SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000 Commission file number 1-3507
---------------------------
ROHM AND HAAS COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 23-1028370
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 INDEPENDENCE MALL WEST, PHILADELPHIA, PA 19106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 215-592-3000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Common Stock of $2.50 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
NONE
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
Aggregate market value of voting stock held by nonaffiliates of the registrant
as of February 28, 2001: $4,096,654,755
Common stock outstanding at February 28, 2001: 220,054,376 shares.
Documents incorporated by reference:
Part I - Annual Report to Stockholders for year ended December 31, 2000
Part II - Annual Report to Stockholders for year ended December 31, 2000
Part III - Definitive Proxy Statement to be filed with the Securities and
Exchange Commission, except the Report on Executive Compensation,
Graph titled "Cumulative Total Return to Shareholders" and Audit
Committee Report included therein.
Part IV - Annual Report to Stockholders for year ended December 31, 2000
PART I
Item 1. Business
Rohm and Haas Company -- Sales by Business
Pro Forma
--------------------------
2000 1999 1998
-----------------------------------------------
Coatings $1,103 $1,110 $1,082
Adhesives and Sealants 707 737 711
Plastic Additives 441 490 468
Specialty Polymers 395 402 405
Monomers 382 305 337
Surface Finishes 373 507 518
------ ------ ------
Performance Polymers Segment $3,401 $3,551 $3,521
------ ------ ------
Agricultural Chemicals $ 530 $ 534 $ 505
Consumer and Industrial Specialties 406 374 347
Performance Chemicals 248 248 271
Ion Exchange Resins 224 211 212
------ ------ ------
Chemical Specialties Segment $1,408 $1,367 $1,335
------ ------ ------
Shipley Ronal $ 699 $ 621 $ 576
Microelectronics 496 246 230
------ ------ ------
Electronic Materials Segment $1,195 $ 867 $ 806
------ ------ ------
Salt Segment $ 875 $ 930 $ 841
------ ------ ------
Total Sales $6,879 $6,715 $6,503
------ ------ ------
Products/
Business 2000 Sales Markets Technology End Uses
- -------- ---------- ------- ---------- --------
Performance $3,401 million
Polymers
Coatings $1,103 million Bldg. & Construction A range of House paints
Home Improvement intermediate Traffic paints
(do-it-yourself products and Maintenance ctgs.
and contractor additives for Metal ctgs.
segments) paints and coatings Varnishes
(acrylic and solvent
based emulsions)
Adhesives $ 707 million Packaging A full-range of Pressure-sensitive
& Sealants Bldg. & Construction adhesives and tapes and labels
Transportation laminate materials Packaging tapes
Home Improvement (acrylic, urethane, Interior car linings
polyester/urethane Weather stripping
emulsion polymers) Engine mounts
Cable wrap
Caulks, cements
Roof coatings
Sealants
Plastics $ 441 million Bldg. & Construction A wide range of PVC pipe
Additives Home/Office Goods additives that impart Plastic packaging
Electronics & desired properties Vinyl siding
Comms. Devices into the end plastic, Wall systems
Transportation or help machinery Vinyl windows
Recreation run more efficiently Fencing & decks
(acrylic-based modifiers, Interior automotive
tin-based stabilizers, parts
lubricants and Appliances and
additives) business machines
Specialty $ 395 million Packaging An array of versatile Coated papers
Polymers Graphic Arts emulsion polymers and paper board
Apparel and other Printing inks
Home & Office Goods technologies Non-woven fibers
Transportation Textile finishes
Bldg. & Construction Leather
Monomers $ 382 million Bldg. & Construction Produces essential Adhesives
Personal Care starting materials Paints & Coatings
Automotive for acrylic products Floor polishes
and specialty Hair sprays
monomers Superabsorbent
products
Products/
Business 2000 Sales Markets Technology End Uses
- -------- ---------- ------- ---------- --------
Surface Finishes $ 373 million
Automotive Transportation Water, solvent and Cars and trucks
Coatings urethane based
exterior and interior
coatings for plastic
parts
Powder Home/Office Goods Epoxy, polyester Metal finishes on
Coatings Recreation, Lawn & and acrylic powder cars, shelving,
Garden coatings applied tables and chairs,
Transportation at a full-range of office furniture,
Bldg. & Construction temperatures cabinetry and
Electronics and machinery
Comms. Devices
Chemical $1,408 million
Specialties
Agricultural Food & Food-related Fungicides, Fruits, nuts,
Chemicals $ 530 million Recreation herbicides vegetables,
Lawn & Garden and insecticides turf and
ornamental
shrubs
