Arch Chemicals, Inc. Reports Fourth Quarter Earnings Per Share of $0.15 and a 17 Percent Increase in Earnings Per Share for the Full Year.Business Editors NORWALK Norwalk (nôr`wôk'). 1 City (1990 pop. 94,279), Los Angeles co., S Calif.; settled in the 1850s, inc. 1957. With the arrival (1875) of the Southern Pacific RR, it became a center for the dairy and logging industries, but , Conn.--(BUSINESS WIRE)--Jan. 27, 2000 Arch Chemicals Founded in 1999, Arch Chemicals (NYSE: ARJ) is a biocides company with over a billion dollars in annual sales. It consists of four divisions:
See: New York Stock Exchange :ARJ A compression program for backup archiving from ARJ Software, Inc., Norwood, MA (www.arjsoftware.com). Introduced in the early 1990s and created by Robert Jung (the RJ in ARJ), ARJ never achieved the popularity of PKZIP, although it is considered a worthy competitor. See JAR. ) announced that for the fourth quarter of 1999, earnings per share were $0.15 on net income of $3.5 million compared to a loss of $0.10 per share on a net loss of $2.3 million in 1998. Sales increased 10 percent to $185 million, compared to $168 million in 1998. 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. was $2.6 million in the fourth quarter of 1999 compared to an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $2.7 million in 1998. Net income for the full year 1999 was $42.0 million, or $1.82 per share, compared with $35.7 million, or $1.55 per share in 1998. For the full year 1999, sales increased 2 percent to $880 million compared to $863 million in 1998. Results for the fourth quarter and full year of 1999 include an extraordinary gain on the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt of $1.3 million after tax, or $0.06 per share. The results for the full year also include nonrecurring charges Nonrecurring Charge An expense occurring only once on a company's financial statement. Notes: An extraordinary item is an example of a nonrecurring charge. Also known as "nonrecurring item". of $1.5 million after tax, or $0.07 per share incurred in the third quarter. &uot;I am pleased to report that for the fourth consecutive quarter we have met our earnings per share expectations,&uot; said Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. E. Campbell Campbell, city, United States Campbell, city (1990 pop. 36,048), Santa Clara co., W Calif., in the fertile Santa Clara valley; founded 1885, inc. 1952. , Arch's Chairman and Chief Executive Officer. &uot;We now look forward to continued strong performance in 2000. We anticipate sales growth of 4 to 6 percent and earnings per share growth of 12 to 15 percent, providing our shareholders an exciting opportunity for near-term near-term adj. Of, for, or involving a short period of time in the near future. appreciation. We also remain confident about Arch's prospects for long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. sustainable growth,&uot; Mr. Campbell added. The following compares segment sales and operating income (including equity in earnings of affiliated companies Affiliated Companies A situation that occurs when one company owns a minority interest (less than 50%) in another company. Also refers to companies that are related to each other in some way. Notes: An affiliated company is sometimes referred to as a subsidiary. ) for the fourth quarter of 1999 and 1998: Microelectronic The miniaturization of electronic circuits. See chip. Chemicals Microelectronic Chemicals reported sales of $54.0 million and incurred an operating loss of $0.2 million for the fourth quarter of 1999 compared with sales and an operating loss of $51.1 million and $3.5 million, respectively, in 1998. The results for the quarter continue to be negatively impacted by the depressed Depressed A description of a market, security, or product that is experiencing weak demand and lowering prices. Notes: A depressed market, security, or product implies that prices and volume are low. There are many reasons for a depressed market, security, or product. results of the process chemicals product line. Process chemicals reported sales of $17.1 million and incurred an operating loss of $3.0 million compared to sales of $16.9 million and an operating loss of $2.1 million in 1998. Excluding the impact of the process chemicals product line, sales increased eight percent and operating income improved $4.2 million. The increase in operating income was due to higher sales, favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. joint venture performance and the absence of start-up Start-up The earliest stage of a new business venture. costs incurred in the prior year. Water Chemicals Water Chemicals reported sales of $42.2 million and an operating loss of $7.0 million for the fourth quarter of 1999 compared with sales and an operating loss of $32.3 million and $7.9 million, respectively, in 1998. The sales increase of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. thirty percent was equally driven by higher volumes in both the branded, bulk and export business, as well as increased sales from the distribution businesses. The improvement in operating results was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the higher sales and increased profits in the distribution businesses, partially offset by higher manufacturing costs due to the timing of a plant maintenance outage out·age n. 1. A quantity or portion of something lacking after delivery or storage. 