EXHIBIT 99.1
FOR IMMEDIATE RELEASE Contact:
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Tuesday, August 3, 2004 Kenneth M. McHugh
Vice President and Controller
International Specialty Products Inc.
(973) 872-4200
INTERNATIONAL SPECIALTY HOLDINGS ANNOUNCES
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SECOND QUARTER 2004 RESULTS
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Wayne, NJ -- International Specialty Holdings Inc. (the "Company"), a
wholly-owned subsidiary of International Specialty Products Inc. ("ISP"),
reported today second quarter 2004 net income of $6.9 million compared with net
income of $16.7 million in the second quarter of 2003. The lower results for the
second quarter of 2004 were attributable to investment losses partially offset
by significantly higher operating income.
Operating income for the second quarter of 2004 was $45.4 million, an
increase of 22% compared with $37.1 million in the second quarter of 2003. The
higher operating income includes improved results in the Company's Specialty
Chemicals and Mineral Products business segments, partially offset by losses in
the Industrial Chemicals segment.
Operating income for the Specialty Chemicals segment improved 23% to
$41.6 million compared with $33.7 million last year. The improved results were
primarily attributable to the personal care and performance chemicals product
lines, mainly due to higher unit volumes. Operating income in the second quarter
of 2004 was also favorably impacted by the weaker U.S. dollar and by the
contribution to income from the three specialty chemical niche acquisitions made
during the first quarter of 2004.
The Industrial Chemicals segment recorded an operating loss of $1.8
million in the second quarter of 2004 compared with an operating loss of $1.4
million in last year's second quarter. The results were attributable to the
adverse impact of the stronger Euro on European-based manufacturing costs,
partially offset by an improved product mix and manufacturing efficiencies.
Operating income for the Mineral Products business segment was $5.6
million in the second quarter of 2004 compared with $4.7 million in last year's
second quarter. The 19% improvement from last year's second quarter was due to
higher unit volumes, partially offset by increased operating expenses.
Net sales for the second quarter of 2004 of $261.7 million represented
the highest second quarter sales in the Company's history and were 14% higher
than sales of $229.5 million in the same period last year. The increase in sales
resulted primarily from higher unit volumes in all business segments and from
the contribution to Specialty Chemicals sales from the three acquisitions made
during the first quarter of 2004. The favorable impact of the weaker U.S.
dollar, primarily in Europe, also benefited sales.
Interest expense for the second quarter of 2004 was $18.7 million
compared with $19.1 million in the second quarter of 2003. Investment losses in
the second quarter of 2004 were $13.4 million compared with investment income of
$6.0 million in the same period last year. The investment loss in the second
quarter of 2004 includes a $5.5 million other than temporary impairment charge
related to an available-for-sale equity security held in the Company's
investment portfolio. Other expense, net, for the quarter was $2.8 million
compared with other income, net, of $1.3 million in the second quarter of 2003,
with the higher expense due primarily to unfavorable foreign exchange.
-continued-
FIRST HALF RESULTS
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For the first half of 2004, the Company recorded net income of $35.7
million compared with net income of $38.3 million in the first half of 2003. The
improved results for the first half of 2004 were attributable to record high
operating income, partially offset by lower investment income. First half 2003
results included a $1.0 million after-tax charge for the cumulative effect of a
change in accounting principle from the adoption of Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement Obligations."
Results for the first half of 2004 set Company records for net sales
and operating income. Operating income for the first half of 2004 was $94.4
million compared with $71.8 million in the first half of 2003, which included a
charge of $1.5 million for stock option payments related to ISP's going private
transaction. Excluding such charge, operating income increased 29% to $94.4
million from $73.3 million in the first half of 2003 (see attached
reconciliation of non-GAAP financial measures). The higher operating income was
attributable to significantly higher results in the Company's Specialty
Chemicals business segment and lower losses in the Industrial Chemicals segment,
partially offset by lower results in the Mineral Products segment.