Consumer & Household Products Antimicrobial, Laundry and
Industrial $ 406 million Personal Care dispersant, and dishwasher
Specialties Industrial Processing a range of other detergents
Bldg. & Construction technologies Shampoos, lotions
conditioners
hair sprays
Performance
Chemicals $ 248 million
Organic Industrial processing Liquid & solid dyes Gasoline and
Specialties Lubricants & fuels for petroleum uses diesel fuels
Sulfer-based Permanent
intermediates markers
and salt-forming Dyes
bases Corrosion
inhibitors
Products/
Business 2000 Sales Markets Technology End Uses
- -------- ---------- ------- ---------- --------
Inorganic Sodium borohydride Pharmaceutical
& Specialty and related products
Solutions technologies Papers and
recycled newsprint
Ion Exchange Food & Food-related Anion and cation Soft drinks and
Resins $ 224 million Electronics and ion exchange resins juices
Comms. Devices and adsorbents Ultrapure water
Pharmaceutical Catalysis
Home/Office Goods Pharmaceuticals
Industrial Processing
Electronic $1,195 million
Materials
Shipley $ 699 million Electronics and Enabling technology Cellular phones
Ronal Comms. Devices for all aspects of the PCs
Transportation manufacture of Mainframe
Home/Office Goods printed wiring computers
boards; Automotive parts
processes critical to Office equipment
electronic components, Electronic games
advanced packaging and Steel and metal
industrial finishing finishing
markets
Micro- $ 496 million Electronics and Essential technology PCs
electronics Comms. Devices for creating state- Cellular phone &
Home/Office Goods of-the-art integrated other comms.
Transportation circuits: devices
Recreation photoresists, Home appliances
anti-reflective Office equipment
coatings, Electronic games
chemical mechanical Cars, trucks, etc.
planarization (CMP)
Salt $ 875 million Food & Food Related Salt in all forms Table salt
Transportation produced through Cooking salt
Industrial Processing vacuum pan Home water
Home/Office Goods production, conditioning salt
solar evaporation, or Highway salt
mined rock salt Chemical processing
salt
Salt blocks for feed
In addition to the above, the information indicated below appears in the
2000 Annual Report to Stockholders (Stockholders' Report) and is incorporated by
reference:
Page of
Stockholders'
Report
-------------
Business operations:
Performance Polymers............................. 6
Chemical Specialties............................. 12
Electronic Materials............................. 16
Salt............................................. 20
Industry segment information for years 1998-2000... 51
Foreign operations for years 1998-2000............. 52
Employees.......................................... 62
Raw Materials
The company uses a variety of commodity chemicals as raw materials in its
operations. In most cases, these raw materials are purchased from multiple
sources under long-term contracts. For the company's Performance Polymers and
Chemical Specialties segment, most of these materials are hydrocarbon
derivatives such as propylene, acetone and styrene.
Competition and Seasonality
The principal market segments in which the company competes are described
in the company's Annual Report to Stockholders on pages 6 through 21. The
company experiences vigorous competition in each of these segments and its
competitors include many large multinational chemical firms based in Europe,
Japan and the United States. In some cases, the company competes against firms
which are producers of commodity chemicals which the company must purchase as
the raw materials to make its products. The company, however, does not believe
this places it at any significant competitive disadvantage. The company's
products compete with products offered by other manufacturers on the basis of
price, product quality and specifications, and customer service. Most of the
company's products are specialty chemicals which are sold to customers who
demand a high level of customer service and technical expertise from the company
and its sales force. Also, seasonality is an important factor affecting the
operations of certain of the company's businesses.
Research and Development
The company maintains its principal research and development laboratories
at Spring House, Pennsylvania. Research and development expenses, substantially
all company sponsored, totaled $259 million, $224 million and $207 million in
2000, 1999 and 1998, respectively. The company believes that its many
intellectual properties are of substantial value in the manufacturing,
marketing and application of its various products. Though the company is not
dependent, to a material extent, upon any one trademark, patent or license
certain of the company's businesses may be so dependent.
