EXHIBIT 20
COPY OF QUARTERLY REPORT TO STOCKHOLDERS
ROHM AND HAAS COMPANY
THIRD QUARTER 1999
ID: COVER GRAPHIC
FINANCIAL HIGHLIGHTS (Millions of dollars, except earnings per share)
- -------------------------------------------------------------------------------
Third Quarter Nine Months
----------------------- -----------------------
Percent Percent
1999 1998 Change 1999 1998 Change
----------------------- -----------------------
Net sales $1,577 $909 73 $3,661 $2,836 29
Net earnings 58 86 (33) 159 365 (56)
Net earnings, excluding
non-recurring items* 82 89 (8) 302 320 (6)
Net earnings per
common share:
- Basic $ .27 $.49 (45) $ .85 $ 2.02 (58)
- Diluted $ .26 $.48 (46) $ .84 $ 1.98 (58)
Net earnings per
common share,
excluding non-
recurring items*:
- Basic $ .38 $.51 (25) $ 1.62 $ 1.77 (8)
- Diluted $ .37 $.50 (26) $ 1.60 $ 1.74 (8)
- -------------------------------------------------------------------------------
* Significant non-recurring items include:
- 1999: (third quarter) restructuring charges; (second quarter) write-off
of purchased in-process research and development in connection with the
acquisition of Morton, charge related to 1998 joint venture dispositions
and restructuring charges in the Electronics Materials segment;
(first quarter) Electronic Materials segment asset write-downs and other
restructuring charges mostly associated with the 48%-owned Rodel
affiliate and gains related to environmental remediation related
insurance settlements.
- 1998: (second quarter) gains on the sale of joint venture interests in
AtoHaas and RohMax, asset write-downs and business realignment costs;
(second and third quarter) loss on early extinguishment of debt.
SALES BY BUSINESS SEGMENT
Millions of dollars
---------------------------------------------------
PERFORMANCE POLYMERS $899
CHEMICAL SPECIALTIES $305 [PIE CHART]
ELECTRONIC MATERIALS $210
SALT $163
SALES BY GEOGRAPHY
Millions of dollars
---------------------------------------------------
NORTH AMERICA $937
[PIE CHART] EUROPE $400
ASIA-PACIFIC $162
LATIN AMERICA $ 78
=======================
== CHAIRMAN'S LETTER ==
=======================
Rohm and Haas's third quarter results reflect the strengths of
the company:
* Our businesses showed the operating strength we've come to
expect;
* We saw good demand geographically;
* And we made a fast start in our integration and cost reduction
efforts -- achieving a $100 million lower run rate by the end of
September.
The third quarter earnings per share of $.37, absent unusual charges,
show that we are delivering a good return to shareholders.
The most notable event during the quarter occurred when Larry Wilson
retired on September 30th after 11 years as CEO, 35 years overall with Rohm
and Haas. Jay Stewart, former chairman of the acquired Morton
International and Vice Chairman of Rohm and Haas, retired at the end of
October. We will forever be in debt to these two leaders for the lasting
contributions they have made to the new Rohm and Haas Company.
It will be my job to build upon their legacy with the able help of a
very strong and motivated leadership team at Rohm and Haas Company.
And we will grow from a strong starting position. Rohm and Haas has
taken a number of steps in recent years to strengthen the quality of our
product portfolio so that it has an even tighter focus on the high-growth
market segments. Efficiency and tight cost control have become a core
competency. Our ability to identify opportunities for cost savings, then
achieve them quickly is reflected on our fast progress on the Morton
integration. And, finally, we are poised for profitable growth. We have a
few more quarters of dilution ahead of us as we work through integration
costs, but we expect good demand and good growth to follow.
/s/ Raj L. Gupta
Raj L. Gupta
Chairman and CEO
November 15, 1999
========================================
== MANAGEMENT DISCUSSION AND ANALYSIS ==
========================================
The company acquired LeaRonal, Inc. (LeaRonal), an electronic materials
business, on January 26, 1999 and acquired Morton International, Inc.
(Morton), a specialty chemicals producer, on June 21, 1999 (see details of
these transactions under "Liquidity, Capital Resources and Other Financial
Data" below). The results of LeaRonal and Morton have been included in the
consolidated financial statements since the dates of acquisition. Unaudited
pro forma information is presented in both the table on page 3 and in the
Notes to Consolidated Financial Statements.
Within the following discussion, unless otherwise stated, "quarter" and
"nine-month period" refer to the third quarter of 1999 and the nine
months ended September 30, 1999. All comparisons are with the
corresponding periods in the previous year, unless otherwise stated.
THIRD QUARTER 1999 VERSUS
THIRD QUARTER 1998
After recording non-recurring charges discussed below, the company
reported earnings of $58 million for the quarter compared to earnings of
$86 million in 1998. Diluted earnings per common share was $.26
compared with $.48 in 1998. Earnings excluding non-recurring items for
the quarter were $82 million versus $89 million in the prior year.
Quarterly diluted earnings per common share on this basis was $.37 in
1999 versus $.50 per share in the comparable period of 1998.
The quarter includes an after-tax charge of $19 million, or $.09 per
share, for restructuring costs resulting both from the integration of
Morton and the company's redesign of its selling and administrative
infrastructure. The charge is primarily composed of severance costs.
In addition, an after-tax charge of $5 million, or $.02 per share, was
recorded as Other Expense in the quarter for other integration costs,
primarily outside consultants. The third quarter of 1998 results
included an extraordinary after-tax charge of $3 million, or $.02 per
share, related to an early extinguishment of debt. (A reconciliation
from reported earnings to earnings excluding non-recurring items by
business segment is presented in the tables on page 5.)
Acquisitions during 1999, which were accounted for using the purchase
method, significantly impact the comparability of results for the quarter
and nine-month periods. Accordingly, pro forma sales and earnings excluding
non-recurring items for the 1998 periods and nine months of 1999 are
provided to facilitate comparisons. The pro forma results include Morton
and LeaRonal as if the acquisitions had occurred on January 1, 1998. Pro
forma adjustments have been made primarily to reflect increased goodwill and
intangible amortization and interest expense. Cost savings from integration
efforts have not been reflected. Non-recurring items are excluded from pro
forma earnings. Consequently, the pro forma results do not reflect the
actual earnings had the acquisitions occurred on the dates indicated, and
are not intended to be a projection of future results or trends.
