Acetex reports earnings of $39.3 million for its initial 7 1/2 months ended Sept. 30, 1995.CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--November 22, 1995--Acetex Corporation announced today earnings determined under U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting of U.S. $39.3 million, cash flow of U.S. $40.4 million, and EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become (defined as operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. plus depreciation and amortization) of U.S. $65.1 million for the period from the the commencement of operations on Feb. 9, 1995 to Sept. 30, 1995. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight of U.S. $234.2 million were generated during the period from the sale of acetic acid acetic acid (əsē`tĭk), CH3CO2H, colorless liquid that has a characteristic pungent odor, boils at 118°C;, and is miscible with water in all proportions; it is a weak organic carboxylic acid (see carboxyl group). and derivative derivative: see calculus. derivative In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. products. Due to the uncertainty surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the ultimate number of common shares to be issued on conversion of the Special Shares, amounts per share have not been provided. "These improved results in comparison to prior years are the result of healthy markets for the company's products, together with significantly lower feedstock feed·stock n. Raw material required for an industrial process. Noun 1. feedstock - the raw material that is required for some industrial process raw material, staple - material suitable for manufacture or use or finishing costs for methanol methanol, methyl alcohol, or wood alcohol, CH3OH, a colorless, flammable liquid that is miscible with water in all proportions. Methanol is a monohydric alcohol. It melts at −97. ," stated Brooke Brooke , Rupert 1887-1915. British poet known for his war poetry suffused with a romantic patriotic quality. Noun 1. Brooke - English lyric poet (1887-1915) Rupert Brooke N. Wade, chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Acetex Corporation. The company is now experiencing a narrowing of margins as product prices decline in the wake of the very substantial decline in methanol costs and as a result of the general softening softening /sof·ten·ing/ (sof´en-ing) malacia. softening a change of consistency, with loss of firmness or hardness. in chemical markets. In October October: see month. , 1995, the company refinanced its bank debt and vendor financing Vendor Financing The lending of money by a company to one of its customers so that the customer can buy products from it. By doing this, the company increases its sales even though it is basically buying its own products. through the issuance of U.S. $180 million of Senior Secured Notes due in 2003. The refinancing Refinancing An extension and/or increase in amount of existing debt. represented an important step forward in improving the liquidity and flexibility of the company because it eliminates the amortization obligation inherent in bank debt and positions the company exceptionally well for future growth. The company's production facilities located at Pardies, France, are presently shut down for five weeks to complete a planned five-year major maintenance turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. . Production at the Pardies facility will resume in mid-December Noun 1. mid-December - the middle part of December period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" Dec, December - the last (12th) month of the year . Acetex is a Canadian-based global chemical company which on Feb. 9, 1995 completed the acquisition of the acetyls division of Paris based Rhone-Poulenc. Acetex's special warrants are listed for trading on the Alberta Stock Exchange Alberta Stock Exchange See Canadian Venture Exchange (CDNX). under the symbol "ATX See ATX motherboard. (hardware, standard) ATX - An open PC motherboard specification by Intel. ATX is a development of the Baby AT specification with the motherboard rotated 90 degrees in the chassis. ." -0-
Acetex Corporation
Financial and Operating Highlights
Selected Financial Information
(U.S. $'000s)
(unaudited)
Period from
Three Months Ended Feb. 9, 1995 to
Sept. 30, 1995 Sept. 30, 1995
Net sales $ 77,715 $ 234,177 Net income 7,674 39,265 Cash generated from operations(1) 17,201 40,360 Cash position at end of period 31,958 31,958 EBITDA (2) 24,454 65,105 Long term debt at end of period 180,000 180,000 (1) Before changes in non-cash working capital (2) Defined as Operating Income plus depreciation and amortization Production Volume Information (tonnes) Production Volumes Acetic acid 76,000 205,000 VAM 36,000 93,000 Acetic Acid Derivatives 18,000 51,000
Acetex Corp.