Environmental Matters
A discussion of environmental matters is incorporated herein by reference
to pages 32 and 34 of the Stockholders' Report.
Item 2. Properties
The company, its subsidiaries and affiliates presently operate more than
100 manufacturing facilities in 25 countries. A list identifying those
facilities is found on page 65 of the company's Annual Report to Stockholders
which is hereby incorporated by reference. Additional information addressing the
suitability, adequacy and productive capacity of the company's facilities is
found on page 34 of the company's Stockholders' Report and throughout the
various business discussions of the company's industry segments found on pages 6
through 21 of the Stockholders' Report.
Item 3. Legal Proceedings
A discussion of legal proceedings is incorporated herein by reference to
pages 57 through 59 of the Stockholders' Report.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the
fourth quarter of 2000.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
The company's common stock of $2.50 par value is traded on the New York
Stock Exchange (Symbol: ROH). There were 9,226 registered common stockholders as
of December 31, 2000. The 2000 and 1999 quarterly summaries of the high and low
prices of
the company's common stock and the amounts of dividends paid on common stock are
presented on pages 39 and 60 of the Stockholders' Report and are incorporated in
this Form 10-K by reference.
Item 6. Selected Financial Data
The company's summary of selected financial data and related notes for the
years 1996 through 2000 are incorporated in this Form 10-K by reference to pages
62 through 64 of the Stockholders' Report.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Management's discussion and analysis of 1998 to 2000 results is
incorporated herein by reference to pages 27 through 39 of the Stockholders'
Report. These items should be read in conjunction with the consolidated
financial statements and related notes to financial statements presented on
pages 41 through 61 of the Stockholders' Report.
Cautionary Statements
Any statements made by the company in its filings with the Securities and
Exchange Commission or other communications (including press releases and
analyst meetings and calls) that are not statements of historical fact are
forward-looking statements. These statements include, without limitation, those
relating to anticipated product plans, litigation and environmental matters,
currency effects, profitability, and other commitments or goals. Forward-looking
statements are subject to a number of risks and uncertainties that could cause
actual results to differ materially from the statements made. These risks and
uncertainties include, but are not limited to, the following:
1) Currencies and Economic Conditions. Approximately half of the company's
revenues are from outside the United States, a significant portion of which are
denominated in foreign currencies. Also, significant production facilities are
located outside the United States. The company's financial results therefore can
be affected by changes in foreign currency rates. Though the company uses
certain financial instruments to mitigate these effects, it does not hedge its
foreign currency exposure in a manner that would entirely eliminate the effects
of changes in foreign exchange rates on the company's earnings, cash flows and
fair values of assets and liabilities. Accordingly, reported revenue, net
income, cash flows and fair values have been and in the future may be affected
by changes in foreign exchange rates. In addition, because of the extensive
nature of the company's foreign business activities, financial results could be
adversely affected by changes in worldwide economic conditions, changes in trade
policies or tariffs, changes in interest rates, and political unrest.
2) Competition and Demand. The company's products are sold in a
competitive, global economy. Competitors include many large multinational
chemical firms based in
Europe, Japan and the United States. These competitors often have resources that
are greater than the company's. In addition, financial results are subject to
fluctuations in demand and the seasonal activity of certain of the company's
businesses. The company also manufactures and sells its products to customers in
industries and countries that are experiencing periods of rapid change, most
notably countries in Eastern Europe and in the Asia-Pacific region. Also,
weather conditions have historically had, and will likely continue to have in
the future, a significant impact on revenues and earnings in the company's
Agricultural Chemicals business and its Salt segment. These factors can
adversely affect demand for the company's products and therefore may have a
significant impact on financial results.
3) Supply and Capacity. From time to time certain raw materials the company
requires become limited. It is likely this will occur again in the future.
Should such limitations arise, disruptions of the company's supply chain may
lead to higher prices and/or shortages. Also, from time to time, the company is
subject to increases in raw material prices and, from time to time, experiences
significant capacity limitations in its own manufacturing operations. These
limitations, disruptions in supply, price increases and capacity constraints
could adversely affect financial results.
4) Technology. The company has invested significant resources in
intellectual properties such as patents, trademarks, copyrights, and trade
secrets. The company relies on the protection these intellectual property rights
provide since it depends on these intellectual resources for its financial
stability and its future growth. The development and successful implementation
of new, competing technologies in the market place could significantly impact
future financial results.