The table on page 3 reflects business segment sales and earnings excluding
non-recurring items for the quarter. The quarter and nine months ended
September 30, 1998 and the nine months ended September 30, 1999 are
presented on a pro forma basis. Geographic sales information is also
presented.
Reported sales for the quarter increased to $1,577 million from $909 million
in the 1998 period, reflecting 1999 acquisitions. Pro forma sales increased
2% for the quarter due to higher sales in the Performance Polymers
businesses in all regions and to higher sales in the Electronic Materials
segment. Earnings excluding non-recurring items decreased 8%, primarily as
a result of a lower selling price and higher raw material cost relationship
in the quarter and acquisition-related interest and amortization expense.
In addition, earnings were impacted by the lower gross profit margin
businesses acquired with Morton, such as Salt, and a non-recurring after-tax
charge to costs of goods sold of $7 million, or $.03 per share, resulting
from the sale of certain Morton inventories which had been written up to
fair value in connection with the acquisition.
Performance Polymers sales increased to $899 million in the quarter from
reported sales of $574 million in the 1998 period. Pro forma sales
increased 1%, largely a result of volume in acrylic-based products. Sales
increases were primarily in North America in the Coatings, Plastic
Additives, Specialty Polymers and Adhesives and Sealants businesses.
Reported earnings for the quarter were $92 million
2
PRO FORMA SALES BY BUSINESS SEGMENT AND GEOGRAPHY (in millions)
- ------------------------------------------------------------------------------
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
Pro Pro Pro
Forma Forma Forma
1999 1998 1999 1998
BUSINESS SEGMENT ----------------------------------------
Performance Polymers $ 899 $ 891 $2,694 $2,697
Chemical Specialties 305 303 1,024 1,000
Electronic Materials 210 193 631 604
Salt 163 167 625 552
- --------------------------------------------------------- ------------------
Total $1,577 $1,554 $4,974 $4,853
- --------------------------------------------------------- ------------------
CUSTOMER LOCATION
North America $ 937 $ 951 $2,987 $2,962
Europe 400 408 1,318 1,316
Asia-Pacific 162 122 465 375
Latin America 78 73 204 200
- --------------------------------------------------------- ------------------
Total $1,577 $1,554 $4,974 $4,853
- --------------------------------------------------------- ------------------
PRO FORMA NET EARNINGS, EXCLUDING NON-RECURRING ITEMS,
BY BUSINESS SEGMENT
- ------------------------------------------------------------------------------
(Unaudited)
BUSINESS SEGMENT
Performance Polymers $ 104 $ 96 $ 319 $ 294
Chemical Specialties 26 20 108 103
Electronic Materials 13 11 37 46
Salt 0 2 33 19
Corporate (61) (66) (214) (210)
- --------------------------------------------------------- ------------------
Total $ 82 $ 63 $ 283 $ 252
- --------------------------------------------------------- ------------------
($104 million excluding non-recurring items) versus $77 million in the prior
year period. Pro forma earnings, which exclude non-recurring items,
increased 8% as a result of volume-driven increases in Coatings, Plastic
Additives and Specialty Polymers.
Chemical Specialties sales increased $66 million to $305 million in the
quarter from $239 million in 1998. Pro forma sales increased 1%. This
growth was attributable to Agricultural Chemicals, primarily due to a
recovery of the Dithane business in Asia-Pacific and stronger Goal fungicide
sales in North America. In addition, the combined results of the Consumer
and Industrial Specialties businesses (Ion Exchange Resins, Formulation
Chemicals and Biocides) impacted sales favorably, particularly in
Asia-Pacific and Europe. Reported earnings for the quarter were $21 million
($26 million excluding non-recurring items) versus $14 million in the prior
year period. Pro forma earnings increased 30% driven largely by earnings in
the Agricultural Chemicals business as a result of the volume growth
discussed above, efficient plant operations and lower overall selling and
administrative expenses in Europe. Consumer and Industrial Specialties
businesses also contributed to the earnings increase.
3
Electronic Materials sales increased $114 million to $210 million in the
quarter from $96 million in the comparable 1998 period. Sales on a pro
forma basis increased 9% due to higher sales in the Microelectronics (Micro)
and the Shipley Ronal (formerly Printed Wiring Board) businesses,
especially in Asia-Pacific and North America. Micro sales exhibited
particular strength in its deep-UV photoresist line with double-digit sales
increases. Reported earnings for the quarter were $12 million ($13 million
excluding non-recurring items) versus $9 million in the prior year period.
Pro forma earnings increased $2 million in the quarter reflecting the impact
of strong revenue growth.
Salt sales were $163 million in the quarter. Included in a full quarter's
results for the first time this quarter, this business includes salt for a
variety of uses, such as grocery table salt, food processing, industrial
processing, water softening and highway icing control. Pro forma sales
decreased 2%. Though growth in North America for the quarter was strong,
driven by non-food retail sales, sales in Europe were down as a result of a
decline in the food processing market. No earnings were reported largely as
a result of goodwill and intangible amortization charges and a one-time
acquisition-related charge for FIFO-based European inventories.
Corporate expenses totaled $67 million in the quarter compared to $14
million in the prior year period. This increase was a result of interest
expense from the financing of 1999 acquisitions. Included in the quarter
was an after tax charge of $6 million, or $.03 per share, for restructuring
and other infrastructure and integration costs, primarily outside
consultants. The third quarter of 1998 includes a $3 million after-tax
charge for an extraordinary loss related to the early extinguishment of
debt. On a pro forma basis corporate expenses for the quarter were down 8%.
The third quarter gross profit margin was 35%, down from 38% from the prior
year period. This change reflects the impact of former Morton businesses
which operate at lower margins than most legacy Rohm and Haas businesses.
Higher depreciation expense resulting from fair values assigned to acquired
assets had an impact as did the effect of a non-recurring after-tax charge
to costs of goods sold of $7 million, or $.03 per share. This charge
resulted from the write up to market value of certain Morton inventories in
connection with the acquisition.
Selling, administrative and research expenses (SAR) increased $118
million for the quarter versus the 1998 period. Excluding expenses of
LeaRonal and Morton, acquired in 1999, SAR decreased approximately 5%,
but as a percentage of net sales was 21%, comparable to the prior period
percentage of 22%. Interest expense increased for the quarter to $66
million from $5 million in 1998, due to higher debt levels resulting
from the LeaRonal and Morton acquisitions.