Consolidated Statement of Cash Flow
(U.S. $000s, unaudited)
Three Months Ended Period From
Sept. 30, 1995 Feb. 9, 1995-Sept. 30, 1995
Cash provided by
(used in):
Operating activities
Net income $ 7,674 $ 39,265
Charges and credits to
income not involving cash
Depreciation and amortization 4,478 12,000
Pension expense 125 407
Unrealized foreign exchange
loss (gain) 4,239 (16,489)
Deferred tax 819 5,457
Income from equity investment (134) (280)
17,201 40,360
Changes in working capital
excluding cash (1,492) 2,670
15,709 43,030
Investing Activities
Acquisition of acetic acid
business
Acquisition of working
capital excluding cash - (21,441)
Acquisition of property,
plant and equipment - (160,984)
Acquisition of intangible assets - (58,810)
Acquisition of deferred tax
asset - (2,211)
Equity investment - (4,042)
Acquisition of other assets - (3,953)
Assumption of pension
obligation - 4,461
Net cash paid for acquisition - (246,980)
Purchase of property, plant
and equipment (2,306) (6,025)
Distribution from equity
investee 436 436
Purchase of other assets (120) (7,359)
(1,990) (259,928)
Financing Activities
Proceeds from issuance of
special shares - 1
Proceeds from issuance of
special warrants 2,847 63,665
Proceeds from long-term debt,
net of repayments (7,000) 185,000
Drawdown of capital lease
obligation (861) (1,182)
Spanish pension contribution 160 1,372
(4,854) 248,856
Increase in cash during the
period 8,865 31,958
Cash, beginning of period 23,093 -
Cash, end of period 31,958 31,958
NOTE: The accompanying notes are an integral part of this consolidated financial statement. Acetex Corp. Consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: Statements of Income (U.S. $000s) (Unaudited) Period from Nine Months Three Months Three Months Feb. 9, 1995 Ended Ended Sept. 30 Ended Sept. 30 to Sept. 30, Sept. 30, 1995 1994 1995 1994 Net sales $77,715 $ 64,482 $ 234,177 $ 169,677 Cost of goods sold Cost of goods sold The total cost of buying raw materials, and paying for all the factors that go into producing finished goods. cost of goods sold 50,857 56,202 164,096 148,183 Gross Profit 26,858 8,280 70,081 21,494 Selling, general and administrative costs administrative costs, n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. 5,259 3,750 12,389 10,964 Research and development expenses 541 1,469 1,418 4,185 Amortization of intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. 1,083 -- 2,761 -- Operating Income 19,975 3,061 53,513 6,345 Equity income 134 193 280 496 Interest expense (4,809) (785) (11,983) (2,400) Unrealized foreign exchange gain(loss) (4,239) -- 16,489 -- Realized foreign exchange gain 777 78 1,612 380 Income Before Income Taxes 11,838 2,547 59,911 4,821 Income tax Current income tax 3,345 832 15,189 1,755 Deferred income tax 819 -- 5,457 -- ----- ----- ------ ----- 4,164 832 20,646 12,770 Net Income $ 7,674 $ 1,715 $ 39,265 $ 3,066 NOTE: The accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. notes are an integral part of this consolidated financial statement Consolidated financial statement A financial statement that shows all the assets, liabilities, and operating accounts of a parent company and its subsidiaries. Acetex Corp. Consolidated Balance Sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. (U.S. $000s, unaudited) Assets Current Assets Current Assets Appearing on a company's balance sheet, it represents cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other assets that can be converted to cash within one year. Sept. 30, Feb. 9 1995 1995 Cash $ 31,958 $ 23,020 Accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying 69,283 42,716 Inventories, net 37,710 27,845 Prepaid expenses Prepaid Expense An asset that arises on a balance sheet because of the payment of something in advance (prepayment). Services for the payment will be received in the near future. and other current assets Other Current Assets A balance sheet item that includes the value of non-cash assets due within one year. Notes: Examples are things like prepaid expenses and accounts receivable. 10,853 3,175 149,804 96,756 Property, plant and equipment, net 174,862 166,572 Intangible assets, net 60,390 59,170 Other assets other assets Assets of relatively small value. For financial reporting purposes, firms frequently combine small assets into a single category rather than listing each item separately. 11,829 7,703 Deferred tax assets 2,745 2,211 Equity investment 4,213 4,042 403,843 336,454 Liabilities and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. Current liabilities Current Liabilities Usually appearing on a company's balance sheet, it represents the amount owed for interest, accounts payable, short-term loans, expenses incurred but unpaid, and other debts due within one year. Accounts payable 33,447 27,755 Accrued liabilities Accrued liabilities are liabilities which have occurred, but have not been paid or logged under accounts payable during an accounting period; in other words, obligations for goods and services provided to a company for which invoices have not yet been received. 