5) Joint Ventures and Acquisitions. The company has entered, and in the
future may enter, into arrangements with other companies to expand product
offerings and to enhance its own capabilities. It will likely also continue to
make strategic acquisitions and divestitures. The success of acquisitions of new
technologies, companies and products, or arrangements with third parties, is not
predictable and there can be no assurance that the company will be successful in
realizing its objectives, or that realization may not take longer than
anticipated, or that there will not be unintended adverse consequences from
these actions.
6) Environmental. Risks and uncertainties related to environmental matters
are discussed on pages 32 through 34 of the Stockholders' Report and are
incorporated herein by reference.
Item 7a. Market Risk Discussion
Management's discussion of market risk is incorporated herein by reference
to page 38 and 39 of the Stockholders' Report.
Item 8. Financial Statements and Supplementary Data
The consolidated balance sheets as of December 31, 2000, and 1999, and the
related consolidated statements of earnings, stockholders' equity and cash flows
for the years ended December 31, 2000, 1999, and 1998, together with the report
of PricewaterhouseCoopers LLP dated March 8, 2001 are incorporated in this Form
10-K by reference to pages 39 through 61 of the Stockholders' Report.
Supplementary selected quarterly financial data is incorporated in this Form
10-K by reference to pages 39 and 60 of the Stockholders' Report.
Item 9. Disagreements on Accounting and Financial Disclosure
No reports on Form 8-K were filed during 2000 or 1999 relating to any
disagreements with accountants on accounting and financial disclosure.
PART III
Item 10. Directors and Executive Officers of the Registrant
and
Item 11. Executive Compensation
The information called for by Items 10 and 11 of this Form 10-K report for
the fiscal year ended December 31, 2000, has been omitted, except for the
information presented below, because the company will file with the Securities
and Exchange Commission a definitive Proxy Statement pursuant to regulation
14(a) under the Securities Exchange Act of 1934.
Executive Officers
The company's executive officers along with their present position, offices
held and activities during the past five years are presented below. All officers
normally are elected annually and serve at the pleasure of the Board of
Directors. The company's non-employee directors and their business experience
during the past five years are listed in the company's Proxy Statement.
Bradley J. Bell, 48, senior vice president and chief financial officer since
1999; vice president, chief financial officer and treasurer from 1997 to 1998;
previously vice president and treasurer of Whirlpool Corporation from 1987 to
1997.
Pierre R. Brondeau, 43, vice president and director of the electronic materials
business group since 1999; president and chief executive officer of Shipley
Company, LLC since 1999; president and chief operating officer of Shipley
Company, LLC since 1998; vice president and chief operating officer of Shipley
Company, LLC from 1997 to 1998; director of research, sales and marketing of
Shipley Company, LLC from 1995 to 1997.
Nance K. Dicciani, 53, senior vice president, director of chemical specialties
business group and director of the European region since 1999; vice president
1993 to 1998; director for monomers and chairman of RohMax from 1996 to 1998;
previously business unit director for petroleum chemicals from 1991 to 1996.
J. Michael Fitzpatrick, 54, president, chief operating officer and director
since 1999; vice president since 1993; chief technology officer from 1996 to
1998; previously director of research from 1993 to 1995.
Joseph J. Forish, 48, vice president and director of human resources since 1999;
previously vice president of human resources for a unit of Bristol-Myers Squibb
Corporation from 1989 to 1999.
Raj L. Gupta, 55, chairman, chief executive officer and director since 1999;
vice chairman since 1999; vice president and regional director of Asia-Pacific
from 1993 to 1998.
Robert A. Lonergan, 55, vice president and general counsel since 1999;
previously senior vice president, general counsel and secretary of PegasusGold,
Inc. from 1995 to 1999.
Charles M. Tatum, 52, senior vice president and chief technology officer since
1999; vice president from 1990 to 1998; director of plastics additives from 1994
to 1998.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The security ownership of certain beneficial owners and management is
incorporated in this Form 10-K by reference to the definitive Proxy Statement to
be filed with the Securities and Exchange Commission.
Item 13. Certain Relationships and Related Transactions
The information called for by Item 13 is incorporated in this Form 10-K
by reference to the definitive Proxy Statement to be filed with the Securities
and Exchange Commission.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report:
1. Financial Statements
The consolidated financial statements of Rohm and Haas Company
are incorporated in this Form 10-K by reference to pages 39 through 59 of
the Stockholders' Report , a complete copy of which follows page 11
(follows Schedule II) of this report, together with the report of
PricewaterhouseCoopers LLP dated March 8, 2001.
