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Immediate Release
Michael Whitlow
(225) 388-7320
Sarah McCoy
(804) 788-6091
Richmond, Virginia, July 23, 2003 -- Albemarle Corporation (NYSE:ALB)
reported second-quarter 2003 net income of $22.6 million, or 54 cents per share
on a diluted basis. The earnings include a 16 cents per diluted share benefit
due to the reversal of income tax reserves as the Internal Revenue Service
closed audits related to certain tax years. After an adjustment for this item,
the Company's diluted earnings per share for second-quarter 2003 was 38 cents,
or $16.0 Million. Second-quarter 2002 earnings were $16.9 million, or 40 cents
per diluted share, excluding a favorable Federal income tax settlement of $3.8
million.
Results for second-quarter 2003 reflect higher net sales, up 6.6
percent versus second-quarter 2002, or $16.8 million, due primarily to the
favorable effects of foreign exchange in Europe and the positive contribution
made by the addition of the fuel and lube additives products that were acquired
in mid-January 2003, offset in part by lower shipments of brominated flame
retardants and certain performance chemicals products. On a year-to-year
comparison, the second-quarter 2003 margin percentages are down slightly due to
higher energy and raw material costs.
For the first six months of 2003, net income amounted to $43.6 million,
up 16.2 percent from $37.5 million for the first six months of 2002, while
diluted earnings per share were $1.03 per share for the first six months of
2003, up 19.8 percent from 86 cents per share for the same period in 2002.
Excluding the impact of income tax settlements, tax reserve adjustments and a
charge for the cumulative effect of a change in an accounting principle related
to SFAS No. 143 (five cents per diluted share), earnings for the first six
months were 76 cents per diluted share compared to 78 cents per diluted share in
2002.
Sales for the first six months of 2003 were $535.0 million, up $50.5
million or approximately 10 percent over the first six months of 2002. The
increase in sales was primarily due to the favorable effects of foreign exchange
in Europe and the positive contribution made by the addition of the fuel and
lube additives products that were acquired in mid-January 2003 from Ethyl
Corporation.
Average common shares used to compute second-quarter and six months
2003 diluted earnings per share were 42,046,000 and 42,166,000 down from
42,822,000 and 43,506,000, respectively, for the corresponding periods in 2002,
primarily reflecting the effects of the Company's repurchase of its common
shares in both February 2003 and 2002.
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Mark C. Rohr, President and CEO, commented, "Overall we are pleased
with our performance in the second quarter despite the difficult economic
environment in which we operate. We have programs in place to improve profit
margins and help offset higher raw material and energy costs. Our underlying
performance was enhanced by our efforts to grow through new business
development, recent acquisitions and good fixed cost control."
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 July 23, following a
conference call at 3:00 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 80
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 Statements of Income
(In thousands except per-share amounts) (Unaudited)
Second Quarters Ended June 30
----------------------------------------------
2003 2002(a)
---------------- -----------------
Net sales $269,476 $252,706
Cost of goods sold (b) 211,050 194,551
---------------- -----------------
Gross profit 58,426 58,155
Selling, general and
administrative expenses 29,435 28,916
Research and development expenses 4,421 4,020
---------------- -----------------
Operating profit 24,570 25,219
Interest and financing expenses (1,257) (1,235)
Other income and (expenses),
including minority interest (316)(c) 2,276 (e)
---------------- -----------------
Income before income taxes 22,997 26,260
Income taxes 414 (c,d) 5,566 (e)
---------------- -----------------
Net income $22,583 $20,694
================ =================
Basic earnings per share $0.55 $0.50
================ =================
Shares used to compute basic
earnings per share 41,208 41,618
================ =================
Diluted earnings per share $0.54 $0.48
================ =================
Shares used to compute diluted
earnings per share 42,046 42,822
================ =================
See accompanying notes to the consolidated financial statements following the
balance sheets.
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Albemarle Corporation and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands except per-share amounts) (Unaudited)
Six Months Ended June 30
-------------------------------------------
2003 2002(a)
---------------- ----------------
Net sales $535,046 $484,528
Cost of goods sold (b) 418,978 370,613
---------------- ----------------
Gross profit 116,068 113,915
Selling, general and
administrative expenses 57,061 54,620
Research and development expenses 9,363 8,796
Special item - 850 (f)
---------------- ----------------
Operating profit 49,644 49,649
Interest and financing expenses (2,594) (2,460)
Other income and (expenses), including
minority interest 3,257 (c) 3,068 (e)
---------------- ----------------
Income before income taxes 50,307 50,257
Income taxes 4,510 (c,d) 12,765 (e)
---------------- ---------------
Income before cumulative effect
of a change in accounting principle 45,797 37,492
Cumulative effect of a change in
accounting principle, net (2,220) (g) -
---------------- ----------------
Net income $43,577 $37,492
================ ================
Basic earnings per share:
Income before cumulative effect of a
change in accounting principle $1.10 $0.88
Cumulative effect of a change in
accounting principle, net (0.05) (g) -
---------------- ----------------
Net income $1.05 $0.88
================ ================
Shares used to compute basic
earnings per share 41,352 42,528
================ ================
Diluted earnings per share:
Income before cumulative effect of a
change in accounting principle $1.08 $0.86
Cumulative effect of a change in
accounting principle, net (0.05) (g) -
---------------- ----------------
Net income $1.03 $0.86
================ ================
Shares used to compute diluted
earnings per share 42,166 43,506
================ ================
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)
Second Quarters Ended June 30
------------------------------------------------------------------------------
2003 2002(a)
----------------------------------- ----------------------------------
Revenues Income Revenues Income
-------------- ------------ ------------- -------------
Polymer Chemicals $150,128 $18,750 $142,955 $17,927
Fine Chemicals 119,348 11,769 109,751 13,290
-------------- ------------ ------------- -------------
Segment totals $269,476 30,519 (b) $252,706 31,217 (b)
============== =============
Corporate and other expenses (5,949) (b) (5,998) (b)
------------ -------------
Operating profit 24,570 25,219
Interest and financing expenses (1,257) (1,235)
Other income and (expenses),
including minority interest (316) (c) 2,276 (e)
------------ -------------
Income before income taxes $22,997 $26,260
============ =============
Six Months Ended June 30
------------------------------------------------------------------------------
2003 2002(a)
----------------------------------- ----------------------------------
Revenues Income Revenues Income
-------------- ------------ ------------- -------------
Polymer Chemicals $297,356 $35,099 $265,122 $29,851
Fine Chemicals 237,690 25,156 219,406 29,598
-------------- ------------ ------------- -------------
Segment totals $535,046 60,255 (b) $484,528 59,449 (b,f)
============== =============
Corporate and other expenses (10,611) (b) (9,800) (b,f)
------------ -------------
Operating profit 49,644 49,649
Interest and financing expenses (2,594) (2,460)
Other income and (expenses),
including minority interest 3,257 (c) 3,068 (e)
------------ -------------
Income before income taxes $50,307 $50,257
============ ==========
See accompanying notes to the consolidated financial statements following the
balance sheets.