On a comparable basis, excluding the aforementioned charge in last
year's first half, operating income for the Specialty Chemicals segment improved
29% to $87.8 million compared with $68.0 million last year. The improved results
were primarily attributable to the personal care, performance chemicals,
pharmaceutical and beverage product lines, mainly due to higher unit volumes
partially offset by higher manufacturing costs. Operating income in the first
half of 2004 was also favorably impacted by the weaker U.S. dollar and by the
contribution to income from the three acquisitions made during the first quarter
of 2004.
-continued-
The Industrial Chemicals segment recorded an operating loss of $1.6
million in the first half of 2004 compared with an operating loss of $4.1
million in last year's first half. The lower operating losses were attributable
to an improved product mix and manufacturing efficiencies, partially offset by
the adverse impact of the stronger Euro on European-based manufacturing costs.
Operating income for the Mineral Products business segment was $8.1
million in the first half of 2004 compared with $8.7 million in the same period
last year. The decline from last year's first half was primarily due to higher
operating and manufacturing expenses, largely offset by the favorable impact of
higher unit volumes.
Record net sales for the first half of 2004 were $528.6 million
compared with $462.1 million in the same period last year. The 14% increase in
sales resulted primarily from higher unit volumes in all business segments and
from the contribution to Specialty Chemicals sales from the three acquisitions
made during the first quarter of 2004. The favorable impact of the weaker U.S.
dollar, primarily in Europe, also benefited sales.
Interest expense for the first half of 2004 was $38.5 million compared
with $39.0 million in the first half of 2003. Investment income in the first
half of 2004 was $2.9 million compared with $26.9 million in the same period
last year. Investment income in the first half of 2004 includes a $5.5 million
other than temporary impairment charge related to an available-for-sale equity
security held in the Company's investment portfolio. Other expense, net, for the
first half of 2004 was $4.7 million compared with $0.1 million in the first half
of 2003, with the higher expense due primarily to unfavorable foreign exchange.
At the end of the second quarter of 2004, the total debt for the
Company was $886.1 million and cash and marketable securities were $383.5
million. The Company's wholly-owned operating subsidiary, ISP Chemco Inc., had
total debt of $688.1 million and cash and cash equivalents of $25.2 million as
of the end of
-continued-
the second quarter of 2004. Capital expenditures and acquisitions for the
second quarter and first half of 2004 were $18.0 million and $58.3 million,
respectively, and depreciation and amortization expense was $16.5 million and
$32.3 million, respectively.
* * * * * *
International Specialty Holdings Inc. is a leading multinational
manufacturer of specialty chemicals and mineral products.
This press release contains "forward looking statements" within the
meaning of the federal securities laws with respect to the Company's financial
results and future operations and, as such, concerns matters that are not
historical facts. These statements are subject to risks and uncertainties that
could cause actual results to differ materially from those expressed in such
statements. Important factors that could cause such differences are discussed in
the Company's filings with the U.S. Securities and Exchange Commission and are
incorporated herein by reference.
-continued-
INTERNATIONAL SPECIALTY HOLDINGS INC.
SALES AND EARNINGS DATA (UNAUDITED)
(MILLIONS)
Second Quarter Six Months
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2004 2003 2004 2003
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Net sales................................... $ 261.7 $ 229.5 $ 528.6 $ 462.1
Cost of products sold....................... (166.8) (147.2) (335.6) (299.8)
Selling, general and administrative......... (49.1) (45.0) (98.1) (88.7)
Other operating charges..................... - - - (1.5)
Amortization of intangible assets........... (0.4) (0.2) (0.5) (0.3)
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Operating income............................ 45.4 37.1 94.4 71.8
Interest expense............................ (18.7) (19.1) (38.5) (39.0)
Investment income (loss).................... (13.4) 6.0 2.9 26.9
Other income (expense), net................. (2.8) 1.3 (4.7) (0.1)
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Income before income taxes and cumulative
effect of change in accounting principle.. 10.5 25.3 54.1 59.6
Income taxes................................ (3.6) (8.6) (18.4) (20.3)
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Income before cumulative effect of change
in accounting principle................... 6.9 16.7 35.7 39.3
Cumulative effect of change in accounting
principle, net of income tax benefit
of $0.6................................... - - - (1.0)
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Net income.................................. $ 6.9 $ 16.7 $ 35.7 $ 38.3
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-continued-
INTERNATIONAL SPECIALTY HOLDINGS INC.