2. Financial Statement Schedule
The following supplementary financial information is filed in this
Form 10-K and should be read in conjunction with the financial statements
in the Stockholders' Report:
Page
Independent Accountants' Report on Financial ----
Statement Schedule.......................................... 12
Schedule submitted:
II - Valuation and qualifying accounts for the years
2000, 1999 and 1998 ................................. 11
The schedules not included herein are omitted because they are not
applicable or the required information is presented in the financial
statements or related notes.
3. Exhibits
Exhibit (3)(i), Restated Certificate of Incorporation
Exhibit (4), Certificate of Designation of Series A Junior
Participating Preferred Stock.
Exhibit (12), Computation of Ratio of Earnings to Fixed
Charges for the company and subsidiaries, is attached as page 19 of
this Form 10-K.
Exhibit (13), Annual Report to Stockholders, follows page 11 of
this report.
Exhibit (21), Subsidiaries of the registrant, is attached as
pages 20 and 22 of this Form 10-K.
Exhibit (23), Consent of PricewaterhouseCoopers LLP, attached
as page 23 of this report
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, Rohm and Haas Company has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
/s/ Bradley J. Bell
------------------------------------------
Bradley J. Bell
Senior Vice President and Chief Financial Officer
March 26, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed on March 26, 2001 by the following persons on behalf
of the registrant and in the capacities indicated.
Signature and Title Signature and Title
------------------- -------------------
/s/ Raj L. Gupta /s/ James A. Henderson
- ----------------------------------- ---------------------------------
Raj L. Gupta James A. Henderson
Director, Chairman of the Board and Director
Chief Executive Officer
/s/ Bradley J. Bell /s/ Richard L. Keyser
- ----------------------------------- ---------------------------------
Bradley J. Bell Richard L. Keyser
Senior Vice President and Chief Director
Financial Officer
/s/ William J. Avery /s/ John H. McArthur
- ----------------------------------- ---------------------------------
William J. Avery John H. McArthur
Director Director
/s/ James R. Cantalupo /s/ Jorge P. Montoya
- ----------------------------------- ---------------------------------
James R. Cantalupo Jorge P. Montoya
Director Director
/s/ J. Michael Fitzpatrick /s/ Sandra O. Moose
- ----------------------------------- ---------------------------------
J. Michael Fitzpatrick Sandra O. Moose
Director Director
/s/ Earl G. Graves /s/ Gilbert S. Omenn
- ----------------------------------- ---------------------------------
Earl G. Graves Gilbert S. Omenn
Director Director
/s/ David W. Haas /s/ Ronaldo H. Schmitz
- ----------------------------------- ---------------------------------
David W. Haas Ronaldo H. Schmitz
Director Director
/s/ Thomas W. Haas /s/ Marna C. Whittington
- ----------------------------------- ---------------------------------
Thomas W. Haas Marna C. Whittington
Director Director
Schedule II
ROHM AND HAAS COMPANY AND SUBSIDIARIES
Valuation and Qualifying Accounts
Year Ended December 31,
-----------------------------------
2000 1999 1998
-------- ---------- ----------
(millions of dollars)
Deducted from Accounts Receivable -
Allowances for losses:
Balance at beginning of year $ 37 $ 12 $ 15
Additions charged to earnings 14 6 3
Acquisitions 2 22 --
Charge-offs, net of recoveries (10) (3) (6)
---- ---- ----
Balance at end of year $ 43 $ 37 $ 12
==== ==== ====
Report of Independent Accountants on
Financial Statement Schedule
To the Board of Directors and
Stockholders of Rohm and Haas Company:
Our audits of the consolidated financial statements referred to in our
report dated March 8, 2001 appearing in the 2000 Annual Report to Stockholders
of Rohm and Haas Company (which report and consolidated financial statements
are incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the financial statement schedule listed in Item 14(a)(2)
of this Form 10-K. In our opinion, this financial statement schedule
presents fairly, in all material respects, the information set forth therein
when read in conjunction with the related consolidated financial statements.
/s/ PricewaterhouseCoopers LLP
- -------------------------------
PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
March 8, 2001