2. A temporary suspension of operation, especially of electric power. . Performance Chemicals Performance Chemicals reported sales of $88.8 million and operating income of $11.6 million for the fourth quarter of 1999 compared with sales and operating income of $85.0 million and $9.3 million, respectively, in 1998. Performance urethanes and organics sales increased six percent due to higher contract manufacturing fees and new product introductions. Operating income increased significantly as the higher contract manufacturing fees and lower selling, general and administrative expenses more than offset higher raw material costs. Biocides sales were eight percent higher due to increased volumes in all markets. Operating income was higher as a result of the higher sales and lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. , partially offset by higher manufacturing costs. Hydrazine hydrazine (hī`drəzēn'), chemical compound, formula NH2NH2, m.p. 1.4°C;, b.p. 113.5°C;, specific gravity 1.011 at 15°C;. It is very soluble in water and soluble in alcohol. sales decreased five percent due to lower hydrazine hydrate hydrate (hī`drāt), chemical compound that contains water. A common hydrate is the familiar blue vitriol, a crystalline form of cupric sulfate. Chemically, it is cupric sulfate pentahydrate, CuSO4·5H2O. pricing and propellant pro·pel·lant also pro·pel·lent n. 1. Something, such as an explosive charge or a rocket fuel, that propels or provides thrust. 2. volumes which more than offset higher hydrazine hydrate volumes. The lower hydrazine hydrate pricing was caused by the poor economic conditions in Asia, which continue to negatively impact the business. Operating income decreased due to the lower pricing. Sulfuric acid sulfuric acid, chemical compound, H2SO4, colorless, odorless, extremely corrosive, oily liquid. It is sometimes called oil of vitriol. Concentrated Sulfuric Acid sales were comparable. Operating income was higher as a result of lower manufacturing costs and operating expenses. Other During the fourth quarter of 1999, Arch recorded a $2.2 million ($1.3 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) extraordinary gain on the extinguishment of debt. Share Repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. Program During the fourth quarter of 1999, Arch repurchased approximately 391,000 shares of its common stock. In October October: see month. 1999 the Board of Directors authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: a program to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. up to a total of 1.2 million shares of the Company's common stock. Note: All references to earnings per share above reflect diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , and all references to 1998 net income and earnings per share are on a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma basis. About Arch With 1999 sales of approximately $900 million, Arch is a global specialty chemicals A Specialty chemical is a chemical produced for a specialized use. They are produced in lower volume than bulk chemicals, of which petrochemicals, made from oil feedstocks, are the most common. However, both are produced in a chemical plant. company with leadership positions in Microelectronic Chemicals, Water Chemicals and Performance Chemicals. Arch serves world leaders For a list of heads of state, see . World leaders is a MMORPG. The game involves creating a state, joining an alliance and going into war. It is mostly played by players from Israel, China, USA, Britain, Brazil and Saudi-Arabia. in these key markets with forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. solutions to meet their chemical needs. Arch employs over 3,000 individuals worldwide and has manufacturing capabilities in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ,
Asia and Africa.Except for historical information contained herein, the information set forth in this communication contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that are based on management's beliefs, certain assumptions made by management and management's current expectations, estimates and projections about the markets and economy in which Arch and its business segments operate. Words such as &uot;anticipates,&uot; &uot;believes,&uot; &uot;estimates,&uot; &uot;expects,&uot; &uot;forecasts,&uot; &uot;opines Opines are low molecular weight compounds found in plant crown gall tumors produced by the parasitic bacterium Agrobacterium. Opine biosynthesis is catalyzed by specific enzymes encoded by genes contained in a small segment of DNA (known as the T-DNA, for 'transfer DNA') ,&uot; &uot;plans,&uot; &uot;projects,&uot; &uot;should,&uot; &uot;will,&uot; and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions (&uot;Future Factors&uot;) which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expected or forecasted in such forward-looking statements. Arch does not undertake any obligation to update publicly any forward-looking statements, whether as a result of future events, new information or otherwise. Future factors which could cause actual results to differ materially from those discussed include but are not limited to: general economic and business and market conditions, lack of moderate growth in the U.S. economy or even a slight recession in 2000, loss of a key customer, higher than expected raw material costs for certain chemical product lines, increased foreign competition in the calcium hypochlorite calcium hypochlorite n. A white crystalline solid used as a bactericide, fungicide, and bleaching agent. markets, lack of stability or growth in the semiconductor industry, Arch's ability to maintain chemical price increases, the supply/demand balance for the company's products, failure to achieve targeted cost reduction programs, unsuccessful entry into new markets for electronic chemicals, worsening wors·en tr. & intr.v. wors·ened, wors·en·ing, wors·ens To make or become worse. Noun 1. worsening - process of changing to an inferior state decline in quality, deterioration, declension economic conditions in Asia, capital expenditures, such as cost overruns Noun 1. cost overrun - excess of cost over budget; "the cost overrun necessitated an additional allocation of funds in the budget" cost - the total spent for goods or services including money and time and labor , in excess of those scheduled, the occurrence of unexpected manufacturing interruptions/outages, environmental costs in excess of those projected, increased competitive and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. customer pressure, customer acceptance of new products, efficacy efficacy /ef·fi·ca·cy/ (ef´i-kah-se) 1. the ability of an intervention to produce the desired beneficial effect in expert hands and under ideal circumstances. 2. of new technology, changes in U.S. laws and regulations, costs or difficulties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the establishment of Arch as an independent entity, and unfavorable arbitration arbitration Process of resolving a dispute or a grievance outside a court system by presenting it for decision to an impartial third party. Both sides in the dispute usually must agree in advance to the choice of arbitrator and certify that they will abide by the , court or jury decisions.
Arch Chemicals, Inc.
Condensed Consolidated Statements of Income (a)
(In millions, except per share amounts)
----------------------------------------------------------------------
Three Months Years
Ended December 31, Ended December 31,
1999 1998 1999 1998
----------------------------------------------------------------------
Sales $ 185.0 $ 168.4 $ 879.8 $ 862.8
Cost of Goods Sold 138.6 128.3 637.7 622.0
Selling and Administration(b) 39.9 39.7 163.8 167.6
Research and Development 3.9 3.1 17.7 16.2
----------------------------------------------------------------------
Operating Income (Loss) 2.6 (2.7) 60.6 57.0
Equity In Earnings of
Affiliated Companies 1.8 0.6 5.8 3.4
Interest Expense 1.6 0.2 5.7 0.6
Interest Income 0.3 0.3 0.8 1.0
----------------------------------------------------------------------
Income (Loss) Before Taxes
and Extraordinary Gain 3.1 (2.0) 61.5 60.8
Income Tax Provision (Benefit) 0.9 (0.6) 20.8 20.8
----------------------------------------------------------------------
Income (Loss) Before
Extraordinary Gain 2.2 (1.4) 40.7 40.0
Extraordinary Gain (Net of
Taxes of $0.9)(c) 1.3 - 1.3 -
----------------------------------------------------------------------
Net Income (Loss) $ 3.5 $ (1.4) $ 42.0 $ 40.0
======================================================================
Basic Income (Loss) Per Share:
Before Extraordinary Gain $ 0.09 $ (0.10) $ 1.77 $ 1.55
Extraordinary Gain 0.06 - 0.06 -
----------------------------------------------------------------------
Net Income (Loss) $ 0.15 $ (0.10)(d) $ 1.83 $ 1.55(d)
======================================================================
Diluted Income (Loss)
Per Share:
Before Extraordinary Gain $ 0.09 $ (0.10) $ 1.76 $ 1.55
Extraordinary Gain 0.06 - 0.06 -
----------------------------------------------------------------------
Net Income (Loss) $ 0.15 $ (0.10)(d) $ 1.82 $ 1.55(d)
======================================================================
Weighted Average Common
Stock Outstanding - Basic 22.8 23.0 (d) 23.0 23.0(d)
Weighted Average Common
Stock Outstanding - Diluted 22.9 23.0 (d) 23.1 23.0(d)
----------------------------------------------------------------------
(a) Unaudited
(b) Selling and administration expenses for the year ended December
31, 1999 include $2.3 million of nonrecurring expenses related to
an arbitration award and expenses related to the decision to
delay the construction of a facility in China.
(c) The gain on extinguishment of debt is related to the settlement
of a $5.2 million face value note through a payment of $3.0
million.
(d) Pro forma financial information - In January 1999, Olin borrowed
$75 million and on February 8, 1999 the Company assumed this debt
from Olin. Pro forma income (loss) per share of $(0.10) and $1.55
are based upon pro forma net income (loss) of $(2.3) million and
$35.7 million and pro forma common stock outstanding of 23.0
million shares for the three and twelve months ended December 31,
1998, respectively. Pro forma net income reflects pro forma
interest expense of $1.5 million and $7.2 million on borrowings
for the three months and year ended December 31, 1998,
respectively. This assumes that $75 million was outstanding for
such periods and that the Company has seasonal weighted average
borrowings related to the Water Chemicals segment of $40 million
for the first six months of 1998. Such borrowings were assumed to
be at an aggregate effective rate of 7%. Pro forma common stock
outstanding represents the number of common shares issued at the
Distribution Date and assumes that such shares were outstanding
for all periods prior to the Distribution.
Arch Chemicals, Inc.
Condensed Consolidated Balance Sheets (a)
(In millions, except per share amounts)
----------------------------------------------------------------------
December 31, 1999 1998
----------------------------------------------------------------------
Assets:
Cash &Cash Equivalents $ 12.1 $ 7.1
Accounts Receivable, Net 168.6 141.7
Inventories, Net 147.3 139.3
Other Current Assets 26.7 25.6
----------------------------------------------------------------------
Total Current Assets 354.7 313.7
Investments and Advances -
Affiliated Companies at Equity 20.8 21.1
Property, Plant and Equipment, Net 326.7 331.6
Goodwill 37.1 34.8
Other Assets 20.2 20.4
----------------------------------------------------------------------
Total Assets $759.5 $721.6
----------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Short-Term Borrowings $ 21.0 $ 0.9
Accounts Payable 108.1 106.7
Accrued Liabilities 57.1 59.0
----------------------------------------------------------------------
Total Current Liabilities 186.2 166.6
Long-Term Debt 76.8 7.0
Other Liabilities 44.7 43.5
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per
Share, Authorized 100.0 Shares:
22.6 Shares Issued and
Outstanding in 1999 22.6 -
Additional Paid-in Capital 431.9 -
Retained Earnings from February 8, 1999 23.8 -
Equity - 519.0
Cumulative Translation Adjustment (26.5) (14.5)
----------------------------------------------------------------------
Total Shareholders' Equity 451.8 504.5
----------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $759.5 $721.6
----------------------------------------------------------------------
(a) Unaudited
Arch Chemicals, Inc.
Condensed Consolidated Statements of Cash Flows (a)
(In millions)
----------------------------------------------------------------------
Years Ended December 31, 1999 1998
----------------------------------------------------------------------
Operating Activities:
Net Income $ 42.0 $ 40.0
Adjustments to Reconcile Net Income to
Net Cash and Cash Equivalents Provided
by Operating Activities:
Equity in Earnings of Affiliates (5.8) (3.4)
Depreciation and Amortization 53.4 47.1
Deferred Taxes 2.1 2.7
Changes in Assets and Liabilities net of
Purchase of Business:
Receivables (26.7) 19.9
Inventories (7.9) 0.2
Other Current Assets (1.4) 1.4
Accounts Payable and Accrued Liabilities 7.4 (14.0)
Noncurrent Liabilities (5.2) (7.1)
Other Operating Activities 0.8 (1.6)
----------------------------------------------------------------------
Net Operating Activities 58.7 85.2
----------------------------------------------------------------------
Investing Activities:
Capital Expenditures (58.9) (84.3)
Business Acquired in Purchase Transaction (8.0) -
Investments and Advances - Affiliated
Companies at Equity - 0.1
Other Investing Activities (0.1) (1.1)
----------------------------------------------------------------------
Net Investing Activities (67.0) (85.3)
----------------------------------------------------------------------
Financing Activities:
Long-Term Debt Assumed from Olin 75.0 -
Long-Term Debt Borrowings (Repayments) (3.4) 1.7
Short-Term Borrowings (Repayments) 20.5 (0.7)
Dividends Paid (13.8) -
Purchases of Arch Common Stock (6.7) -
Transfers To Olin (58.1) (2.2)
Other Financing Activities 0.3 -
----------------------------------------------------------------------
Net Financing Activities 13.8 (1.2)
----------------------------------------------------------------------
Effect of Exchange Rate Changes on
Cash and Cash Equivalents (0.5) (0.6)
----------------------------------------------------------------------
Net Increase (Decrease) in
Cash and Cash Equivalents 5.0 (1.9)
Cash and Cash Equivalents, Beginning of Year 7.1 9.0
----------------------------------------------------------------------
Cash and Cash Equivalents, End of Year $ 12.1 $ 7.1
----------------------------------------------------------------------
(a) Unaudited
Arch Chemicals, Inc.
