Exhibit 99.1
Crompton Reports First Quarter Results
MIDDLEBURY, Conn.--(BUSINESS WIRE)--April 29, 2003--Crompton
Corporation (NYSE:CK) reported today first quarter net earnings of
$5.8 million, or five cents per share, compared to a net loss of
$292.2 million, or $2.52 per diluted share, in the first quarter of
2002.
Earnings for the first quarter of 2003 included after-tax special
charges for antitrust investigation costs ($5.2 million), previously
announced facility closures, severance and related costs ($0.5
million), and a cumulative effect of accounting change for
implementing FASB Statement No. 143 "Accounting for Asset Retirement
Obligations" ($0.4 million). The net loss for the first quarter of
2002 included a cumulative effect of accounting change for goodwill
impairment of $299 million. Net earnings before such special items
were $11.9 million, or 10 cents per share, in the first quarter of
2003 versus $6.8 million, or six cents per share, in the first quarter
of 2002. Earnings before special items is not a measure of performance
calculated in accordance with generally accepted accounting principles
(GAAP). See the attached supplementary schedules for a reconciliation
of the non-GAAP financial measures referred to herein to their most
directly comparable GAAP financial measures.
First quarter sales of $649.8 million were one percent above the
prior year. Adjusting for divested operations, sales increased seven
percent as increased unit volume of four percent and favorable foreign
currency translation of five percent more than offset the impact of
lower selling prices of two percent.
"We are pleased with our first quarter results, especially
considering the continued sluggish economic environment," said Vincent
A. Calarco, chairman, president and chief executive officer. "We
benefited from an increase in unit volume, lower operating costs, and
favorable foreign currency translation, while higher raw material
costs and lower selling prices in certain businesses were partial
offsets."
"We are also pleased with last week's announcement of the
agreement to sell our OrganoSilicones business to General Electric
Company. The purchase price under the agreement is for $645 million in
cash, plus the GE Specialty Chemicals business with an agreed upon
value of $160 million, and an earn-out of $105 million at a minimum
and $250 million at a maximum payable quarterly over a three-year
period. The closing of the transaction is subject to regulatory
approvals and certain other conditions. On a pro forma basis, assuming
the minimum earn-out, the transaction would have been accretive to
2002 earnings by $.03 per share. For 2003, the transaction appears at
this time to be slightly dilutive, however, we do not expect it to
impact our overall earnings outlook for the year."
First quarter operating results for the company's reporting
segments are summarized as follows:
Polymer Products
Polymer additives sales of $301.6 million were up 13 percent from
the prior year as a result of an increase in unit volume of nine
percent and favorable foreign currency translation of six percent,
partially offset by a two percent decline in selling prices. Plastic,
urethane and petroleum additives sales rose 17 percent, 19 percent and
five percent, respectively, due primarily to increased demand and
favorable foreign currency translation. Rubber additives sales were up
three percent due mainly to increased demand and favorable foreign
currency translation, offset in part by lower selling prices.
Operating profit of $13.5 million was up 16 percent from the prior
year due mainly to higher unit volume and reduced manufacturing costs,
offset in part by increased raw material costs and lower selling
prices.
Polymers sales of $68.2 million were up one percent from the prior
year as a three percent increase in unit volume and favorable foreign
currency translation of three percent, more than offset a five percent
decline in selling prices. EPDM sales were down eight percent due
mainly to lower selling prices resulting from industry overcapacity.
Urethanes sales were up 11 percent due primarily to increased demand
and favorable foreign currency translation. Operating profit of $9.3
million was up seven percent from the prior year due primarily to
increased unit volume and the absence of unfavorable prior year
variances attributable to reduced plant throughput, offset in part by
reduced selling prices and higher raw material costs in the EPDM
business.
Polymer processing equipment sales of $41.1 million were down 17
percent from the first quarter of 2002 as depressed capital equipment
demand was offset in part by favorable foreign currency translation of
four percent and improved selling prices of two percent. Despite lower
sales, operating profit of $1.1 million was $1.0 million higher than
the prior year mainly as a result of lower operating costs and
improved selling prices. The backlog at the end of March was $76
million, equal to year-end 2002.
Specialty Products
OrganoSilicones sales of $117.8 million were up four percent from
the prior year due to favorable foreign currency translation of seven
percent and higher unit volume of three percent, partially offset by a
six percent decline in selling prices. Operating profit of $14.0
million was up 98 percent from the prior year mainly as a result of
increased unit volume and lower costs, offset in part by reduced
selling prices.