A provision for restructuring of $30 million was recognized in the
quarter for costs related both to the integration of Morton and the
company's redesign of its selling and administrative infrastructure.
This after-tax charge of $19 million, or $.09 per share, is primarily
composed of severance costs for approximately 500 people. The charge is
net of certain after-tax pension settlement and curtailment gains.
Further settlement gains will be realized over the next year to eighteen
months. An additional $32 million severance-related reserve associated
primarily with staff reductions of approximately 350 people in the
acquired company was recorded as an increase to goodwill. Further
charges are expected in the future as integration plans develop.
The effective tax rate for the third quarter of 1999 was 41% and 38% on
a pro forma basis. The rate reflects the effect of certain
non-deductible amortization charges resulting from the company's 1999
acquisition activities. The rate was 33% for the third quarter of 1998.
NINE MONTHS 1999 VERSUS
NINE MONTHS 1998
Earnings for the nine month period were $159 million compared to prior
year's earnings of $365 million. Diluted earnings per common share was
$.84 compared to $1.98 in 1998. As shown in the table on page 5 both
1999 and 1998 included certain non-recurring items. Earnings excluding
these items for the nine month period were $302 million, down 6% from
1998 earnings of $320 million. (Earnings for the nine month period by
business segment excluding non-recurring items are presented in the
chart on page 5, which should be read in conjunction with the
presentation on page 12.)
4
RECONCILIATION OF EARNINGS AS REPORTED TO EARNINGS EXCLUDING
NON-RECURRING ITEMS, NET OF TAX (in millions)
- ------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1999 1998 1999 1998
----------------------------------------
EARNINGS AS REPORTED $ 58 $ 86 $159 $365
- IPR&D charge -- -- 105 --
- Provision for restructuring 19 -- 19 --
- Joint venture dispositions -- -- 14 (76)
- Remediation related insurance
settlements -- -- (13) --
- Asset write-downs, integration
and other costs -- -- 8 18
- Early extinguishment of debt -- 3 -- 13
- Infrastructure and integration
costs, primarily outside
consultants 5 -- 10 --
- --------------------------------------------------------- ------------------
EARNINGS EXCLUDING NON-RECURRING ITEMS $ 82 $ 89 $302 $320
- --------------------------------------------------------- ------------------
EARNINGS BY BUSINESS SEGMENT EXCLUDING NON-RECURRING ITEMS*
- ------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
1999 1998 1999 1998
BUSINESS SEGMENT ----------------------------------------
Performance Polymers $104 $ 77 $274 $240
Chemical Specialties 26 14 95 87
Electronic Materials 13 9 40 35
Salt -- -- -- --
Corporate (61) (11) (107) (42)
- --------------------------------------------------------- ------------------
Total $ 82 $ 89 $302 $320
- --------------------------------------------------------- ------------------
* Must be read in conjunction with presentation by business segment
on page 12.
Sales for the first nine months of 1999 increased to $3,661 million from
$2,836 million in 1998. The increase in sales includes contributions
from the acquired Morton and LeaRonal businesses from the respective
dates of acquisitions. On a pro forma basis, sales grew 3%. The
company's reported earnings, excluding non-recurring items, decreased 6%
primarily because of acquisition-related interest and amortization
expenses. Diluted earnings per common share excluding non-recurring
items was $1.60 versus $1.74 in the first nine months of 1998.
Performance Polymers sales increased to $2,082 million in the nine month
period from $1,739 million in 1998. Pro forma sales were flat. Despite
volume gains in each of the businesses within Performance Polymers,
sales in Coatings and Monomers decreased, reflecting lower selling
prices. These decreases were slightly offset by an increase in Plastic
Additives. Sales declined in all regions with the exception of Asia
Pacific, despite higher volume world-wide. Reported earnings excluding
non-recurring items increased to $274 million for the nine month period
from $240 million in the compa-
5
rable prior year period. Pro forma earnings increased 9% largely on
volume but was also helped by lower raw material costs (not expected to
continue into the fourth quarter) and smooth plant operations.
Chemical Specialties sales increased to $898 million in the nine month
period from 1998 sales of $804 million. Pro forma sales increased 2%,
largely due to sales in Agricultural Chemicals, particularly in
Asia-Pacific and Europe, and to sales in the Consumer and Industrial
Specialties businesses, particularly Formulation Chemicals. Reported
earnings excluding non-recurring items for the nine month period
increased 9% from the prior year period. On a pro forma basis earnings
increased 5% primarily because of Agricultural Chemicals which benefited
from favorable weather conditions throughout 1999 and the recovery of
certain important local economies.
Electronic Materials sales increased to $501 million in the nine month
period from $293 million in 1998 as a result of the LeaRonal and Morton
acquisitions in 1999. Pro forma sales increased 4% on volume in both Micro
and Shipley Ronal. Reported earnings excluding non-recurring items for the
period increased to $40 million from $35 million in the 1998 period. Pro
forma earnings decreased 20% for the nine month period due to the erosion of
selling price in the dry film business acquired with Morton.
Corporate expenses totaled $223 million in the nine month period
comparing unfavorably to $55 million in the prior year. Included in
1999 corporate expenses are non-recurring items such as a $105 million
charge for in-process research and development (IPR&D), an after-tax
charge of $14 million, or $.08 per share, to settle a matter related to
the company's 1998 sale of the AtoHaas joint venture, an after-tax gain
of $13 million resulting from a favorable settlement with insurance
carriers over certain environmental remediation matters and
integration-related costs. Excluding non-recurring items, corporate
expenses increased primarily as a result of higher interest expense.
Corporate expenses increased 2% compared to 1998 on a pro forma basis.
The gross profit margin for the nine month period of 1999 was 38% versus 40%
in the prior year period. This change reflects in part the impact of former
Morton businesses which operate at lower margins. Also having an impact is
higher depreciation expense resulting from the step-up to fair value of
acquired assets. Also, 3% unfavorable selling prices were not fully offset
by favorable raw material costs.
Interest expense increased to $95 million in 1999 from $26 million in
1998, due largely to higher debt levels resulting from 1999
acquisitions. Other income was $1 million for 1999, compared with
expense of $19 million for 1998. The 1998 amount reflects a second
quarter asset write-down and business alignment costs.