68,614 24,540 102,061 52,295 Pension obligation 6,430 4,461 Long term debt 180,000 210,000 Obligation under capital lease 4,768 5,588 Deferred income tax 5,690 2,211 298,949 274,555 Shareholders' equity Share capital Issued and outstanding: Common shares (100 common shares) - - Special shares (50 special shares) 1 1 Special warrants (6,706 special warrants) 63,664 60,818 Lender LENDER, contracts. He from whom a thing is borrowed. 2. The contract of loan confers rights, and imposes duties on the lender. 1. The lender has the right to revoke the loan at his mere pleasure; 9 Cowen, R. 687; 8 Johns. Rep. 432; 1 T. R. 480; 2 Campb. Rep. warrants (three lender warrants) 1,080 1,080 Retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. 39,265 - Cumulative translation adjustment 884 - 104,894 61,899 403,843 336,454 NOTE: The accompanying notes are an integral part of this consolidated financial statement. Acetex Corporation Notes to consolidated financial statements (unaudited) Period ended Sept. 30, 1995
The consolidated financial statements have been prepared on a
historical cost basis in accordance with accounting principles
generally accepted in the United States. The consolidated financial
statements have been prepared from the books and records of the
company and its subsidiaries without audit. In the opinion of
management, however, all adjustments which are necessary to the fair
presentation of the results of the period have been made.
These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes for
the period from Feb. 9, 1995 to June 30, 1995, which have been
included in a registration statement filed with the U.S. Securities
and Exchange Commission on Oct. 31, 1995, relating to the company's
proposed offer to exchange all outstanding 9-3/4 percent senior
secured notes due 2003 for similar securities expected to be
registered under the United States Securities Act.
The 1994 comparative figures presented in the financial
statements were prepared without audit from the accounting records
of certain of the acetic acid and acetic acid derivative businesses of
Rhone-Poulenc S.A. located in France and Spain (the "acquired
business") and are not necessarily indicative of the results of
operations of the acquired business had it been operated on a
stand-alone basis. In addition, portions of certain items represent
allocations of those items by Rhone-Poulenc. As well, the company's
acquisition of the business was accounted for under the purchase
method of accounting, pursuant to which the assets and liabilities
of the business were adjusted to their estimated fair values and the
excess of cost over fair value of net assets was recorded as
intangible assets. For these reasons, the financial and operating
data for the company are not comparable to the acquired business.
Finally, the financial and operating results for any period less
than a year are not necessarily indicative of the results that may
be expected for a full year.
Management's discussion and analysis of financial condition and results of operations
On Feb. 9, 1995, Acetex Corp ("Acetex" or the "company")
acquired the outstanding share capital of Pardies Acetiques S.A.
("Pardies") and Erkol S.A., both former wholly-owned subsidiaries of
Rhone-Poulenc S.A. located in France and Spain. The company
financed the $270 million cost of the transaction (including
approximately $10 million of transaction expenses) with the
following sources of funds: (1) term loan borrowings of $131 million
by Pardies and $4 million by Transatlantique Chimie S.A., a French
wholly-owned subsidiary of Acetex, and a $25 million borrowing under
a revolving loan facility by Pardies, all under a secured bank loan
agreement; (2) the issuance by Transatlantique to Rhone-Poulenc of a
series of notes in the aggregate principal amount of $50 million and
(3) $60 million from the proceeds of a special warrants offering by
the company.
The company's revenues are derived primarily from merchant
market sales in Europe of its two principal products, acetic acid
and vinyl acetate monomer ("VAM"), as well as from merchant market
sales of acetic derivatives. The company's results of operations
are affected by a variety of factors, including variations in the
pricing of acetic acid and VAM and in the cost of its principal
feedstocks, methanol and natural gas.
Results of operations Net sales
For the quarter ended Sept. 30, 1995, net sales increased by 20
percent to $77.7 million from $64.5 million for the quarter ended
Sept. 30, 1994, for the acquired business due to a 25 percent
increase in average product prices and an 8 percent increase in the
value of the French franc relative to the U.S. dollar, despite a 10
percent reduction in sales volume. The company's average per tonne
selling prices for acetic acid and VAM increased to $750 from $525
and to $950 from $670, respectively.
