Page 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarterly Period Ended September 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Transition Period from ___________ to ___________
Commission File Number 1-12658
ALBEMARLE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1692118
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. BOX 1335
RICHMOND, VIRGINIA 23210
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (804) 788-6000
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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Number of shares of common stock, $.01 par value, outstanding as of October 31,
2001: 45,469,767
Page 2
ALBEMARLE CORPORATION
PURPOSE OF AMENDMENT:
The purpose of this amendment is to make a correction in the pro forma numbers
in footnote No.7 beginning on Page 10 of the original filing.
Page 3
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
--------------------
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30, 2001 December 31, 2000
------------------ ------------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 34,222 $ 19,300
Accounts receivable, less allowance for doubtful
accounts (2001 - $3,446; 2000 - $2,119) 185,475 174,297
Inventories:
Finished goods 128,075 79,143
Raw materials 23,431 10,804
Stores, supplies and other 22,426 17,471
------------------ ------------------
173,932 107,418
Deferred income taxes and prepaid expenses 18,137 14,139
------------------ ------------------
Total current assets 411,766 315,154
------------------ ------------------
Property, plant and equipment, at cost 1,421,815 1,326,534
Less accumulated depreciation and amortization 882,901 836,460
------------------ ------------------
Net property, plant and equipment 538,914 490,074
Prepaid pension assets 124,869 111,537
Other assets and deferred charges 58,339 42,583
Goodwill and other intangibles, net of amortization 32,573 22,455
------------------ ------------------
Total assets $ 1,166,461 $ 981,803
================== ==================
See accompanying notes to the consolidated financial statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
September 30, 2001 December 31, 2000
------------------ ------------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS EQUITY
Current liabilities:
Accounts payable $ 68,839 $ 72,296
Long-term debt, current portion 171,596 299
Accrued expenses 69,033 56,932
Dividends payable 5,649 5,956
Income taxes payable 25,765 6,633
------------------ ------------------
Total current liabilities 340,882 142,116
------------------ ------------------
Long-term debt 12,367 97,681
Other noncurrent liabilities 121,647 83,496
Deferred income taxes 97,349 99,603
Shareholders equity:
Common stock, $.01 par value, issued and outstanding-
45,758,467 in 2001 and 45,823,743 in 2000 458 458
Additional paid-in capital 55,846 57,223
Accumulated other comprehensive (loss) (14,223) (14,688)
Retained earnings 552,135 515,914
------------------ ------------------
Total shareholders' equity 594,216 558,907
------------------ ------------------
Total liabilities and shareholders equity $ 1,166,461 $ 981,803
================== ==================
See accompanying notes to the consolidated financial statements.
Page 5
ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per-Share Amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
2001 2000 2001 2000
------------------ ------------------ ------------------ ------------------
Net sales $ 242,017 $ 237,053 $ 677,713 $ 698,739
Cost of goods sold 185,336 168,214 512,841 489,292
------------------ ------------------ ------------------ ------------------
Gross profit 56,681 68,839 164,872 209,447
Selling, general and administrative
expenses 25,822 27,106 70,712 79,114
Research and development
expenses 5,603 6,989 16,813 19,456
Special item - - - (15,900)
------------------ ------------------ ------------------ ------------------
Operating profit 25,256 34,744 77,347 126,777
Interest and financing expenses (2,013) (1,551) (4,168) (4,542)
Other income, net 975 1,164 3,793 2,500
------------------ ------------------ ------------------ ------------------
Income before income taxes 24,218 34,357 76,972 124,735
Income taxes 7,457 10,651 22,861 38,668
------------------ ------------------ ------------------ ------------------
Net income $ 16,761 $ 23,706 $ 54,111 $ 86,067
================== ================== ================== ==================
Basic earnings per share $ 0.37 $ 0.52 $ 1.18 $ 1.88
================== ================== ================== ==================
Diluted earnings per share $ 0.36 $ 0.51 $ 1.16 $ 1.85
================== ================== ================== ==================
Cash dividends declared per share of common stock $ 0.13 $ 0.11 $ 0.39 $ 0.33
================== ================== ================== ==================
See accompanying notes to the consolidated financial statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Dollars In Thousands)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
2001 2000 2001 2000
------------------ ------------------ ------------------ ------------------
Net income $ 16,761 $ 23,706 $ 54,111 $ 86,067
Other comprehensive income (loss),
net of tax:
Unrealized gain (loss) on securities
available for sale (102) 193 (341) 525
Foreign currency translation
adjustments 7,307 (4,484) 806 (8,741)
------------------ ------------------ ------------------ ------------------
Other comprehensive income (loss) 7,205 (4,291) 465 (8,216)
------------------ ------------------ ------------------ ------------------
Comprehensive income $ 23,966 $ 19,415 $ 54,576 $ 77,851
================== ================== ================== ==================
See accompanying notes to the consolidated financial statements.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(Unaudited)
Nine Months Ended
September 30,
-----------------------------------------
2001 2000
------------------ ------------------
Cash and cash equivalents at beginning of year $ 19,300 $ 48,621
Cash flows from operating activities:
Net income 54,111 86,067
Adjustments to reconcile net income to cash flows from
operating activities:
Depreciation and amortization 55,461 54,312
Special item - (15,900)
Working capital increase excluding cash and cash
equivalents, net of effects of acquisition of businesses (7,303) (5,383)
Other, net (278) 1,222
------------------ ------------------
Net cash provided from operating activities 101,991 120,318
------------------ ------------------
Cash flows from investing activities:
Acquisition of businesses, including expenses, net of
$5,500 cash acquired (113,000) (33,000)
Capital expenditures (37,928) (40,219)
Investments in joint ventures and nonmarketable securities (6,216) (7,978)
Other, net 767 1,392
------------------ ------------------
Net cash used in investing activities (156,377) (79,805)
------------------ ------------------
Cash flows from financing activities:
Proceeds from borrowings 122,850 19,786
Repayments of long-term debt (36,211) (67,400)
Dividends paid (18,194) (14,711)
Purchases of common stock (2,202) (8,893)
Proceeds from exercise of stock options 677 863
------------------ ------------------
Net cash provided from (used in) financing activities 66,920 (70,355)
------------------ ------------------
Net effect of foreign exchange on cash and cash equivalents 2,388 68
------------------ ------------------
Net increase (decrease) in cash and cash equivalents 14,922 (29,774)
------------------ ------------------
Cash and cash equivalents at end of period $ 34,222 $ 18,847
================== ==================
See accompanying notes to the consolidated financial statements
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ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
1. In the opinion of management, the accompanying consolidated financial
statements of Albemarle Corporation and Subsidiaries ("Albemarle" or "the
Company") contain all adjustments necessary to present fairly, in all
material respects, the Company's consolidated financial position as of
September 30, 2001, and December 31, 2000, the consolidated results of
operations and comprehensive income for the three- and nine-month periods
ended September 30, 2001, and 2000, and condensed consolidated cash flows
for the nine-month periods ended September 30, 2001, and 2000. All
adjustments are of a normal and recurring nature. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's 2000 Annual
Report & Form 10-K filed on February 28, 2001. The December 31, 2000,
consolidated balance sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles. The results of operations for the three- and
nine- month periods ended September 30, 2001, are not necessarily indicative
of the results to be expected for the full year.
2. Long-term debt consists of the following:
September 30, December 31,
2001 2000
------------------ ------------------
Variable-rate bank loans $ 157,100 $ 70,000
Foreign borrowings 14,832 15,916
Industrial revenue bonds 11,000 11,000
Miscellaneous 1,031 1,064
------------------ ------------------
Total 183,963 97,980
Less amounts due within one year 171,596 299
------------------ ------------------
Long-term debt $ 12,367 $ 97,681
================== ==================
The Company's Competitive Advance and Revolving Facility Agreement
("Revolving Credit Agreement") will mature on September 29, 2002.
Accordingly, the balance outstanding thereto is included in current
liabilities. The Company anticipates entering into a new long-term agreement
in the coming months.
3. Cost of goods sold includes foreign exchange transaction gains (losses) of
$976 and ($1,089), and $390 and $209 for the three- and nine-month periods
ended September 30, 2001, and 2000, respectively.
4. In April 2000, the Company made a change in election for certain of its
pension annuity contracts. This election resulted in the recognition of a
one-time noncash special accounting settlement gain of $15,900 ($10,128
after income taxes), or 22 cents per share on a fully diluted basis, in
accordance with Financial Accounting Standards Board `s ("FASB")
Page 9
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
Statement of Financial Accounting Standards ("SFAS") No. 88 "Employer's
Accounting for Settlements and Curtailments of Defined Pension Plans and
Termination Benefits." The special item gain did not affect any retiree
benefits or benefit programs of the Company.
5. Basic and diluted earnings per share for the three- and nine-month periods
ended September 30, 2001, and 2000, are calculated as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
2001 2000 2001 2000
------------------ ------------------ ------------------ ------------------
Basic earnings per share
Numerator:
Income available to stockholders,
as reported $ 16,761 $ 23,706 $ 54,111 $ 86,067
------------------ ------------------ ------------------ ------------------
Denominator:
Average number of shares of
common stock outstanding 45,870 45,816 45,860 45,898
------------------ ------------------ ------------------ ------------------
Basic earnings per share $ 0.37 $ 0.52 $ 1.18 $ 1.88
================== ================== ================== ==================
Diluted earnings per share
Numerator:
Income available to stockholders,
as reported $ 16,761 $ 23,706 $ 54,111 $ 86,067
------------------ ------------------ ------------------ ------------------
Denominator:
Average number of shares of
common stock outstanding 45,870 45,816 45,860 45,898
Shares issuable upon
exercise of stock options 669 868 771 712
------------------ ------------------ ------------------ ------------------
Total shares 46,539 46,684 46,631 46,610
------------------ ------------------ ------------------ ------------------
Diluted earnings per share $ 0.36 $ 0.51 $ 1.16 $ 1.85
================== ================== ================== ==================
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ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
6. The significant differences between the U.S. Federal statutory income tax
rate on pretax income and the effective income tax rate for the three- and
nine-month periods ended September 30, 2001 and 2000, respectively are as
follows:
% of Income Before Income Taxes
-------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
2001 2000 2001 2000
------------------ ------------------ ------------------ ------------------
Federal statutory rate 35.0% 35.0% 35.0% 35.0%
Foreign sales corporation benefit (0.2) (6.0) (1.8) (2.7)
State taxes, net of federal tax benefit 1.2 -- 1.1 0.5
Depletion (2.1) (1.1) (1.8) (0.9)
Reversal of valuation allowance -- -- (1.4) --
Other (3.1) 3.1 (1.4) (0.9)
------------------ ------------------ ------------------ ------------------
Effective income tax rate 30.8% 31.0% 29.7% 31.0%
================== ================== ================== ==================
During the first quarter of 2001, the Company released a valuation allowance
required on a deferred tax asset related to the Company's facilities in
Louvain-la-Neuve, Belgium, which was established in 1996 when the Company's
Olefins Business was sold.