The effective tax rate for the nine month period was 50%, up from 36% from
the prior year period, largely as a result of the non-deductible write-off
of IPR&D. Excluding this charge, the effective tax rate was 38%. The 1999
rate also reflects the effect of non-deductible amortization charges
resulting from the company's 1999 acquisition activities.
LIQUIDITY, CAPITAL RESOURCES
AND OTHER FINANCIAL DATA
On June 21, 1999, the company acquired Morton for cash of $3 billion and
the issuance of 45,121,227 shares of common stock, for a total
transaction value of approximately $4.9 billion, including the
assumption of $272 million of debt. The cash portion of the acquisition
was financed primarily through a combination of commercial paper and
issuance of longer term instruments (see below). As of September 30,
1999, $32 million had not yet been paid to former Morton shareholders
pending the tender of their shares. This is reflected in accounts
payable and accrued liabilities. Accounted for by the purchase method,
the financial statements reflect the allocation of the purchase price
based on estimated fair values at the date of acquisition, pending final
determination of the fair value of certain acquired assets and
liabilities. The allocation as of September 30, 1999, has resulted in
acquired goodwill of $1.5 billion, which is being amortized on a
straight-line basis over 40 years. Based on an independent appraisal,
$105 million of the purchase price was allocated to in-process research
and development, which was recorded as a charge in the second quarter
of 1999.
6
Plans are currently in development to integrate the operations of the
companies. In the third quarter these plans resulted in the recognition of
certain restructuring costs, primarily severance charges for approximately
850 people. These costs totaled $62 million, of which $30 million
associated with legacy Rohm and Haas was recorded as a one-time charge with
the balance of $32 million, associated with the acquired companies, recorded
as an increase to goodwill. These charges are discussed in more detail
above.
In late January 1999, the company acquired all of the outstanding shares
of LeaRonal for approximately $460 million. LeaRonal develops and
manufactures specialty chemical processes used in the manufacture of
printed circuit boards, semiconductor packaging and for electronic
connector plating and also provides processes for metal-finishing
applications. The acquisition, financed primarily through commercial
paper, was accounted for using the purchase method. The financial
statements reflect the allocation of the purchase price based on
estimated fair values at the date of acquisition, later analysis of
certain acquired assets and liabilities and the effects of plans now
under way to integrate the two companies, including asset write-downs
and severance costs. The allocation as of September 30, 1999, has
resulted in acquired goodwill of approximately $210 million, which is
being amortized on a straight-line basis over 40 years. The results of
LeaRonal have been included in the consolidated financial statements
since the date of acquisition.
Also in 1999, the company purchased an additional 15% interest in its
Rodel affiliate, bringing its total interest to 48%. These investments
total approximately $149 million. The Rodel investment is accounted for
on the equity method with the company's share of earnings reported as
equity in affiliates.
On July 6, 1999, the company issued $2 billion of long-term debt,
refinancing a portion of the commercial paper borrowings used as initial
financing for the above transactions. These debt securities include
$500 million of five-year 6.95% notes, $500 million of ten-year 7.40%
notes and $1 billion of thirty-year 7.85% debentures. Each series of
securities will mature on July 15 of its respective year of maturity
with interest payable semiannually on January 15 and July 15 of each
year, beginning January 15, 2000. The securities are senior unsecured
obligations of the company and will rank equally with all other senior
unsecured indebtedness. The securities contain restrictions similar to
the company's other long-term debt. There are no restrictions on the
payment of dividends.
Net cash in-flows during the nine month period included these
transactions and resulted in a $67 million increase in cash and cash
equivalents versus year-end 1998. Free cash flows for the first nine
months of 1999 versus the prior-year period were as follows:
Nine Months Ended
September 30,
-----------------
1999 1998
-----------------
Cash provided by
operating activities $521 $519
Capital additions (198) (137)
Dividends (100) (95)
-----------------
Free cash flow $223 $287
-----------------
Fixed asset additions during the nine month period included acrylics
expansion in Texas; Coatings expansion in Kentucky; spending on
emulsions plants in Spain and China and additional investment in the
Agricultural Chemicals business. Spending for the full year, excluding
additions related to acquired companies, is expected to be approximately
$265 million.
The debt ratio was 52% as of September 30, 1999, compared with 25% at
year-end 1998, reflecting the effect of the issuance of debt as
discussed above. (The debt ratio is total debt, net of cash, divided by
the sum of net debt, minority interest, stockholders' equity and ESOP
shares.)
The company is a party in various government enforcement and private
actions associated with former waste disposal sites and is also involved
in potential remediations at some of its manufacturing facilities. At
September 30, 1999, the reserves for remediation were $172 million,
compared to $131 million at December 31, 1998. The 1999 amount includes
$49 million of reserves for remediation related to Morton. The company
is in the midst of lawsuits over insurance coverage for environmental
liabilities. It is the company's practice to reflect environmental
insurance recoveries in the results of
7
operations for the quarter in which litigation is resolved through
settlement or other appropriate legal process. Recoveries typically
determine coverage for both past and future environmental spending. In
the first nine months of 1999 and 1998 $10 million, and $9 million,
respectively, were charged to earnings before tax for environmental
remediation. In the 1999 period, the company recorded income before tax
of $22 million for remediation related insurance recoveries. The 1999
and 1998 charges include the aggregation of several small environmental
accruals.
During 1996, the U.S. EPA notified Morton of possible irregularities in
water discharge monitoring reports filed by the Moss Point, Mississippi
plant in early 1995. Morton retained an outside law firm to investigate,
and it was confirmed that such reports had been falsified over a period of
years. Other environmental problems at the plant were also identified, and
the investigation has been expanded to address the additional issues. The
company has been served with a draft multi-count complaint and grand jury
subpoenas seeking documents related to wastewater discharge and groundwater
monitoring reporting at Moss Point. Morton has furnished the requested
documents, and is cooperating with the environmental authorities. As a
result of these irregularities and possible violations, the company may be
exposed to material fines, penalties, and remedial expenses, but is unable
to determine the ultimate resolution.