Crop protection sales of $60.4 million were up 15 percent from the
first quarter of 2002 due to a nine percent increase in unit volume
mainly attributable to increased domestic and European demand and
favorable foreign currency translation of six percent. Operating
profit of $19.7 million was up 36 percent from the prior year
primarily as a result of increased unit volume and higher joint
venture equity income of $3.3 million, offset in part by an
unfavorable sales mix.
Other sales of $64.4 million were 34 percent lower than the prior
year due primarily to the divestiture of the industrial specialties
business in June 2002. Sales for the remaining refined products
business were up 12 percent due to favorable foreign currency
translation, higher selling prices and increased unit volume.
Operating profit of $0.4 million was down 87 percent from the first
quarter of 2002 due mainly to the divestment of industrial specialties
and higher refined products raw material costs that were partially
recovered through increased selling prices.
The Company's news releases and other information, including
certain financial and statistical information presented during its
periodic earnings conference calls, are available on the Company's
investor relations page at www.cromptoncorp.com. The Company will
conduct its first quarter conference call at 1:30 p.m. Eastern Time on
April 29, 2003. The telephone number is 719-457-2629. Live audio is
available on the Company's investor relations page at
www.cromptoncorp.com. Replay of the conference call will be available
for two weeks beginning at 5:00 p.m. Eastern Time on April 29, 2003,
by calling 719-457-0820, access code 497118.
Crompton Corporation is a $2.5 billion global producer and
marketer of specialty chemicals and polymer products and equipment.
Additional information concerning Crompton Corporation is available at
www.cromptoncorp.com.
Adjusted Financial Measures
The Company uses certain non-GAAP financial measures which
eliminate the effect of certain special items. One non-GAAP financial
measure used is net earnings excluding antitrust investigation costs
and facility closures, severance and related costs. These special
items may be recurring. Another non-GAAP financial measure used is
operating results excluding the impact of the Company's divested
operations.
The Company believes the non-GAAP financial measures used in this
earnings release provide useful information to both management and
investors by excluding certain costs and the impact of divested
operations that the Company believes are not indicative of its core
operating results. The Company believes that these special items may
obscure trends that are important in evaluating the Company's
continuing operating activities. In addition, since the Company has
historically reported such non-GAAP financial measures to the
investment community, the Company believes that the inclusion of such
measures provides consistency in its financial reporting. Further,
these non-GAAP results are one of the primary indicators that
management uses for planning and forecasting in future periods.
Readers should not consider these non-GAAP financial measures in
isolation or as a substitute for the Company's reported financial
results under GAAP. The attached supplementary schedules containing a
reconciliation of the non-GAAP financial measures to their most
directly comparable GAAP financial measures should be used as a
supplement to GAAP results to assist the reader in better
understanding the operational performance of the Company.
Supplementary schedules include the "Consolidated Statement of
Operations Adjusted for Special Items and Divested Operations,"
"Segment Sales and Operating Profit," and "Major Factors Affecting
Results."
Forward Looking Statements
Certain statements made in this release are forward-looking
statements that involve risks and uncertainties, including, but not
limited to, general economic conditions, the completion of the
announced transaction, the outcome and timing of antitrust
investigations to which the Company is subject, pension and other
post-retirement benefit plan assumptions, energy and raw material
prices and availability, production capacity, changes in interest
rates and foreign currency exchange rates, changes in technology,
market demand and customer requirements, the enactment of more
stringent environmental laws and regulations, and other risks and
uncertainties detailed in the Company's filings with the Securities
and Exchange Commission. These statements are based on our estimates
and assumptions and on currently available information. The
forward-looking statements include information concerning our possible
or assumed future results of operations, and the Company's actual
results may differ significantly from the results discussed.
Forward-looking information is intended to reflect opinions as of the
date this release was issued and such information will not necessarily
be updated by the Company.