7. On May 31, 2001, the Company, through its wholly owned subsidiary Albemarle
Deutschland GmbH, completed the acquisition of Martinswerk GmbH
("Martinswerk"), including manufacturing facilities and headquarters in
Bergheim, Germany and Martinswerk's 50-percent stake in Magnifin
Magnesiaprodukte GmbH, which has manufacturing facilities at St. Jakobs
Breitenau, Austria. The acquisition was financed through the Company's
existing Revolving Credit Agreement. The acquisition has been accounted for
by the purchase method of accounting, and accordingly, the operating results
have been included in the Company's consolidated results of operations from
the date of acquisition. The US GAAP purchase price allocation, which
amounted to approximately $34,000 in cash plus expenses and the assumption
of approximately $60,000 in current and long-term liabilities, have been
recorded in the accompanying financial statements at September 30, 2001, to
the extent possible based upon the use of certain estimates. The assets
acquired and liabilities assumed have been based upon information currently
available and on current assumptions as to future operations. The Company is
also completing the review and determination of the fair values of the other
assets acquired and liabilities assumed. Accordingly, the allocation of the
purchase price is subject to revision, based upon the final determination of
certain issues. Martinswerk produces mineral-based flame retardants for the
plastics and rubber markets, brightening pigments for high-quality paper
applications and specialty aluminum oxides for polishing, catalyst and niche
ceramic applications. Magnifin produces high-purity magnesium hydroxide
flame retardant products used in applications requiring higher processing
temperatures.
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ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
On July 1, 2001, the Company acquired the custom and fine chemicals
businesses of ChemFirst Inc. (NYSE:CEM) for approximately $79,000 in cash,
plus the assumption of certain current liabilities and expenses associated
with the acquisition. The acquisition was financed through the Company's
existing Revolving Credit Agreement. The Asset Purchase Agreement provides
for additional contingent payments to ChemFirst Inc. not expected to exceed
$10,000. The US GAAP purchase price allocation, excluding the effects of
additional contingent consideration, has been included in the September 30,
2001 financial statements based upon the use of certain estimates. The
assets acquired included working capital, property, plant and equipment and
certain intangibles, including goodwill and technical know how. The purchase
price allocation will be finalized by December 31, 2001. Albemarle's new
businesses focus on the manufacture of custom and proprietary fine chemicals
and chemical services for the pharmaceutical and life sciences industries.
They also include additives for ultraviolet light-cured polymer coatings,
which should broaden the portfolio of Albemarle's polymer chemicals
business. Included is a multi-functional manufacturing plant in Tyrone,
Pennsylvania, and a cGMP (current Good Manufacturing Practices) pilot plant
in Dayton, Ohio.
Pro forma information is presented as follows for the nine-month periods
ended September 30, 2001 and 2000, respectively, and the three-month period
ended September 30, 2000, prior to the finalization of the purchase price
allocations, as if Martinswerk GmbH and Martinswerk's 50-percent stake in
Magnifin Magnesiaprodukte GmbH, and the custom and fine chemicals businesses
of ChemFirst Inc., which were acquired on May 31, 2001 and July 1, 2001,
respectively, had been acquired on January 1, 2000.
Nine Months Ended Nine Months Ended Three Months Ended
September 30, 2001 September 30, 2000 September 30, 2000
--------------------- ---------------------- ----------------------
Net sales $ 748,239 $ 829,646 $ 277,773
===================== ====================== ======================
Net income $ 56,513 $ 90,198 $ 24,602
===================== ====================== ======================
Diluted earnings per
share $ 1.21 $ 1.94 $ 0.53
===================== ====================== ======================
The pro forma information presented above includes adjustments for interest
expense, depreciation, amortization of intangibles as well as various other
income statement accounts in order to properly present results of operations
for the Company as if the acquisitions were made on January 1, 2000.
Page 12
ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
8. The Company is a global manufacturer of specialty polymer and fine
chemicals, currently grouped into two operating segments: Polymer Chemicals
and Fine Chemicals. The operating segments were determined based on
management responsibility. The Polymer Chemicals' segment is comprised of
flame retardants, organometallics and catalysts, and polymer additives and
intermediates. The Fine Chemicals' operating segment is comprised of
agrichemicals and pharmachemicals, performance chemicals and fine chemistry
services. Segment data includes intersegment transfers of raw materials at
cost and foreign exchange gains and losses as well as allocations for
certain corporate costs. The corporate and other expenses include certain
corporate-related items not allocated to the reportable segments.
Three Months Ended September 30,
----------------------------------------------------------
2001 2000
--------------------------- --------------------------
Summary of segment results Net Sales Income Net Sales Income
------------ ------------ ------------ ------------
Polymer Chemicals $ 117,558 $ 14,217 $ 128,799 $ 28,289
Fine Chemicals 124,459 18,065 108,254 15,044
------------ ------------ ------------ ------------
Segment totals $ 242,017 32,282 $ 237,053 43,333
Corporate and other expenses ============ (7,026) ============ (8,589)
------------ ------------
Operating profit 25,256 34,744
Interest and financing expenses (2,013) (1,551)
Other income, net 975 1,164
------------ ------------
Income before income taxes $ 24,218 $ 34,357
============ ============
Nine Months Ended September 30,
----------------------------------------------------------
2001 2000
--------------------------- --------------------------
Summary of segment results Net Sales Income Net Sales Income
------------ ------------ ------------ ------------
Polymer Chemicals $ 347,430 $ 50,363 $ 382,641 $ 87,678
Fine Chemicals 330,283 42,155 316,098 56,753
------------ ------------ ------------ ------------
Segment totals $ 677,713 92,518 $ 698,739 144,431
Corporate and other expenses ============ (15,171) ============ (17,654)
------------ ------------
Operating profit 77,347 126,777
Interest and financing expenses (4,168) (4,542)
Other income, net 3,793 2,500
------------ ------------
Income before income taxes $ 76,972 $ 124,735
============ ============
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ALBEMARLE CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In Thousands Except Share and Per-Share Amounts)
(Unaudited)
9. On January 1, 2001, the Company adopted SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company's transition
adjustment did not have a material effect on the financial position or
results of operations in 2001. In connection with the adoption of SFAS No.
133, the Company elected not to utilize hedge accounting. Consequently,
changes in the fair value of derivatives are recognized in the Company's
statement of operations.
In July 2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No. 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001 and establishes specific
criteria for the recognition of intangible assets separately from goodwill.
This Statement is not expected to have a material impact on the Company's
financial statements.
Also during July 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 142 eliminates the amortization of goodwill and
instead requires a periodic review of any goodwill balance for possible
impairment. SFAS No. 142 also requires that goodwill be allocated at the
reporting unit level. The statement is effective for years beginning after
December 15, 2001. The Company will discontinue amortization of goodwill as
of January 1, 2002 for financial reporting purposes, and will comply with
periodic impairment test procedures. This Statement is not expected to have
a material impact on the Company's financial statements.
In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations," which addresses financial accounting and reporting
for obligations associated with the retirement of tangible long-lived assets
and related asset retirement costs. SFAS No. 143 is effective for financial
statements with fiscal years beginning after June 15, 2002. This Statement
is not expected to have a material impact on the Company's financial
statements.
During October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets," which addresses financial
accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS No. 121, "Accounting for the
Impairment of Long Lived-Assets to Be Disposed Of," and the accounting and
reporting provisions of Accounting Principles Board Opinion No. 30,
"Reporting the Results of Operations, Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions," for the disposal of a segment of a business. This
statement also amends Accounting Research Bulletin No. 51, "Consolidated
Financial Statements," to eliminate the exception to consolidation for a
subsidiary for which control is likely to be temporary. SFAS No. 144 is
effective for financial statements with fiscal years beginning after
December 15, 2001. This Statement is not expected to have a material impact
on the Company's financial statements.
Page 21
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.
ALBEMARLE CORPORATION
----------------------
(Registrant)
Date: November 14, 2001 By: s/ Robert G. Kirchhoefer
-----------------------------
Robert G. Kirchhoefer
Treasurer and
Chief Accounting Officer
(Principal Accounting Officer)