In addition to accrued environmental liabilities, the company has
reasonably possible loss contingencies relating to environmental matters
of approximately $148 million. This amount does not include reasonably
possible loss contingencies related to certain Morton sites as these
contingencies have not yet been fully assessed. The company has also
identified other sites, including its larger manufacturing facilities in
the United States, where future environmental remediation expenditures
may be required, but these expenditures are not reasonably estimable at
this time. The company believes that these matters, when ultimately
resolved, which may be over the next decade, will not have a mate-
rial adverse effect on the consolidated financial position of the
company, but could have a material adverse effect on consolidated
results of operations in any given quarter.
On October 26, 1999 the board of directors declared a regular quarterly
dividend on common shares of 19 cents per common share payable December
1, 1999 to stockholders of record on November 5, 1999. During the third
quarter of 1999, the company redeemed the $2.75 cumulative convertible
preferred stock under the terms of the issue.
On November 12, 1999, the company settled its obligations to a third party
under an accelerated stock repurchase program for $62 million. Under the
terms of the program, initiated in 1998, the final cost to the company
reflected the average share price paid by the third party in the market over
an extended trading period.
In 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes a new model for
the accounting and reporting of derivative and hedging transactions.
The statement amends a number of existing standards and, as amended by
SFAS No. 137, is scheduled to be effective for fiscal years beginning
after June 15, 2000. The company expects to adopt this standard as
required in fiscal year 2001 and, because of continual business-driven
changes to its derivatives and hedging programs, has not fully assessed
its potential impact on its financial position or results of operations.
During 1996 management initiated an enterprise-wide program to prepare
the company's computer systems and applications for the year 2000, and,
in 1997, began assessing supply chain and customer implications and
process control. All of the company's centralized computer systems have
been inventoried and assessed to determine their Year 2000 readiness.
Remediation of all systems is essentially complete. For the most
significant of these remediated systems, testing and implementation into
normal operations ("reintegration") was completed by June 30, 1999.
While a few projects remain open and are being closely monitored, none
are expected to cause business disruption, even if they are not
completed by year end; nevertheless, all are scheduled for completion
before that time.
In mid-June, 1999, a test of the key systems supporting supply chain and
related processes was completed. This test confirmed that the systems
that enable order processing, manufacturing,
8
logistics and related activities are not likely to fail as a result of
the date change. In addition to these tested internal systems and
processes, the company has placed a high priority on continuing to
assess and update the status of its critical suppliers and business
partners, such as warehouses, toll manufacturers, distributors and
transportation services.
The company expects all of its internal remediation and testing to be
completed as stated above; however, despite its best efforts, business may
be interrupted with potentially material effects on its financial position
or results of operations if any of the following occur: external supply of
raw materials or utilities is delayed or unavailable for an extended period;
manufacturing systems fail; or central corporate computer systems fail. To
limit the effects of these potential failures, the company has completed
corporate contingency planning guidelines and business units, staff
functions and plant sites have completed contingency plans for potential
disruptions of critical systems or processes. Final contingency plans
across the company were completed by September 30, 1999. Examples of
contingency plans include a "freezing" of modifications to computer systems,
ensuring availability of additional information technology personnel during
the critical time period, backing-up systems at off-site facilities, making
alternate raw material supply arrangements, and preparing for routine,
temporary shut-downs of certain plants and facilities. In addition, the
company has standard operating procedures in place for a safe and orderly
shut-down of systems and facilities should this be necessary.
A significant proportion of the costs associated with the Year 2000
effort represent the redeployment of existing information technology
resources. In addition, consulting and other expenses related to
software application and facilities enhancements necessary to prepare
the systems for the year 2000 will be incurred. Approximately 90% of
these costs, which are expected to total $18 million, have been incurred
and charged to expense through September 30, 1999.
This discussion contains forward-looking statements based, in part, on
assumptions such as the following: that the manufacturers of the
company's computer systems and software have correctly represented the
year 2000 status of their products; that the company's suppliers and
customers will meet their stated year 2000 compliance obligations; and
that the company's own investigation, remediation, testing and systems
implementations are successful. The year 2000 discussions and other
forward-looking statements made in this report are based on current
expectations and are subject to the risks and uncertainties discussed
here as well as those detailed in the "Cautionary Statements" section of
the 1998 Form 10-K filed with the Securities and Exchange Commission on
February 26, 1999 and the Form S-4 filed on May 21, 1999.
9
============================================
== ROHM AND HAAS COMPANY AND SUBSIDIARIES ==
============================================
SALES BY BUSINESS SEGMENT AND GEOGRAPHY (Millions of dollars)
- ---------------------------------------------------------------------------------------
THIRD QUARTER 1999 AND 1998
- ---------------------------------------------------------------------------------------
Performance Chemical Electronic
Polymers Specialties Materials Salt Total
--------------- ----------- ---------- ------ --------------
1999 1998* 1999 1998* 1999 1998* 1999 1999 1998*
--------------- ----------- ---------- ---- --------------
North America $ 581 $ 384 $136 $ 90 $ 99 $ 44 $121 $ 937 $ 518
Europe 234 124 74 66 50 23 42 400 213
Asia-Pacific 53 40 48 38 61 29 -- 162 107
Latin America 31 26 47 45 -- -- -- 78 71
--------------- ----------- ---------- ---- --------------
Total $ 899 $ 574 $305 $239 $210 $ 96 $163 $1,577 $ 909
--------------- ----------- ---------- ------ --------------
- ---------------------------------------------------------------------------------------
FIRST NINE MONTHS 1999 AND 1998
- ---------------------------------------------------------------------------------------
Performance Chemical Electronic
Polymers Specialties Materials Salt Total
--------------- ----------- ---------- ------ --------------
1999 1998* 1999 1998* 1999 1998* 1999 1999 1998*
--------------- ----------- ---------- ---- --------------
North America $1,351 $1,139 $363 $310 $231 $134 $134 $2,079 $1,583
Europe 516 408 255 252 116 70 46 933 730
Asia-Pacific 135 119 158 122 154 89 -- 447 330
Latin America 80 73 122 120 -- -- -- 202 193
--------------- ----------- ---------- ---- --------------
Total $2,082 $1,739 $898 $804 $501 $293 $180 $3,661 $2,836
--------------- ----------- ---------- ---- --------------
*Certain reclassifications were made to conform to current year segment
presentation.