CROMPTON CORPORATION
Consolidated Statements of Operations
First quarter ended 2003 and 2002
(In thousands, except per share data)
First Quarter
-------------------
2003 2002
--------- ---------
Net sales $ 649,751 $ 644,838
Cost of products sold 459,188 458,863
Selling, general and admin. 98,928 97,209
Depreciation and amortization 36,408 38,079
Research and development 18,438 20,218
Equity income (5,614) (2,264)
Facility closures, severance and
related costs 849 -
Antitrust investigation costs 8,489 -
--------- ---------
Operating profit 33,065 32,733
Interest expense 26,715 26,138
Other income, net (902) (2,293)
--------- ---------
Earnings before income taxes
and cumulative effect of
accounting change 7,252 8,888
Income taxes 1,005 2,133
--------- ---------
Earnings before cumulative
effect of accounting change 6,247 6,755
Cumulative effect of accounting change (401) (298,981)
--------- ---------
Net earnings (loss) $ 5,846 $(292,226)
========= =========
Basic earnings (loss) per common share:
Earnings before cumulative
effect of accounting change $ 0.05 $ 0.06
Cumulative effect of accounting
change - (2.63)
--------- ---------
Net earnings (loss) $ 0.05 $ (2.57)
========= =========
Weighted average shares
outstanding 114,146 113,274
========= =========
Diluted earnings (loss) per common share:
Earnings before cumulative
effect of accounting change $ 0.05 $ 0.06
Cumulative effect of accounting
change - (2.58)
--------- ---------
Net earnings (loss) $ 0.05 $ (2.52)
========= =========
Weighted average shares
outstanding 114,331 115,801
========= =========
CROMPTON CORPORATION
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
(In thousands of dollars)
March 31, December
2003 31, 2002
---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 25,441 $ 16,941
Accounts receivable 213,670 185,983
Inventories 477,547 460,116
Other current assets 94,204 114,094
---------- ----------
Total current assets 810,862 777,134
---------- ----------
NON-CURRENT ASSETS
Property, plant and equipment 936,141 942,516
Cost in excess of acquired net assets 585,170 584,633
Other assets 542,097 536,532
---------- ----------
$2,874,270 $2,840,815
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 6,537 $ 5,727
Accounts payable 321,743 276,133
Accrued expenses 230,928 267,849
Income taxes payable 123,057 116,111
Other current liabilities 16,966 15,670
---------- ----------
Total current liabilities 699,231 681,490
---------- ----------
NON-CURRENT LIABILITIES
Long-term debt 1,239,165 1,261,847
Postretirement health care liability 193,128 193,996
Other liabilities 505,230 503,599
STOCKHOLDERS' EQUITY
Common stock 1,192 1,192
Additional paid-in capital 1,045,393 1,048,304
Accumulated deficit (586,424) (586,555)
Accumulated other comprehensive loss (165,736) (200,426)
Treasury stock at cost (56,909) (62,632)
---------- ----------
Total stockholders' equity 237,516 199,883
---------- ----------
$2,874,270 $2,840,815
========== ==========
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
First quarter ended 2003 and 2002
(In thousands of dollars)
First Quarter
-------------------
Increase (decrease) to cash 2003 2002
- -------------------------------------------------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 5,846 $(292,226)
Adjustments to reconcile net earnings (loss) to
net cash provided by (used in) operations:
Cumulative effect of accounting change, net of
tax 401 298,981
Facility closures, severance and related costs 849 -
Antitrust investigation costs 8,489 -
Depreciation and amortization 36,408 38,079
Equity income (5,614) (2,264)
Changes in assets and liabilities, net:
Accounts receivable (23,259) (55,348)
Inventories (5,864) 29,696
Accounts payable 41,969 25,950
Other (14,859) (52,735)
--------- ---------
Net cash provided by (used in) operations 44,366 (9,867)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (14,639) (16,836)
Other investing activities (98) 323
--------- ---------
Net cash used in investing activities (14,737) (16,513)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments) proceeds on debt (24,829) 5,182
Proceeds from sale of accounts receivable 8,126 14,111
Dividends paid (5,715) (5,666)
Other financing activities 880 1,628
--------- ---------
Net cash (used in) provided by financing
activities (21,538) 15,255
--------- ---------
CASH
Effect of exchange rates on cash 409 (554)
--------- ---------
Change in cash 8,500 (11,679)
Cash at beginning of period 16,941 21,506
--------- ---------
Cash at end of period $ 25,441 $ 9,827
========= =========
SUPPLEMENTARY
SCHEDULE I
-------------
CROMPTON CORPORATION
Consolidated Statements of Operations Adjusted for Special Items and
Divested Operations
First quarter ended 2003 and 2002
(In thousands, except per share data)
The following supplementary schedules I, II and III contain a
reconciliation of the non-GAAP financial measures contained in this
earnings release to their most directly comparable GAAP financial
measures (see note (c) below).
