.9 million after tax or $0.01 per share) in 2002. |
| (F) | – Includes an insurance settlement gain of $11.0 million ($6.8 million after tax or $0.05 per share) in 2002. |
Note: All of the above per-share amounts are presented as diluted earnings per share. |
ENGELHARD CORPORATION |
| December 31, 2003 | December 31, 2002 | ||||
| Cash | $ | 87,889 | $ | 48,246 | |
| Receivables, net | 400,043 | 380,270 | |||
| Committed metal positions | 350,163 | 615,441 | |||
| Inventories | 442,787 | 427,162 | |||
| Other current assets | 112,678 | 94,922 | |||
| Total current assets | 1,393,560 | 1,566,041 | |||
| Investments | 158,664 | 136,804 | |||
| Property, plant and equipment, net | 880,822 | 860,475 | |||
| Goodwill | 275,121 | 272,353 | |||
| Other intangible and noncurrent assets | 224,836 | 185,041 | |||
| Total assets | $ | 2,933,003 | $ | 3,020,714 | |
| Short-term borrowings | $ | 68,275 | $ | 348,749 | |
| Accounts payable | 296,979 | 225,045 | |||
| Hedged metal obligations | 295,821 | 537,243 | |||
| Other current liabilities | 286,940 | 275,250 | |||
| Total current liabilities | 948,015 | 1,386,287 | |||
| Long-term debt | 390,565 | 247,805 | |||
| Other noncurrent liabilities | 309,024 | 309,455 | |||
| Shareholders’ equity | 1,285,399 | 1,077,167 | |||
| Total liabilities and shareholders’ equity | $ | 2,933,003 | $ | 3,020,714 | |
ENGELHARD CORPORATION |
| Twelve Months Ended December 31, | ||||||
| 2003 | 2002 | |||||
| Cash flows from operating activities | ||||||
| Net earnings | $ | 234,223 | $ | 171,408 | ||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||
| Depreciation and depletion | 124,315 | 110,676 | ||||
| Amortization of intangible assets | 3,357 | 2,886 | ||||
| Loss on investments | — | 6,659 | ||||
| Equity results, net of dividends | (14,805 | ) | (12,279 | ) | ||
| Equity investment impairment | — | 57,704 | ||||
| Net change in assets and liabilities: | ||||||
| Materials Services related | 332,590 | (30,053 | ) | |||
| All other | (48,696 | ) | (4,732 | ) | ||
| Net cash provided by operating activities | 630,984 | 302,269 | ||||
| Cash flows from investing activities | ||||||
| Capital expenditures | (113,557 | ) | (113,309 | ) | ||
| Proceeds from investments | 6,651 | — | ||||
| Acquisitions and other investments | (1,000 | ) | (7,606 | ) | ||
| Net cash used in investing activities | (107,906 | ) | (120,915 | ) | ||
| Cash flows from financing activities | ||||||
| Decrease in short-term borrowings | (284,283 | ) | (40,302 | ) | ||
| (Decrease)/increase in hedged metal obligations | (225,000 | ) | 3,784 | |||
| Repayment of long-term debt | (184 | ) | (148 | ) | ||
| Proceeds from issuance of long-term debt | 150,224 | — | ||||
| Purchase of treasury stock | (119,568 | ) | (133,543 | ) | ||
| Cash from exercise of stock options | 32,880 | 48,781 | ||||
| Dividends paid | (51,576 | ) | (51,492 | ) | ||
| Net cash used in financing activities | (497,507 | ) | (172,920 | ) | ||
| Effect of exchange rate changes on cash | 14,072 | 6,778 | ||||
| Net increase in cash | 39,643 | 15,212 | ||||
| Cash at beginning of year | 48,246 | 33,034 | ||||
| Cash at end of year | $ | 87,889 | $ | 48,246 | ||