10
Rohm and Haas Company and Subsidiaries
NET EARNINGS BY BUSINESS SEGMENT(1)
- -------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
1999 1998 1999 1998
--------------------------------------------
(Millions of dollars)
BUSINESS SEGMENT --------------------------------------------
Performance Polymers $ 92 $ 77 $ 262 $314
Chemical Specialties 21 14 90 72
Electronic Materials 12 9 31 34
Salt -- -- (1) --
Corporate(2) (67) (14) (223) (55)
- --------------------------------------------------------- -------------------
Total $ 58 $ 86 $ 159 $365
- --------------------------------------------------------- -------------------
(1) Segment earnings reflect after-tax operating results, net of acquisition-
related amortization of goodwill and other assets. 1998 results have been
restated to reflect the business segmentation adopted in the third quarter
of 1999.
(2) Corporate includes non-operating items such as interest income and
expense, corporate governance costs and corporate exploratory research.
In 1998, it includes loss on early extinguishment of debt, while in the
nine months ended September 1999, it includes a $105 charge for purchased
in-process research and development costs associated with the Morton
acquisition.
ANALYSIS OF CHANGE IN BASIC PER-SHARE EARNINGS
CURRENT PERIOD RELATIVE TO YEAR-EARLIER PERIOD
- ----------------------------------------------------------------------
$/Share (after-tax)
-----------------------------
THIRD FIRST
QUARTER NINE MONTHS
GROSS PROFIT ------------ --------------
Selling prices $ (.09) $ (.42)
Raw material costs .03 .28
Physical volume, product mix and other .25 .43
Morton effect on gross profit .58 .65
Currency effect on gross profit -- .02
- ----------------------------------------------------- ---------------
Increase in gross profit .77 .96
- ----------------------------------------------------- ---------------
OTHER CAUSES
Purchased in-process research
and development -- (.59)
Selling, administrative and
research expenses* (.07) (.20)
Provision for restructuring (.11) (.11)
Remediation related insurance recoveries -- .07
Share of affiliate earnings .02 (.02)
Interest expense (.21) (.23)
Change in outstanding shares of
common stock (.07) (.03)
Morton effect -- other than gross profit (.49) (.53)
Amortization of goodwill and other
intangibles (.19) (.22)
Effect of prior year items:
- ---------------------------
- Gain on sales of facilities
and investments, net -- (.50)
- Extraordinary loss on early
extinguishment of debt .02 .07
- 1998 provision for writedown
of assets -- .08
Other .09 .01
- ----------------------------------------------------- ---------------
Decrease from other causes (1.01) (2.20)
- ----------------------------------------------------- ---------------
Decrease in basic per-share earnings $ (.24) $(1.24)
- ----------------------------------------------------- ---------------
*Amounts shown are on a U.S. dollar basis and include the impact of
currency movements compared to the prior-year period.
11
Rohm and Haas Company and Subsidiaries
STATEMENTS OF CONSOLIDATED EARNINGS (Unaudited)
- -------------------------------------------------------------------------------
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------ --------------------
1999 1998 1999 1998
------------------------ --------------------
CURRENT EARNINGS (Millions of dollars, except per share amounts)
-----------------------------------------------
Net sales $ 1,577 $ 909 $ 3,661 $ 2,836
Cost of goods sold 1,027 564 2,280 1,712
- -------------------------------------------------------- --------------------
Gross profit 550 345 1,381 1,124
Selling and administrative expense 257 154 604 460
Research and development expense 65 50 165 154
Interest expense 66 5 95 26
Amortization of goodwill and
other intangibles 33 1 40 4
Share of affiliate
net earnings (losses) 5 -- (1) 2
Purchased in-process research
and development -- -- 105 --
Provision for restructuring 30 -- 30 --
Gain (loss) on disposition of
joint ventures -- -- (22) 131
Other income (expense), net (6) (2) 1 (19)
- -------------------------------------------------------- --------------------
Earnings before income taxes and
extraordinary item 98 133 320 594
Income taxes 40 44 161 216
- -------------------------------------------------------- --------------------
EARNINGS BEFORE
EXTRAORDINARY ITEM $ 58 $ 89 $ 159 $ 378
Extraordinary loss on early
extinguishment of debt (net
of income tax benefit of
$1 and $6, respectively) -- 3 -- 13
- -------------------------------------------------------- --------------------
NET EARNINGS $ 58 $ 86 $ 159 $ 365
Less preferred stock dividends -- 1 2 5
- -------------------------------------------------------- --------------------
NET EARNINGS APPLICABLE
TO COMMON SHAREHOLDERS $ 58 $ 85 $ 157 $ 360
- -------------------------------------------------------- --------------------
EARNINGS PER COMMON SHARE
BEFORE EXTRAORDINARY ITEM
(IN DOLLARS):
- Basic $ .27 $ .51 $ .85 $ 2.09
- Diluted .26 .50 .84 2.05
NET EARNINGS PER
COMMON SHARE:
- Basic $ .27 $ .49 $ .85 $ 2.02
- Diluted .26 .48 .84 1.98
Common dividends $ .19 $ .18 $ .55 $ .52
Weighted average common shares
outstanding (millions)
- Basic 217.3 172.5 184.7 178.3
- Diluted 221.1 178.5 188.3 184.3
- -------------------------------------------------------- --------------------
See notes to consolidated financial statements.
12
Rohm and Haas Company and Subsidiaries
STATEMENTS OF CONSOLIDATED CASH FLOWS (Unaudited)
- ------------------------------------------------------------------------
Nine Months Ended
September 30,
---------------------------
1999 1998
---------------------------
(Millions of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES ---------------------------
Net earnings $ 159 $ 365
Adjustments to reconcile net earnings
to cash provided by operating activities:
Purchased in-process research and
development 105 --
Depreciation, net of acquisitions 252 203
Amortization of goodwill 19 --
Amortization of intangibles 21 --
Gain on sale of facilities
and investments -- (76)
Extraordinary loss on early
extinguishment of debt, net of tax -- 13
Provision for the write down of
plant assets -- 16
Changes in current assets and liabilities,
net of acquisitions and divestitures:
Deferred income taxes (41) 2
Accounts receivable (9) (42)
Inventories (28) 14
Accounts payable and accrued liabilities 60 (27)
Income taxes payable 83 (19)
Other, net (100) 70
- ------------------------------------------------------------------------
Net cash provided by operating activities 521 519
- ------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions of businesses and affiliates,
net of cash acquired (3,274) --
Proceeds on sales of facilities and
investments, net of cash sold -- 287
Additions to land, buildings and equipment (198) (137)
Investments in affiliates, net of
cash acquired -- (21)
- ------------------------------------------------------------------------
Net cash used for (provided by)
investing activities (3,472) 129
- ------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 2,571 8
Purchases of treasury stock (3) (562)
Repayments of long-term debt -- (190)
Net change in short-term borrowings 559 177
Payment of dividends (100) (95)
Other, net (9) (3)
- ------------------------------------------------------------------------
Net cash provided by (used for)
financing activities 3,018 (665)
- ------------------------------------------------------------------------
Effect of exchange rate changes on cash -- --
- ------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 67 $ (17)
- ------------------------------------------------------------------------
See notes to consolidated financial statements.