First Quarter
----------------------------
Adjusted
2002
2003 2002 (b)
--------- --------- --------
Net sales $ 649,751 $ 644,838 $604,740
Cost of products sold 459,188 458,863 429,179
Selling, general and admin. 98,928 97,209 91,926
Depreciation and amortization 36,408 38,079 35,804
Research and development 18,438 20,218 19,070
Equity income (5,614) (2,264) (2,264)
--------- --------- --------
Operating profit before special items 42,403 32,733 $ 31,025
========
Interest expense 26,715 26,138
Other income, net (902) (2,293)
--------- ---------
Earnings before income taxes and
special items 16,590 8,888
Income taxes 4,645 2,133
--------- ---------
Earnings before after-tax special items 11,945 6,755
Facility closures, severance and
related costs (a) (519) -
Antitrust investigation costs (a) (5,179) -
Cumulative effect of accounting change (401) (298,981)
--------- ---------
Net earnings (loss) $ 5,846 $(292,226)
========= =========
Diluted earnings (loss) per common share:
Earnings before after-tax
special items $ 0.10 $ 0.06
========= =========
Net earnings (loss) $ 0.05 $ (2.52)
========= =========
(a) The pre-tax amounts of these special items are shown on the
"Consolidated Statements of Operations."
(b) Adjusted 2002 excludes the first quarter operating results of the
industrial specialties business (sold June 28, 2002).
(c) Readers should not consider the non-GAAP financial measures in
isolation or as a substitute for the Company's reported financial
results under GAAP. The supplementary schedules should be used as
a supplement to GAAP results to assist the reader in better
understanding the operational performance of the Company. For a
further explanation regarding the use of non-GAAP financial
measures, see the Adjusted Financial Measures section included on
page 3 of this release.
CROMPTON CORPORATION SUPPLEMENTARY
Segment Sales and Operating Profit SCHEDULE II
First quarter ended 2003 and 2002 -------------
(In thousands of dollars)
First Quarter
--------------------------
Adjusted
2002
2003 2002 (a)
-------- -------- --------
NET SALES
Polymer Products
Polymer Additives $301,574 $267,235 $267,235
Polymers 68,183 67,480 67,480
Polymer Processing Equipment 41,108 49,805 49,805
Eliminations (3,653) (3,319) (3,319)
-------- -------- --------
407,212 381,201 381,201
-------- -------- --------
Specialty Products
OrganoSilicones 117,779 113,756 113,756
Crop Protection 60,380 52,472 52,472
Other 64,380 97,409 57,311
-------- -------- --------
242,539 263,637 223,539
-------- -------- --------
Total net sales $649,751 $644,838 $604,740
======== ======== ========
OPERATING PROFIT
Polymer Products
Polymer Additives $ 13,513 $ 11,631 $ 11,631
Polymers 9,274 8,649 8,649
Polymer Processing Equipment 1,078 80 80
-------- -------- --------
23,865 20,360 20,360
-------- -------- --------
Specialty Products
OrganoSilicones 13,979 7,051 7,051
Crop Protection 19,651 14,470 14,470
Other 448 3,481 1,773
-------- -------- --------
34,078 25,002 23,294
-------- -------- --------
General corporate expense (15,540) (12,629) (12,629)
-------- -------- --------
42,403 32,733 $ 31,025
========
Facility closures, severance and
related costs (849) -
Antitrust investigation costs (8,489) -
-------- --------
Total operating profit $ 33,065 $ 32,733
======== ========
(a) Adjusted 2002 excludes the first quarter operating results of the
industrial specialties business (sold June 28, 2002).
CROMPTON CORPORATION SUPPLEMENTARY
Major Factors Affecting Results SCHEDULE III
First Quarter 2003 versus 2002 -------------
(In millions, except per share data)
The following table summarizes the major factors contributing to
the first quarter change in sales and after-tax earnings before
special items and cumulative effect of accounting change versus the
prior year:
First Quarter
--------------------------
After-
Net tax EPS
Sales Earnings (Diluted)
------- -------- ---------
2002 before special items * $644.8 $ 6.8 $0.06
Divested operations (40.1) (1.2) (0.01)
Unit volume/mix 22.9 5.7 0.05
Lower selling prices (12.3) (8.9) (0.08)
Foreign currency translation 34.5 2.8 0.02
Costs savings - 8.4 0.07
Raw materials/energy - (6.8) (0.06)
Absorption variances - 7.2 0.06
Other - (2.1) (0.01)
------- -------- ---------
2003 before special items * $649.8 $11.9 $0.10
======= ======== =========
* Refer to Supplementary Schedule I in this release.
CONTACT: Crompton Corporation
Investors:
William Kuser, 203/573-2213
or
Media:
Mary Ann Dunnell, 203/573-3034