SALES AND EARNINGS DATA (UNAUDITED) - (CONTINUED)
(MILLIONS)
Second Quarter Six Months
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2004 2003 2004 2003
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Supplemental Business Segment Information:
Net sales:
Specialty Chemicals..................... $ 178.1 $ 159.0 $ 364.3 $ 316.9
Industrial Chemicals.................... 49.1 44.4 97.8 93.5
Mineral Products........................ 34.5 26.1 66.5 51.7
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Net sales.................................... $ 261.7 $ 229.5 $ 528.6 $ 462.1
========= ========= ========= =========
Operating income:
Specialty Chemicals..................... $ 41.6 $ 33.7 $ 87.8 $ 66.9
Industrial Chemicals.................... (1.8) (1.4) (1.6) (4.1)
Mineral Products........................ 5.6 4.7 8.1 8.7
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Total segment operating income.......... 45.4 37.0 94.3 71.5
Unallocated corporate office............ - 0.1 0.1 0.3
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Operating income............................. $ 45.4 $ 37.1 $ 94.4 $ 71.8
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Depreciation and amortization of
intangible assets....................... $ 16.5 $ 15.1 $ 32.3 $ 30.1
Capital expenditures and acquisitions...... $ 18.0 $ 23.4 $ 58.3 $ 33.0
-continued-
INTERNATIONAL SPECIALTY HOLDINGS INC.
SALES AND EARNINGS DATA (UNAUDITED) - (CONTINUED)
(MILLIONS)
Six Months
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2004 2003
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Reconciliation of non-GAAP financial measures (1):
Operating income per GAAP............................... $ 94.4 $ 71.8
Non-GAAP adjustments:
Add: Other operating charges(2).................... - 1.5
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Operating income, as adjusted........................... $ 94.4 $ 73.3
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Supplemental Business Segment Information:
Operating income:
Operating income per GAAP-Specialty Chemicals...... $ 87.8 $ 66.9
Non-GAAP adjustments............................... - 1.1
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Operating income-Specialty Chemicals as adjusted... $ 87.8 $ 68.0
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Operating loss per GAAP-Industrial Chemicals....... $ (1.6) $ (4.1)
Non-GAAP adjustments............................... - 0.2
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Operating loss-Industrial Chemicals as adjusted.... $ (1.6) $ (3.9)
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Operating income per GAAP-Mineral Products......... $ 8.1 $ 8.7
Non-GAAP adjustments............................... - 0.2
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Operating income-Mineral Products as adjusted...... $ 8.1 $ 8.9
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Total segment operating income as adjusted......... $ 94.3 $ 73.0
Unallocated corporate office per GAAP.............. 0.1 0.3
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Operating income, as adjusted...................... $ 94.4 $ 73.3
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(1) As used herein, "GAAP" refers to U.S. generally accepted accounting
principles. We use non-GAAP financial measures to eliminate the effect
of certain other operating gains and charges on reported operating
income. Management believes that these financial measures are useful to
bondholders and financial institutions because such measures exclude
transactions that are unusual due to their nature or infrequency and
therefore allow bondholders and financial institutions to more readily
compare the Company's performance from period to period. Management uses
this information in monitoring and evaluating the Company's performance
and the performance of individual business segments.
(2) Non-GAAP adjustments for the first six months of 2003 represent an other
operating charge of $1.5 million for stock option payments related to
ISP's going private transaction.