13
Rohm and Haas Company and Subsidiaries
CONSOLIDATED BALANCE SHEETS (Millions of dollars)
- -----------------------------------------------------------------------------
SEPT. 30, December 31, Sept. 30,
1999 1998 1998
------------------------------------
(Unaudited) (Unaudited)
ASSETS ------------------------------------
Current assets:
Cash and cash equivalents $ 83 $ 16 $ 23
Receivables, net 1,271 711 752
Inventories (note f) 884 427 414
Prepaid expenses and other assets 189 133 145
- -----------------------------------------------------------------------------
Total current assets 2,427 1,287 1,334
- -----------------------------------------------------------------------------
Land, buildings and equipment 7,282 4,471 4,375
Less accumulated depreciation 3,749 2,563 2,513
- -----------------------------------------------------------------------------
Net land, buildings and equipment 3,533 1,908 1,862
- -----------------------------------------------------------------------------
Goodwill, net of amortization 2,097 70 78
Other intangible assets, net of
amortization 2,437 22 23
Other assets 681 361 332
- -----------------------------------------------------------------------------
$11,175 $3,648 $3,629
- -----------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 784 $ 172 $ 240
Accounts payable and accrued
liabilities 1,247 653 635
Accrued income taxes payable 158 50 115
- -----------------------------------------------------------------------------
Total current liabilities 2,189 875 990
- -----------------------------------------------------------------------------
Long-term debt 3,242 409 388
Employee benefits payable 623 432 415
Other liabilities 1,550 352 315
Minority interest 26 19 19
Commitments and contingencies
Stockholders' equity:
$2.75 Cumulative convertible preferred
stock (note h) -- 73 110
Common stock: shares
issued -- 242,078,367 605 492 492
Additional paid-in capital 1,939 139 119
Retained earnings 1,343 1,284 1,240
- -----------------------------------------------------------------------------
3,887 1,988 1,961
Less: Treasury stock (note i) 226 286 304
Less: ESOP shares 127 132 133
Accumulated other comprehensive income 11 (9) (22)
- -----------------------------------------------------------------------------
Total stockholders' equity 3,545 1,561 1,502
- -----------------------------------------------------------------------------
$11,175 $3,648 $3,629
- -----------------------------------------------------------------------------
See notes to consolidated financial statements.
14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
(A) These interim financial statements are unaudited, but, in the
opinion of management, all adjustments, which are of a normal
recurring nature, have been made to present fairly the company's
financial position, results of operations and cash flows. Certain
prior year amounts in the Statements of Cash Flows have been
restated to conform to current year presentation. These financial
statements should be read in conjunction with the financial
statements, accounting policies and the notes included in the
company's annual report for the year ended December 31, 1998.
(B) The company is a party in various government enforcement and private
actions associated with former waste disposal sites and is also involved
in potential remediations at some of its manufacturing facilities. At
September 30, 1999, the reserves for remediation were $172 million,
compared to $131 million at December 31, 1998. The 1999 amount includes
$49 million of reserves for remediation related to Morton. The company
is in the midst of lawsuits over insurance coverage for environmental
liabilities. It is the company's practice to reflect environmental
insurance recoveries in the results of operations for the quarter in
which litigation is resolved through settlement or other appropriate
legal process. Recoveries typically determine coverage for both past
and future environmental spending. In the first nine months of 1999 and
1998 $10 million, and $9 million, respectively, were charged to earnings
before tax for environmental remediation. In the 1999 period the
company recorded income before tax of $22 million for remediation
related insurance recoveries. The 1999 and 1998 charges include the
aggregation of several small environmental accruals.
During 1996, the U.S. EPA notified Morton of possible irregularities in
water discharge monitoring reports filed by the Moss Point, Mississippi
plant in early 1995. Morton retained an outside law firm to investigate,
and it was confirmed that such reports had been falsified over a period
of years. Other environmental problems at the plant were also identified,
and the investigation has been expanded to address the additional issues.
The company has been served with a draft multi-count complaint and grand
jury subpoenas seeking documents related to wastewater discharge and
groundwater monitoring reporting at Moss Point. Morton has furnished
the requested documents, and is cooperating with the environmental
authorities. As a result of these irregularities and possible violations,
the company may be exposed to material fines, penalties, and remedial
expenses, but is unable to determine the ultimate resolution.
In addition to accrued environmental liabilities, the company has
reasonably possible loss contingencies relating to environmental
matters of approximately $148 million. This amount does not include
reasonably possible loss contingencies related to certain Morton
sites as these contingencies have not yet been fully assessed.
The company has also identified other sites, including its larger
manufacturing facilities in the United States, where future
environmental remediation expenditures may be required, but these
expenditures are not reasonably estimable at this time. The company
believes that these matters, when ultimately resolved, which may be
over the next decade, will not have a material adverse effect on the
consolidated financial position of the company, but could have a
material adverse effect on consolidated results of operations in any
given quarter.
(C) The company and its subsidiaries are parties to litigation arising
out of the ordinary conduct of its business. Recognizing the
amounts reserved for such items and the uncertainty of the outcome,
it is the company's opinion that the resolution of all pending
lawsuits and claims will not have a material adverse effect,
individually or in the aggregate, upon the results of operations and
the consolidated financial position of the company. The company had
been the subject of an investigation by U.S. Customs into the
labeling of some products imported into the U.S. from some of the
company's non-U.S. locations. In the first quarter of 1999 the
company reached a tentative settlement and agreed to pay $3 million
subject to further government approval. This non-tax deductible
tentative settlement was charged to income in the quarter. In 1998,
subsequent to the sale of the AtoHaas joint venture, the buyer
asserted a claim against the company related to the value of certain
joint venture assets. In the second quarter of 1999 the company
settled this matter for approximately $22 million ($14 million,
after-tax).
