SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------------------------------
For the quarterly period ended March 31, 1995
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 name 1-8142
ENGELHARD CORPORATION
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 22-1586002
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization Number)
101 WOOD AVENUE, ISELIN, NEW JERSEY 08830
- ---------------------------------------- ----------------
(Address of principal executive offices) (Zip Code)
(908) 205-5000
---------------------------------------------------
(Registrant's telephone number including area code)
Not Applicable
----------------------------------------------------
(Former name, former address and former fiscal year,
if change since last report)
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 and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
---
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class of Common Stock Outstanding at April 30, 1995
$1 par value 95,495,363
- 2 -
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(THOUSANDS EXCEPT PER SHARE DATA)
(unaudited)
Three Months Ended
March 31,
-----------------------
1995 1994
-------- --------
Net sales $694,455 $557,737
Cost of sales 582,505 467,895
-------- --------
Gross profit 111,950 89,842
Selling, administrative and other expenses 65,409 55,163
-------- --------
Earnings from operations 46,541 34,679
Equity in losses of affiliates (639) (147)
Net interest expense 8,072 4,194
-------- --------
Earnings before income taxes 37,830 30,338
Income tax expense 10,221 7,584
-------- --------
Net earnings $27,609 $22,754
======== ========
Net earnings per share $0.29 $0.24
======== ========
Cash dividends paid per share $0.12 $0.11
======== ========
Average number of shares outstanding 95,274 96,318
======== ========
See Note to Condensed Consolidated Financial Statements
- 3 -
Engelhard Corporation
Condensed Consolidated Balance Sheets
(Thousands)
(unaudited)
March 31, December 31,
1995 1994
---------- ------------
Cash $43,021 $26,404
Receivables 284,895 265,639
Inventories 252,618 243,439
Other current assets 46,681 38,155
---------- ----------
Total current assets 627,215 573,637
Investments 123,869 112,855
Property, plant and equipment,net 548,686 540,361
Other noncurrent assets 207,155 213,906
---------- ----------
Total assets $1,506,925 $1,440,759
========== ==========
Short-term borrowings $188,578 $179,667
Current maturities of long-term debt 535 489
Accounts payable 104,245 86,230
Other current liabilities 269,634 282,313
---------- ----------
Total current liabilities 562,992 548,699
Long-term debt 111,831 111,762
Other noncurrent liabilities 168,433 165,563
Shareholders' equity 663,669 614,735
---------- ----------
Total liabilities and
shareholders' equity $1,506,925 $1,440,759
========== ==========
See Note to Condensed Financial Statements
- 4 -
Engelhard Corporation
Condensed Consolidated Statements of Cash Flows
(Thousands)
(unaudited)
Three Months Ended
March 31,
-----------------------
1995 1994
-------- --------
Cash flows from operating activities
Net earnings $27,609 $22,754
Adjustments to reconcile net earnings to net
cash provided by operating activities
Depreciation, depletion and amortization 16,463 17,224
Equity losses 639 147
Change in assets and liabilities (12,670) (8,895)
-------- --------
Net cash provided by operating activities 32,041 31,230
-------- --------
Cash flows from investing activities
Capital expenditures, net (23,500) (18,344)
Acquisition of business and investment - (19,250)
Other 4,438 (3,114)
-------- --------
Net cash used in investing activities (19,062) (40,708)
-------- --------
Cash flows from financing activities
Net change in short-term borrowings 8,911 14,162
Dividends paid (11,448) (10,626)
Other 4,433 4,649
-------- --------
Net cash provided by financing activities 1,896 8,185
Effect of exchange rate changes on cash 1,742 556
-------- --------
Net change in cash 16,617 (737)
Cash at beginning of year 26,404 25,613
-------- --------
Cash at end of period $43,021 $24,876
======== ========
See Note to Condensed Consolidated Financial Statements
- 5 -
ENGELHARD CORPORATION
INDUSTRY SEGMENT INFORMATION
(Thousands)
(unaudited)
Three Months Ended
March 31,
------------------------
1995 1994
-------- --------
Net Sales
Catalysts and Chemicals $175,524 $136,067
Pigments and Additives 101,460 88,322
Engineered Materials and
Precious Metals Management 417,471 333,348
-------- --------
$694,455 $557,737
======== ========
Operating Earnings
Catalysts and Chemicals $24,489 $20,415
Pigments and Additives 18,770 13,103
Engineered Materials and
Precious Metals Management 11,033 7,447
-------- --------
54,292 40,965
Equity losses (639) (147)
Interest and other expenses, net (15,823) (10,480)
-------- --------
Earnings before income taxes $37,830 $30,338
======== ========
See note to Condensed Consolidated Financial Statements
- 6 -
Note to Condensed Consolidated Financial Statements
- ---------------------------------------------------
The unaudited condensed consolidated financial statements of
Engelhard Corporation and subsidiaries (the Company) contain all
adjustments which, in the opinion of management, are necessary for a
fair statement of the results for the interim periods presented.
Management's Discussion and Analysis of
Item 2. Financial Condition and Results of Operations
- ------- ---------------------------------------------
Results of Operations
---------------------
Comparison of the First Quarter of 1995
With the First Quarter of 1994
- ---------------------------------------
Earnings before income taxes for the first quarter of 1995
were $37.8 million compared with $30.3 million in 1994. The increase
was primarily due to a 33 percent increase in operating earnings as all
three business segments reported higher results. Selling,
administrative and other expenses increased primarily due to higher
expenses overall related to acquisitions and growth programs. Equity
in losses of affiliates reflected the results of Engelhard/ICC which is
heavily involved in new technology development related to desiccant air
conditioning. Higher net interest expense was due to higher average
debt balances and interest rates during the period.
Net earnings for the first quarter of 1995 were $27.6 million
compared with $22.8 million in 1994. The effective tax rate in 1995
was 27 percent compared with 25 percent for the same period last year.
Net sales for the first quarter of 1995 increased 25 percent
to $694.5 million from $557.7 million for the same quarter in 1994 with
higher sales in all three business segments.
Catalysts and Chemicals
- -----------------------
Operating earnings increased 20 percent to $24.5 million in
the first quarter of 1995 from $20.4 million in the same period of 1994
while net sales increased 29 percent to $175.5 million in 1995 from
$136.1 in 1994.
Higher earnings from Automotive Emission Systems and the
Chemical Catalysts Group more than offset lower Petroleum Catalysts
earnings. The Environmental Catalysts Group had increased earnings
largely due to sales of automotive emission control catalysts in the
U.S. and market share gains in Europe. In the Petroleum Catalysts
Group, weak demand from U.S. refineries resulted in lower shipments of
its Fluid Catalytic Cracking Catalysts while Moving Bed volumes
increased. The Chemical Catalysts Group benefitted from higher North
American Base Metal volumes as well as higher worldwide PM Catalysts
volume.
- 7 -
Pigments and Additives
- ----------------------
Operating earnings increased 43 percent to $18.8 million in
the first quarter of 1995 from $13.1 million in the same period of 1994
while net sales increased 15 percent to $101.5 million in 1995 from
$88.3 million in 1994. This increase was due to improved pricing and
volumes and reduced manufacturing costs.
Engineered Materials and Precious Metals Management
- ---------------------------------------------------
Operating earnings increased 48 percent to $11.0 million in
the first quarter of 1995 from $7.4 million in the same period of 1994
and net sales increased 25 percent to $417.5 million in 1995 from
$333.3 million in 1994.
The Engineered Materials Group's earnings resulted from
stronger worldwide volumes. The Precious Metals Management Group
benefitted from more currently favorable market conditions.
Other Matters
-------------
On May 4, 1995, the Company announced a 3-for-2 split of
common shares and raised the quarterly cash dividend 12.5 percent to
13.5 cents per share, from 12 cents per share before the split.
Capital Resources and Liquidity
-------------------------------
At March 31, 1995 the Company's current ratio was 1.1 and the
total debt to total capital ratio was 31 percent, both about the same
as at December 31, 1994.
Management believes that the combination of the Company's
cash on hand, ongoing cash flow and the ability to access credit and
capital markets will be adequate to finance its working capital
requirements and capital expenditure programs.
- 8 -
Part II - Other Information
---------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
(a) The Company's Annual Meeting of Shareholders was held
May 4, 1995.
(c) Results of votes.
1. Election of Directors For Withheld
--------------------- -------- --------
Linda G. Alvarado 85,341,555 196,107
James V. Napier 85,345,907 191,755
Norma T. Pace 85,300,058 237,604
2. Approval of the Adoption of Directors Stock Option Plan
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
74,493,719 10,530,820 512,868 0
3. Approval of the Amendments to the Stock Option Plan of 1991
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
72,294,786 12,692,395 550,281 0
4. Approval of the Amendments to the Stock Option Plan of 1981
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
68,210,051 16,755,369 572,043 0
5. Appointment of Coopers & Lybrand L.L.P. as Independent Public Accountants
For Against Abstain Broker Non-Vote
--- ------- ------- ---------------
85,034,917 287,961 214,784 0
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
There were no reports on Form 8-K during the quarter ended
March 31, 1995.
- 9 -
SIGNATURES
----------
Pursuant 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 May 15, 1995 /s/ Orin R. Smith
---------------------- ---------------------------------
Orin R. Smith
Chairman and Chief
Executive Officer
Date May 15, 1995 /s/ William E. Nettles
---------------------- -----------------------------------
William E. Nettles
Vice President and
Chief Financial Officer
Date May 15, 1995 /s/ Martin J. Connor, Jr.
---------------------- ---------------------------------
Martin J. Connor, Jr.
Controller