Segment Information (a)
(In millions)
----------------------------------------------------------------------
1999
---------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
----------------------------------------------------------------------
Sales:
Microelectronic Chemicals $ 52.2 $ 53.4 $ 55.2 $ 54.0 $214.8
Water Chemicals 93.0 128.4 63.2 42.2 326.8
Performance Chemicals 79.8 86.4 83.2 88.8 338.2
----------------------------------------------------------------------
Total Sales $225.0 $268.2 $201.6 $185.0 $879.8
----------------------------------------------------------------------
Operating Income (Loss):
Microelectronic Chemicals $ (0.9) $ (0.4) $ (1.5) $ (0.2) $ (3.0)
Water Chemicals 12.5 21.6 (0.8) (7.0) 26.3
Performance Chemicals -
Before Nonrecurring Expenses 9.9 12.4 11.5 11.6 45.4
----------------------------------------------------------------------
Total Operating Income
Before Nonrecurring
Expenses 21.5 33.6 9.2 4.4 68.7
Nonrecurring Expenses (b) - - (2.3) - (2.3)
----------------------------------------------------------------------
Total Operating Income (c) $ 21.5 $ 33.6 $ 6.9 $ 4.4 $ 66.4
----------------------------------------------------------------------
Capital Spending:
Microelectronic Chemicals $ 2.6 $ 2.0 $ 4.7 $ 5.5 $ 14.8
Water Chemicals 1.0 1.1 4.8 5.3 12.2
Performance Chemicals 2.5 7.2 8.2 14.0 31.9
----------------------------------------------------------------------
Total Capital Spending $ 6.1 $ 10.3 $ 17.7 $ 24.8 $ 58.9
----------------------------------------------------------------------
1998
---------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
----------------------------------------------------------------------
Sales:
Microelectronic Chemicals $ 62.4 $ 59.0 $ 55.1 $ 51.1 $227.6
Water Chemicals 71.1 120.5 66.4 32.3 290.3
Performance Chemicals 86.9 90.9 82.1 85.0 344.9
----------------------------------------------------------------------
Total Sales $220.4 $270.4 $203.6 $168.4 $862.8
----------------------------------------------------------------------
Operating Income (Loss):
Microelectronic Chemicals $ 2.4 $ 0.7 $ (3.7) $ (3.5) $ (4.1)
Water Chemicals 6.7 18.0 (3.0) (7.9) 13.8
Performance Chemicals 15.5 13.0 12.9 9.3 50.7
----------------------------------------------------------------------
Total Operating
Income (Loss)(c) $ 24.6 $ 31.7 $ 6.2 $ (2.1) $ 60.4
----------------------------------------------------------------------
Capital Spending:
Microelectronic Chemicals $ 7.2 $ 11.5 $ 14.4 $ 10.2 $ 43.3
Water Chemicals 2.2 2.5 2.5 2.9 10.1
Performance Chemicals 3.0 3.0 5.9 19.0 30.9
----------------------------------------------------------------------
Total Capital Spending $ 12.4 $ 17.0 $ 22.8 $ 32.1 $ 84.3
----------------------------------------------------------------------
(a) Unaudited
(b) Nonrecurring expenses associated with the Performance Chemicals
segment relate to an arbitration award and expenses related to
the decision to delay the construction of a facility in China.
(c) Segment operating income includes the equity in earnings of
affiliated companies.
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