(D) In the third quarter of 1998, the board of directors declared a
three-for-one split of the company's common stock. The stock split
was effected in the form of a 200 percent common stock dividend paid
on September 1, 1998 to stockholders of record on August 7, 1998.
The par value of the common stock remained $2.50 per share. Also
during the third quarter of 1998, the company retired 39 million
treasury shares. As a result of these transactions, the company
reclassified $296 million from retained earnings to common stock.
This amount represents the total par value of new shares issued.
Amounts per share, numbers of common shares and capital accounts
have been restated to give retroactive effect to the stock split.
(E) On June 21, 1999, the company acquired Morton for cash of $3 billion
and the issuance of 45,121,227 shares of common stock, for a total
transaction value of approximately $4.9 billion, including the
assumption of $272 million of debt. The cash portion of the
acquisition was financed primarily through a combination of
commercial paper and the later issuance of longer term instruments
(see below). As of September 30, 1999, $32 million had not yet been
paid to former Morton shareholders pending the tender of their
shares. This is reflected in accounts payable and accrued
liabilities. Accounted for by the purchase method, the financial
statements reflect the allocation of the purchase price based on
estimated fair values at the date of acquisition, pending final
determination of the fair value of certain acquired assets and
liabilities. The allocation as of September 30, 1999, has resulted
in acquired goodwill of $1.5 billion, which is being amortized on a
straight-line basis over 40 years. Based on an independent
appraisal, $105 million of the purchase price was allocated to
in-process research and development, which was recorded as a charge
in the second quarter of 1999.
15
In late January 1999 the company acquired all of the outstanding shares
of LeaRonal for approximately $460 million. LeaRonal develops and
manufactures specialty chemical processes used in the manufacture of
printed circuit boards, semiconductor packaging and for electronic
connector plating and also provides processes for metal-finishing
applications. The acquisition, financed primarily through
commercial paper, was accounted for using the purchase method. The
financial statements reflect the allocation of the purchase price
based on estimated fair values at the date of acquisition, later
analysis of certain acquired assets and liabilities and the effects
of plans now under way to integrate the two companies, including
asset write-downs and severance costs. The allocation as of
September 30, 1999, has resulted in acquired goodwill of
approximately $210 million, which is being amortized on a
straight-line basis over 40 years. The results of LeaRonal have
been included in the consolidated financial statements since the
acquisition date.
A provision for restructuring of $30 million was recognized in the
quarter for costs related both to the integration of Morton and the
company's redesign of its selling and administrative infrastructure.
This after-tax charge of $19 million, or $.09 per share, is
primarily composed of severance costs for approximately 500 people.
The charge is net of certain after-tax pension settlement and
curtailment gains. Further settlement gains will be realized over
the next year to eighteen months. An additional $32 million
severance-related reserve associated primarily with staff reductions
of approximately 350 people in the acquired company was recorded as
an increase to goodwill. Further charges are expected in the future
as integration plans develop.
Restructuring reserve activity for the quarter ended September 30, 1999
was as follows:
Beginning balance $ --
Provision charged to earnings 30
Provision to goodwill 32
Payments made during the quarter (16)
Other changes to reserve --
-----
Ending balance $ 46
-----
The following unaudited pro forma information presents the results of
operations of the Company as if the above acquisitions had taken
place on January 1, 1998 and excludes the write-off of purchased
in-process research and development of $105 million:
Nine Months Ended
----------------------
(In millions, except per SEPT. 30, Sept. 30,
share amounts) 1999 1998
--------- ---------
Net sales $4,974 $4,853
Net earnings 245 297
Diluted earnings per share $ 1.12 $ 1.29
These pro forma results of operations have been prepared for comparative
purposes only and do not purport to be indicative of the results of
operations which actually would have resulted had the acquisitions
occurred on the date indicated, or which may result in the future.
On July 6, 1999, the company issued $2 billion of long-term debt,
refinancing a portion of the commercial paper borrowings used as
initial financing for the above transactions. These debt securities
include $500 million of five-year 6.95% notes, $500 million of ten-
year 7.40% notes and $1 billion of thirty-year 7.85% debentures.
Each series of securities will mature on July 15 of its respective
year of maturity with interest payable semiannually on January 15
and July 15 of each year, beginning January 15, 2000. The
securities are senior unsecured obligations of the company and will
rank equally with all other senior unsecured indebtedness. The
securities contain restrictions similar to the company's other
long-term debt. There are no restrictions on the payment of
dividends.
(F) Inventories consist of:
(Millions of dollars)
SEPT. 30, Dec. 31, Sept. 30,
1999 1998 1998
--------- -------- ---------
Finished products and work in process $696 $330 $307
Raw materials and supplies 188 97 107
---- ---- ----
Total inventories $884 $427 $414
---- ---- ----
(G) The components of comprehensive income are as follows
(millions of dollars):
Quarter Ended
September 30,
----------------
1999 1998
---- ----
Net earnings $58 $86
Other comprehensive income, net of tax:
Foreign currency translation
adjustment 31 4
---- ----
Comprehensive income $89 $90
---- ----
Nine Months
Ended
September 30,
----------------
1999 1998
---- ----
Net earnings $159 $365
Other comprehensive income, net of tax:
Foreign currency translation
adjustment 20 (6)
---- ----
Comprehensive income $179 $359
---- ----
(H) The number of preferred shares issued and outstanding were:
September 30, 1999 ---
December 31, 1998 1,457,956
September 30, 1998 2,198,590
(I) The number of common treasury shares were:
September 30, 1999 23,256,038
December 31, 1998 29,369,853
September 30, 1998 31,148,635
Dithane and Goal are trademarks of Rohm and Haas Company.
16
APPENDIX TO EXHIBIT 20
(Pursuant to Part 232.304(a) of Regulation S-T)
Graphic Description/Cross Reference
- ----------- -----------------------------------------------------------
Cover Illustration and the words "Third Quarter Report 1999"
Pie Charts Description included in introduction to Exhibit 20
(not incorporated by reference)