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Albemarle Corporation and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
Six Months Ended June 30
2003 2002(a)
---------------- --------------
Cash and cash equivalents at beginning of year $37,636 $30,585
---------------- --------------
Cash flows from operating activities:
Net income 43,577 37,492
Cumulative effect of a change in accounting principle, net (g) 2,220 -
---------------- --------------
Income before cumulative effect of a change in accounting principle 45,797 37,492
Adjustments to reconcile net income before cumulative effect of a
change in accounting principle to cash flows from operating activities:
Depreciation and amortization 40,779 40,475
Working capital decrease net of the effects of the acquisition 9,812 7,959
Increase in income tax receivable (c) (11,278) -
Other, net (1,278) (5,198)
---------------- --------------
Net cash provided from operating activities 83,832 80,728
---------------- --------------
Cash flows from investing activities:
Acquisition of assets (h) (26,579) -
Capital expenditures (19,278) (19,267)
Proceeds from liquidation of investment 4,419 -
Investments in joint ventures and nonmarketable securities (6,410) (3,164)
Restricted expended industrial revenue bond proceeds - 1,741
---------------- --------------
Net cash used in investing activities (47,848) (20,690)
---------------- --------------
Cash flows from financing activities:
Proceeds from borrowings 47,332 103,995
Repayments of long-term debt (52,441) (64,969)
Purchases of common stock (13,474) (92,943)
Dividends paid (11,664) (11,316)
Proceeds from exercise of stock options 372 2,156
---------------- --------------
Net cash used in financing activities (29,875) (63,077)
---------------- --------------
Net effect of foreign exchange on cash 6,248 5,858
---------------- --------------
Increase in cash and cash equivalents 12,357 2,819
---------------- --------------
Cash and cash equivalents at end of period $49,993 $33,404
================ ==============
Supplemental noncash disclosures due to change in accounting principle:
Increase in property, plant and equipment $(6,520) -
Increase in accumulated depreciation 3,083 -
Increase in other noncurrent liabilities 6,922 -
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)
June 30, December 31
2003 2002 (a)
------------------- -----------------
ASSETS
Cash and cash equivalents $ 49,993 $ 37,636
Other current assets 393,767 375,428
------------------- -----------------
Total current assets 443,760 413,064
------------------- -----------------
Property, plant and equipment 1,546,336 1,497,989
Less accumulated depreciation
and amortization 1,030,367 978,918
------------------- -----------------
Net property, plant and equipment 515,969 519,071
Other assets and intangibles 289,453 260,821
------------------- -----------------
$1,249,182 $1,192,956
=================== =================
LIABILITIES &
SHAREHOLDERS' EQUITY
Current liabilities $182,588 $ 165,007
Long-term debt 175,183 180,137
Other noncurrent liabilities 162,510 149,223
Deferred income taxes 134,501 128,849
Shareholders' equity 594,400 569,740
------------------- -----------------
$1,249,182 $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 $748 and $283 and $809
and $1,074 for the three- and six-months periods ended June 30, 2003,
and 2002, respectively.
(c) 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. In addition,
the Company recorded interest income of $195 ($124 after income taxes)
for the three months ended June 30, 2003. The net effect of the refund
on the Condensed Consolidated Statement of Income for the six month
period ended June 30, 2003 amounted to $7,216 or 17 cents per diluted
share, including interest $4,308 ($2,744 after income taxes).
(d) During the quarter ended June 30, 2003, the Company received
notification of the finalization of the Internal Revenue Service's
examination of its Federal income tax returns for the years ended
December 31, 1998 and 1999. As a result, the Company evaluated its
remaining tax reserves and released $6.6 million to earnings.
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(e) On April 25, 2002, following approval by the congressional Joint
Committee On Taxation, the Company received a favorable tax settlement
of $3,777, including interest of $1,285 after income taxes, from the
Internal Revenue Service on its claims for adjustment of export
benefits for the years 1994 and 1995.
(f) 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.
(g) 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.
(h) On January 21, 2003, Albemarle acquired Ethyl's fuel and lubricant
antioxidants working capital, patents and other intellectual property
for $26,579 in cash plus Albemarle will pay to Ethyl a total of $1,500
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.