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Immediate Release
Michael Whitlow
(225) 388-7320
Sara McCoy
(804) 788-6091
Albemarle Reports First-Quarter 2003 Results
Richmond, Virginia, April 23, 2003 -- Albemarle Corporation (NYSE:ALB)
reported first-quarter 2003 net income of $21.0 million, or 50 cents per share
on a diluted basis. The earnings include the positive effect of a prior period
income tax settlement from the Internal Revenue Service of 17 cents per diluted
share and the after-tax cumulative effect of a charge for a change in accounting
principle related to SFAS No. 143 "Accounting for Asset Retirement Obligations"
of five cents per diluted share.
After adjusting for these items, the Company's diluted earnings per share
for first quarter 2003 was 38 cents. First-quarter 2002 earnings per share,
which also amounted to 38 cents, included a one cent after-tax special charge
for workforce reductions. On a period-to-period comparison, first-quarter 2003
operating results reflect higher sales volumes, reduced manufacturing fixed
costs and the positive effects of foreign exchange, offset by higher energy and
raw materials costs and lower pricing in certain businesses.
First-quarter 2003 net sales of $265.6 million were a first-quarter record
for the Company since the sale of the olefins businesses in 1996, up 14.6
percent from first-quarter 2002. The increase in net sales was primarily due to
higher shipments of flame retardants, the effects of foreign exchange and the
sales associated with the addition of the fuel and lube additives products that
were acquired in mid- January from Ethyl Corporation, offset, in part, by lower
pricing in certain businesses.
Average common shares used to compute first quarter 2003 diluted earnings
per share were 42,286,000, down from 44,190,000 for the corresponding period in
2002, primarily reflecting the effects of the Company's repurchase of its common
shares in both February 2003 and 2002.
Mark C. Rohr, president and chief executive officer, said, "We are pleased
with the continued progress in our polymer additives business and positive
impact of our acquisitions and joint ventures. I believe our 2003 first quarter
is a solid performance against some strong headwinds in energy and raw
materials. While underlying volumes remain stable, we continue to observe mixed
signals regarding improvement in consumer electronics, capital spending and
other aspects of the general economy that would indicate that a recovery is in
progress."
Rohr added, "The Company generated almost $50 million in net cash flow from
operating activities during the first quarter despite the slow growth economic
environment in which we operate, continuing to provide a clear view of our
strategic position and financial strength of the business."
On January 1, 2003, the Company adopted the provisions of the Emerging
Issues Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees
and Costs." The Company reclassified all costs incurred for shipping and
handling from a reduction of net sales to cost of sales for the periods
reflected herein. The presentation of prior period information has been
reclassified to conform to the current year presentation. The Company plans to
file an amendment to its Form 10-K for the year 2002. This change does not have
an effect on gross profit, operating profit or net income. Shipping and handling
costs reclassified totaled $8,352 and $7,194 for the three months ended March
31, 2003 and 2002, respectively.
Some of the information presented in the following communication may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
based on the Company's current expectations, which are in turn based on the
Company's reasonable assumptions within the bounds of its knowledge of its
business and operations. There can be no assurance, however, that the Company's
actual results will not differ materially from the results and expectations in
the forward-looking statements. Factors that could cause actual results to
differ materially include, without limitation, the timing of orders received
from customers, the gain or loss of significant customers, competition from
other manufacturers, changes in the demand for the Company's products, increases
in the cost of products, increases in the cost of energy and raw materials
(notably, ethylene, chlorine and natural gas), changes in the Company's markets
in general, fluctuations in foreign currencies, changes in new product
introductions resulting in increases in capital project requests and approvals
leading to additional capital spending, changes in laws and regulations,
unanticipated claims or litigation, the inability to obtain current levels of
product or premises liability insurance or the denial of such coverage,
political unrest affecting the global economy and changes in accounting
standards. The Company assumes no obligation to provide revisions to any
forward-looking statements should circumstances change, except as otherwise
required by securities and other applicable laws.
A more comprehensive discussion of the Company's performance will be
available on Albemarle's Web Page at www.albemarle.com on April 23, following a
conference call at 3 PM Eastern daylight time.
Albemarle Corporation, headquartered in Richmond, Virginia, is a leading
producer of specialty chemicals for consumer electronics; pharmaceuticals;
agricultural, automotive and industrial products; and construction and packaging
materials. The company's two business segments, Polymer Chemicals and Fine
Chemicals - which includes custom manufacturing services for the life sciences
market - serve customers in more than 40 countries, generating annual revenue of
approximately $1 billion. Learn more about Albemarle at www.albemarle.com.
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Albemarle Corporation and Subsidiaries
Condensed Consolidated Statement of Income
(In thousands except per-share amounts) (Unaudited)
First Quarters Ended
March 31
-------------------------------------------
2003 2002(a)
---------------- ----------------
Net sales $265,570 $231,822
Cost of goods sold (b) 207,928 176,062
---------------- ----------------
Gross profit 57,642 55,760
Selling, general and administrative expenses 27,626 25,704
Research and development expenses 4,942 4,776
Special item - 850 (c)
---------------- ----------------
Operating profit 25,074 24,430
Interest and financing expenses (1,337) (1,225)
Minority interest (694) -
Other income, net 4,267 (d) 792
---------------- ----------------
Income before income taxes 27,310 23,997
Income taxes 4,096 (d) 7,199
---------------- ----------------
Income before cumulative effect
of a change in accounting principle 23,214 16,798
Cumulative effect of a change in
accounting principle, net (2,220) (e) -
---------------- ----------------
Net income $20,994 $16,798
================ ================
Basic earnings per share:
Income before cumulative effect of a
change in accounting principle $0.56 $0.39
Cumulative effect of a change in accounting
principle, net (0.05) (e) -
---------------- ----------------
Net income $0.51 $0.39
================ ================
Shares used to compute basic
earnings per share 41,496 43,438
================ ================
Diluted earnings per share:
Income before cumulative effect of a
change in accounting principle $0.55 $0.38
Cumulative effect of a change in accounting
principle, net (0.05) (e) -
---------------- ----------------
Net income $0.50 $0.38
================ ================
Shares used to compute diluted
earnings per share 42,286 44,190
================ ================
See accompanying notes to the consolidated financial statements following the
balance sheets.
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Albemarle Corporation and Subsidiaries
Consolidated Summary of Segment Results
(In thousands) (Unaudited)
First Quarters Ended March 31
------------------------------------------------------------------------------
2003 2002(a)
----------------------------------- ----------------------------------
Revenues Income Revenues Income
-------------- ------------ ------------- -------------
Polymer Chemicals $147,228 $16,349 $122,167 $11,924
Fine Chemicals 118,342 13,387 109,655 16,308 (c)
-------------- ------------ ------------- -------------
Segment totals $265,570 29,736 (b) $231,822 28,232 (b)
============== =============
Corporate and other expenses (4,662) (3,802) (c)
------------ -------------
Operating profit 25,074 24,430
Interest and financing expenses (1,337) (1,225)
Minority interest (694) -
Other income, net 4,267 (d) 792
------------ -------------
Income before income taxes $27,310 $23,997
============ =============
See accompanying notes to the consolidated financial statements following the
balance sheets.
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Albemarle Corporation and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(In thousands) (Unaudited)
Three Months Ended March 31
---------------------------
2003 2002 (a)
---------------- --------------
Cash and cash equivalents at beginning of year $37,636 $30,585
Cash flows from operating activities:
Net income 20,994 16,798
Cumulative effect of a change in accounting principle, net (e) 2,220 -
---------------- --------------
Income before cumulative effect of a change in accounting principle 23,214 16,798
Adjustments to reconcile net income before cumulative effect of a
change in accounting principle to cash flows from operating activities:
Depreciation and amortization 20,138 20,269
Working capital decrease excluding cash and cash equivalents 13,561 1,057
Increase in income tax receivable (d) (11,083) -
Other, net 3,331 (2,580)
---------------- --------------
Net cash provided from operating activities 49,161 35,544
---------------- --------------
Cash flows from investing activities:
Acquisition of business (f) (27,020) -
Capital expenditures (8,857) (8,182)
Proceeds from liquidation of investment 4,216 -
Investments in joint ventures and nonmarketable securities (1,813) (1,277)
Restricted expended industrial revenue bond proceeds - 1,741
---------------- --------------
Net cash used in investing activities (33,474) (7,718)
---------------- --------------
Cash flows from financing activities:
Proceeds from borrowings 42,033 100,099
Repayments of long-term debt (37,767) (31,164)
Purchases of common stock (13,213) (92,943)
Dividends paid (5,918) (5,918)
Proceeds from exercise of stock options - 445
---------------- --------------
Net cash used in financing activities (14,865) (29,481)
---------------- --------------
Net effect of foreign exchange on cash 1,829 568
---------------- --------------
Increase (decrease) in cash and cash equivalents 2,651 (1,087)
---------------- --------------
Cash and cash equivalents at end of period $40,287 $ 29,498
================ ==============
Supplemental noncash disclosures due to change in accounting principle:
Increase in property, plant and equipment $(6,520) -
Increase in accumulated depreciation 2,985 -
Increase in other noncurrent liabilities 7,020 -
Decrease in deferred tax liabilities (1,265) -
---------------- --------------
Total $ 2,220 -
================ ==============
See accompanying notes to the consolidated financial statements following the
balance sheets.
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Albemarle Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands of dollars) (Unaudited)
March 31 December 31
2003 2002 (a)
------------------- -----------------
ASSETS
Cash and cash equivalents $ 40,287 $ 37,636
Other current assets 384,066 375,428
------------------- -----------------
Total current assets 424,353 413,064
------------------- -----------------
Property, plant and equipment 1,520,768 1,497,989
Less accumulated depreciation
and amortization 1,004,535 978,918
------------------- -----------------
Net property, plant and equipment 516,233 519,071
Other assets and intangibles 282,187 260,821
------------------- -----------------
$1,222,773 $1,192,956
=================== =================
LIABILITIES &
SHAREHOLDERS' EQUITY
Current liabilities $ 179,654 $165,007
Long-term debt 184,408 180,137
Other noncurrent liabilities 156,353 147,082
Deferred income taxes 130,676 128,849
Minority interest 1,719 2,141
Shareholders' equity 569,963 569,740
------------------- -----------------
$1,222,773 $1,192,956
=================== =================
Notes (in thousands except share amounts):
(a) Certain amounts in the accompanying consolidated financial
statements have been reclassified to conform to the current
presentation.
(b) Includes foreign exchange transaction gains of $61 and $791 for
the three-month periods ended March 31, 2003, and 2002, respectively.
(c) Special charges for the first quarter ended March 31, 2002, totaled
$850 ($541 after income taxes or one cent per diluted share) resulting
from the workforce reduction programs at certain of the Company's
facilities.
(d) In March 2003, the Company recorded a receivable for an income tax
refund of $11,083. The refund related to the Internal Revenue
Service's examination of the Company's 1996 and 1997 tax returns. The
net effect of the refund on the Condensed Consolidated Statement of
Income for the period ended March 31, 2003 amounted to $7,092 or 17
cents per diluted share, including interest $4,113 ($2,620 after
income taxes) and a refund of $6,970, offset by, the reversal of a
deferred tax asset previously recognized, totaling $2,498.
(e) On January 1, 2003, the Company implemented Statement of Financial
Accounting Standard 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 the associated asset retirement costs. The cumulative
effect of the change in accounting principle resulting from the
implementation of the standard was $2,220 net of taxes of $1,265 or
five cents per diluted share.
(f) On January 21, 2003, Albemarle acquired Ethyl's fuel and lubricant
antioxidants working capital, patents and other intellectual property
for $27,020 in cash plus Albemarle will pay to Ethyl a total of $2,500
in additional consideration during 2003 if Ethyl's purchases of
antioxidant products from Albemarle and Albemarle's sales of
antioxidant products to third parties for fuel and lubricant additive
use meet certain specified performance criteria. The effect of the
acquisition on 2003 earnings will be finalized upon completion of an
external third party valuation, including appropriate amortization
periods if any, of intellectual property acquired.