Gross profit
Gross profit increased by 224 percent or $18.6 million, to $26.9
million from $8.3 million. The increase in gross profit was
primarily due to the significant increases in the company's average
per tonne selling prices for acetic acid and VAM. Gross profit also
increased due to reductions in methanol prices that resulted in the
company's average methanol price decreasing to $200 per tonne from
$360 per tonne. As a result, gross profit as a percentage of net
sales increased to 35 percent from 13 percent. Other costs remained
relatively unchanged on a cost per tonne basis.
Operating income
Operating income increased by 545 percent or $16.9 million to
$20.0 million from $3.1 million. The significant increase in
operating income was due to the increase in gross profit.
Foreign exchange gain/loss. The company recorded a foreign exchange loss of $3.5 million, which included an unrealized foreign exchange loss of $4.2 million, primarily due to the company's dollar denominated debt held by Pardies and Transatlantique. The company's principal operating subsidiary's functional currency is the French franc. As the value of the U.S. dollar increased during the quarter ended Sept. 30, 1995, the results for the period show a foreign exchange loss. Net income
As a result of the factors discussed above, net income increased
by 353% or $6.0 million to $7.7 million from $1.7 million for the
prior period.
Liquidity and Capital Resources
Cash provided by operations was $15.7 million for the quarter
ended Sept. 30, 1995, largely due to net income of $7.7 million. In
addition, Special Warrants were issued for proceeds of $3.5 million
which were offset by costs of $.7 million associated with issuing a
prospectus in Canada.
The company has entered into an agreement commencing March 18,
1996, which, for a period of two years, essentially stabilizes the
price of most of its natural gas purchases. In addition, the
company hedges its exposure to foreign exchange gains and losses
through short-term hedging agreements with Rhone-Poulenc.
The company expects to satisfy its cash requirements in the
future through internally generated cash and borrowings.
On Oct. 2, 1995, the company issued $180 million of 9.75% Senior
Secured Notes Due 2003. The proceeds from the notes were used to
retire the outstanding Bank Term loan of $130 million and the
Rhone-Poulenc vendor notes of $50 million.
As part of the refinancing, the company cancelled a series of
agreements which fixed the interest rate on a portion of the Bank
Term loans for a period of three years at an effective rate of
interest of 9.33% per annum, commencing Aug. 31, 1995. The cost
associated with this cancellation of approximately $2.5 million will
be included in the write-off of financing costs during the fourth
quarter of 1995.
On Oct. 2, 1995, the company also entered into an amended
Revolving Credit Agreement with its existing banks. This provides
for $35 million (or the equivalent amount in French francs) in
revolving loans which will be used for working capital needs,
capital expenditures and general corporate purposes. Drawings are
restricted to a maximum 70% of outstanding trade receivables and 50%
of inventories on a consolidated basis. Loans will bear interest at
a rate of LIBOR or PIBOR plus 1.75% and a commitment fee will be
paid of .75% per annum of the uncancelled undrawn portion of the
agreement. The Revolving Credit Agreement is secured by a security
interest on substantially all the real and personal property of
Transatlantique and Pardies, with such security being shared with
holders of the Notes and Banks having derivatives exposure to
Pardies.
Capital Expenditures
Capital expenditures incurred during the three months ended
Sept. 30, 1995, totaled $2.3 million. Total expenditures for 1995
are projected at $13.7 million of which $5 million relates to the
expansion of the acetic acid production capacity by approximately
70,000 tonnes at the Pardies plant and $5 million for the
debottlenecking currently underway at Tarragona. Total capital
expenditures in 1996 are anticipated to be approximately $16
million, with approximately $5 million related to ongoing operations
and $11 million associated with completion of the Pardies and
Tarragona projects.
CONTACT: Acetex Corporation, Calgary Jeannie Jeannie was a 30-minute Saturday morning animated series produced by Hanna-Barbera Productions from September 8, 1973 to August 30, 1975 on CBS. Based upon the 1960s sitcom I Dream of Jeannie Kerr Kerr , Walter 1913-1996. American playwright, writer, and drama critic for the New York Herald-Tribune (1951-1966) and the New York Times (1983-1996). In 1978 he won a Pulitzer Prize for criticism. , 604/688-9600 |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion