Arch Chemicals, Inc. Reports Full-year 2001 Earnings Per Share From Continuing Operations of $0.08, Including Special Items.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. 31, 2002 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:
Antonym: dec. . (NYSE NYSE 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 for the full year 2001, sales were $920.8 million compared to $941.2 million in 2000. Earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the before cumulative effect of accounting change were $0.08 for the full year 2001 on $1.8 million of net income, compared to $0.02 per share on net income of $0.5 million. Excluding special items, earnings per share from continuing operations before cumulative effect of accounting change were $0.15 for the full year 2001 on $3.3 million of net income, compared to $1.66 per share on net income of $37.1 million in 2000. Excluding special items, segment 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 $24.2 million compared to $65.4 million in 2000. "While we at Arch Chemicals faced a difficult, recessionary environment last year, we achieved some key goals that sharpened sharp·en tr. & intr.v. sharp·ened, sharp·en·ing, sharp·ens To make or become sharp or sharper. sharp the focus of our business portfolio and positioned us to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. an improving economy and some key growth opportunities," 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, President and Chief Executive Officer. "For example, our Treatment Products segment recorded higher full-year sales and earnings principally due to the successful integration of our two major acquisitions - Hickson Hickson is a surname, and may refer to
American poet known for her verse detailing the dreams and struggles of African Americans. An early volume of poems, Annie Allen (1949), was awarded a Pulitzer Prize. Noun 1. Industries' personal care intermediates business. In addition, we demonstrated our ability to maximize cash generation through strict asset management and cost-reduction initiatives. We also reduced costs in Microelectronic The miniaturization of electronic circuits. See chip. Materials by restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). the process chemicals business, and we've we've Contraction of we have. we've have positioned HTH (chat) HTH - Hope This Helps. Often used sarcastically, see HAND. Water Products for improved results with some exciting new products and direct-to-retail distribution methods." Results from continuing operations for the fourth quarter of 2001 were a $0.63 loss per share on net loss from continuing operations of $14.1 million compared to a loss of $1.66 per share on net loss of $37.1 million in 2000. Sales of $171.8 million in 2001 decreased 22% from $221.5 million in 2000. Excluding special items, segment 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. in 2001 was $16.6 million compared to operating income of $1.1 million in 2000, and the loss per share for the quarter was $0.60 on losses of $13.5 million compared to earnings per share of $0.01 on net income of $0.1 million in 2000. The following compares segment sales and operating income for the fourth quarter of 2001 and 2000 (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. and excluding special items and certain unallocated expenses of the corporate headquarters): Microelectronic Materials Microelectronic Materials reported sales of $30.4 million and an operating loss of $5.7 million for 2001 compared to sales of $58.8 million and operating income of $3.6 million. Of the sales decrease, $12.8 million or 45% was related to the exit of certain unprofitable process chemical product lines in conjunction with the restructuring announced in the fourth quarter of 2000. Excluding the effect of the restructuring, sales were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 34% lower, principally due to the downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the semiconductor industry, which affected most Microelectronic Materials' product lines except polyimides. Demand for our new, aqueous aqueous /aque·ous/ (a´kwe-us) 1. watery; prepared with water. 2. see under humor. a·que·ous adj. , developable buffer buffer, solution that can keep its relative acidity or alkalinity constant, i.e., keep its pH constant, despite the addition of strong acids or strong bases. coat polyimides continued to grow and resulted in slightly higher year-over-year sales for that product line. The operating loss resulted from the lower sales and lower profit ($1.2 million) from our joint venture, FUJIFILM Fujifilm Holdings Corporation or Fujifilm (富士フイルム株式会社 Arch. These shortfalls, combined with higher research and development expenditures for new product development, were partially offset by lower selling and manufacturing costs resulting from cost reduction initiatives including employee furloughs and lower operating and depreciation expenses as a result of the restructuring of the Process Chemicals business. HTH Water Products HTH Water Products reported sales of $16.7 million and an operating loss of $14.9 million for the fourth quarter of 2001 compared to sales and an operating loss of $22.0 million and $10.5 million, respectively, in 2000. The 24% decrease in sales was principally due to lower branded distributor sales as a result of a change in distribution strategy from utilizing distributors to directly shipping to retail channels, which has postponed the traditional distributor program early winter sales to spring retail sales. The lower branded sales due to the absence of this "early-buy" purchasing were partially offset by higher export sales. The decrease in operating results was due to the lower branded sales, increased research and development costs for new product development, and additional costs associated with the launch of the new HTH(R) Poolife(TM) collection of products for exclusive use by pool and spa dealers. In addition, the segment was negatively impacted by unfavorable fixed cost absorption due to the extended 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. and lower production rates, a result of a continued effort to reduce inventory levels. Treatment Products Treatment Products reported sales of $48.4 million and operating income of $3.6 million compared with sales and operating income of $55.2 million and $3.3 million, respectively, for the fourth quarter of 2000. The increase in sales due to the inclusion of the Personal Care Intermediates business was more than offset by lower custom chemical sales of the Biocides business. The operating income increase was driven by the inclusion of the Personal Care Intermediates business and higher results in the Biocides business. Biocides sales were 35% lower as a result of the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of a custom-chemical product line that accounted for approximately $6 million of sales in the fourth quarter of 2000 and lower antidandruff sales, partially offset by continued growth in marine antifoulant antifoulant substances used to coat marine netting in fish cages; some may cause unacceptable chemical residues in the farmed fish. paint sales. Operating income was higher primarily as a result of lower manufacturing and selling costs and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. product mix, which more than offset the lower sales. Wood Protection sales were comparable to the prior year. Operating income was slightly lower than the prior year primarily due to slightly higher 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. . Performance Products Performance Products reported sales of $56.5 million and an operating loss of $0.7 million compared with sales and operating income of $66.9 million and $5.5 million, respectively, in 2000. Performance Urethanes sales were approximately 28% lower principally due to lower performance polyol The name polyols refers to chemical compounds containing multiple hydroxyl groups. In two technological disciplines polyols have special meaning: food science and polymer chemistry. For information as it pertains to food ingredients, please see the article on sugar alcohols. volumes, as a result of poor economic conditions, and lower contract manufacturing volumes. Performance Urethanes sales continued to be adversely affected by the economic downturn and softness in demand in the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. coatings, adhesives, sealants and elastomers markets. Operating income was lower as a result of the lower sales, the absence of income ($4.4 million) related to the BASF BASF Bar Association of San Francisco (since 1872; San Francisco, California) BASF Badische Anilin und Soda Fabrik (German chemical products company) BASF Builders Association of South Florida contract, which was completed on December December: see month. 31, 2000, and higher unabsorbed manufacturing costs due to lower contract manufacturing and commercial volumes. Coatings sales were 6 percent higher due to higher volumes and improved pricing. Operating income decreased due to higher selling 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. due to geographic expansion which more than offset the higher sales. Other Specialty Products Other Specialty Products reported sales of $19.8 million and operating income of $4.6 million compared with sales of $18.6 million and operating income of $1.2 million in the prior year. 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 increased by approximately 18% due to higher 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. revenues associated with the new contract with the U.S. government and from a propellant production campaign in the quarter. These more than offset lower hydrates sales into Asia, where depressed market Depressed market Market in which supply overwhelms demand, leading to weak and lower prices. conditions continued through the fourth quarter. Operating income was higher primarily due to the higher sales. Sulfuric Acid sulfuric acid, chemical compound, H2SO4, colorless, odorless, extremely corrosive, oily liquid. It is sometimes called oil of vitriol. Concentrated Sulfuric Acid sales decreased 4 percent as a result of lower pricing due to unfavorable product mix compared to the prior year. Operating income was lower primarily due to the lower sales. Special Items Restructuring costs totaling $0.9 million, included in the fourth quarter results, comprise severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when and employee benefit costs in connection with headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. reductions of corporate headquarters and centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. services and Performance Urethanes personnel ($2.4 million), partially offset by a reduction of the estimated remaining liability for the 2000 restructuring program ($1.5 million). The Company anticipates future annual cash savings of over $2 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these workforce reductions. Discontinued Operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. Loss from discontinued operations, net of tax, reflects the results of operations of the Organics division and interest expense allocated to this business and includes a $1.8 million restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. in the fourth quarter. Interest Expense Interest expense for 2001 decreased due to lower effective interest rates and lower debt due to lower working capital borrowing needs. The Company reduced its debt levels by approximately $15 million in the period, bringing total debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan to approximately $40 million for the full year. 2002 Outlook The Company expects a gradual The Gradual (Latin: graduale, sometimes called the Grail) is a chant in the extraordinary form of the Roman Catholic Mass, sung after the reading or singing of the Epistle and before the Alleluia, or, during penitential seasons, before the Tract. economic recovery starting in the second half of the year. In addition, the Company's direct-to-retail distribution strategy in HTH Water Products will shift sales, traditionally in the first quarter, to the second quarter and the Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. segment is not expected to improve from its depressed levels until the second half of the year. As a result, the Company anticipates earnings per share for the first quarter of 2002 will be in the breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations range. For the full year, earnings per share from continuing operations are expected to be in the range of $0.50 to $0.75. In addition, 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 is expected to be in the $95 to $105 million range while capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. is expected to be in the $45 million range. Mr. Campbell, commenting on 2002 said, "Although we hope to see economic conditions begin to improve during the first half of 2002, we will continue to pursue our disciplined approach to shaping our business portfolio so we can achieve our stated goal of delivering strong top line and bottom line results while maintaining an attractive dividend yield for our shareholders. Our tools include cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , improved operating efficiencies, and capital spending and working capital reduction initiatives. These, combined with management's focus on investing in high potential growth areas, will position us to capture business opportunities as economic conditions improve." Revolving Credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. Facility The Company announced that it has renewed re·new v. re·newed, re·new·ing, re·news v.tr. 1. To make new or as if new again; restore: renewed the antique chair. 2. its existing 364-day credit facility and amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. certain prospective financial covenants of this facility and of its $125 million 5-year facility to reflect the seasonality of its portfolio. Principally, the quarterly leverage (Debt/EBITDA) ratio has been increased to 4.5 for the first quarter of 2002, with gradual reductions to 3.5 as of December 31, 2002 and thereafter, reflecting Arch's seasonal borrowing needs. The renewed 364-day facility will expire expire /ex·pire/ (ek-spi´er) 1. to exhale. 2. to die. ex·pire v. 1. To breathe one's last breath; die. 2. To exhale. on January January: see month. 22, 2003 and has available borrowing commitments of $87.5 million. 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 . About Arch With sales of approximately $1 billion, Arch Chemicals, Inc., (NYSE: ARJ) headquartered in Norwalk, Conn., 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 four core segments - Microelectronic Materials, HTH Water Products, Treatment Products and Performance Products. Arch Chemicals 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, employing a global workforce and manufacturing facilities 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. For more information,
visit the company's web site at www.archchemicals.com.
-- Listen in live to Arch Chemicals' fourth quarter and full-year 2001 earnings conference call on Thursday, January 31, 2002 at 11:00 a.m. (ET) at http://www.archchemicals.com. -- If members of the public wish to access Arch's live earnings call in a listen-only mode, dial: (888) 391-0098 in the United States or (415) 904-2484 outside the United States. -- A telephone replay will be available from 1:00 p.m. on Thursday Thursday: see week. , January 31, 2001 until 6:00 p.m. (ET) on Thursday, February February: see month. 7. The replay number is (800) 633-8284, passcode 20029537; from outside the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , please call (858) 812-6440, passcode 20029537. 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 various businesses operate. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "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') ," "plans," "predicts," "projects," "should," "targets," "will," 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 ("Future Factors"), which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expected or forecasted in such forward-looking statements. The Company undertakes no 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 economic recovery in the second half of 2002 in the U.S., lack of moderate growth or recession in European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. economies; increases in interest rates; economic conditions in Asia; strengthening of the U.S. dollar against the euro; customer acceptance of new products, efficacy of new technology, changes in U.S. laws and regulations, 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; the Company's ability to maintain chemical price increases; 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; further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the semiconductor industry and lack of recovery in the second half of 2002; unfavorable court, 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 or jury decisions, the supply/demand balance for the Company's products, including the impact of excess industry capacity; failure to achieve targeted cost reduction programs; unsuccessful entry into new markets for electronic chemicals; capital expenditures in excess of those scheduled; environmental costs in excess of those projected; the occurrence of unexpected manufacturing interruptions/outages at customer or company plants; unfavorable weather conditions for swimming pool use; gains or losses on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. ; the inability of the Company to sell the Hickson organics division at its desired price; and the unsuccessful integration of acquired businesses.
Arch Chemicals, Inc.
Condensed Consolidated Statements of Income (a)
(In millions, except per share amounts)
----------------------------------------------------------------------
Three Months Years
Ended December 31, Ended December 31,
2001 2000 2001 2000
----------------------------------------------------------------------
Sales $ 171.8 $ 221.5 $ 920.8 $ 941.2
Cost of Goods Sold (b) 132.8 168.5 666.8 691.6
Selling and
Administration 47.0 49.6 197.0 172.0
Amortization of
Intangibles 3.1 2.2 10.7 5.9
Research and Development 6.6 5.0 25.4 17.1
Equity In (Earnings)
of Affiliated Companies (1.1) (1.9) (3.3) (7.8)
Special Items (c):
Impairment Charge - 31.0 - 31.0
Restructuring 0.9 26.5 1.5 34.0
Other (Gains)
and Losses - 0.3 1.0 (8.1)
----------------------------------------------------------------------
Income (Loss) from
Continuing
Operations Before
Interest, Taxes
and Cumulative
Effect of
Accounting Change (17.5) (59.7) 21.7 5.5
Interest Expense, net 3.4 4.8 17.7 13.0
----------------------------------------------------------------------
Income (Loss) from
Continuing
Operations Before
Taxes and
Cumulative Effect
of Accounting Change (20.9) (64.5) 4.0 (7.5)
Income Tax Provision
(Benefit) (6.8) (27.4) 2.2 (8.0)
----------------------------------------------------------------------
Income (Loss) from
Continuing Operations
Before Cumulative
Effect of Accounting
Change (14.1) (37.1) 1.8 0.5
Loss from Discontinued
Operations, net of
tax (e) (3.1) - (2.9) -
Cumulative Effect of
Accounting Change,
net of tax (d) - - (0.2) -
----------------------------------------------------------------------
Net Income (Loss) $ (17.2) $ (37.1) $ (1.3) $ 0.5
======================================================================
Basic Income (Loss)
Per Share:
Continuing Operations
Before Cumulative
Effect of Accounting
Change $(0.63) $(1.66) $ 0.08 $ 0.02
Discontinued
Operations (e) (0.14) - (0.13) -
Cumulative Effect of
Accounting Change (d) - - (0.01) -
----------------------------------------------------------------------
Basic Income (Loss)
Per Share $(0.77) $(1.66) $(0.06) $ 0.02
======================================================================
Diluted Income (Loss)
Per Share:
Continuing Operations
Before Cumulative
Effect of Accounting
Change $(0.63) $(1.66) $ 0.08 $ 0.02
Discontinued
Operations (e) (0.14) - (0.13) -
Cumulative Effect of
Accounting Change (d) - - (0.01) -
----------------------------------------------------------------------
Diluted Income (Loss)
Per Share $(0.77) $(1.66) $(0.06) $ 0.02
======================================================================
Weighted Average Common
Stock Outstanding - Basic 22.3 22.2 22.3 22.3
Weighted Average Common
Stock Outstanding - Diluted 22.3 22.2 22.4 22.3
----------------------------------------------------------------------
EBITDA (f) $ (3.0) $ 10.4 $ 91.3 $ 106.2
----------------------------------------------------------------------
(a) Unaudited.
(b) Included in the Cost of Goods Sold for the fourth quarter and full
year results of 2000 is a $3.0 charge to write down inventory to
net realizable value, including disposal costs, due to the process
chemicals restructuring and the exiting of certain product lines.
(c) Special Items consist of the following:
- Impairment Charge- 2000 write-down of property, plant and
equipment due to the process chemicals business restructuring.
- Restructuring Charge- Fourth quarter 2001 represents a charge
of $2.4 for headcount reductions and a $1.5 reduction of the
2000 restructuring reserve. Full year 2001 also includes the
reimbursement of certain severance costs, which were
previously recorded in the fourth quarter of 2000, and
retention payments made to employees as a result of the
restructuring of the process chemicals business.
Fourth quarter 2000 charge includes the restructuring of the
process chemicals business, the write-off of certain costs
associated with the biocides business, and other headcount
reductions. For the full-year, the restructuring charge also
includes severance and related employee benefits associated
with the reorganization of certain businesses and corporate.
- Other (Gains) and Losses- 2001 includes the write-off of an
investment in GlobalBA.com, Inc. 2000 fourth quarter
represents expense for certain acquisition-related costs. 2000
full year is principally comprised of a pretax gain on the
sale of Superior Pool Products and certain acquisition costs
associated with the purchase of derivative instruments to
mitigate the risk of foreign currency fluctuations related to
the acquisition of Hickson International PLC.
(d) Reflects the adoption of SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities."
(e) Represents the results of operations, net of tax, of the Organics
division for September through December 2001.
(f) Includes results of the Organics division since the date of
acquisition.
(g) The following table reconciles diluted income (loss) per share to
diluted income (loss) per share excluding special items,
discontinued operations and cumulative effect of accounting
change:
Fourth Quarter Years Ended December 31,
2001 2000 2001 2000
----------------------------------------
Diluted Income
(Loss) Per Share $ (0.77) $ (1.66) $ (0.06) $ 0.02
----------------------------------------
Special Items:
Impairment Charge,
Restructuring
Charge and Other
(Gains) Losses 0.03 1.59 0.07 1.56
Inventory
Write-down - 0.08 - 0.08
Discontinued Operations 0.14 - 0.13 -
Cumulative Effect of
Accounting Change - - 0.01 -
----------------------------------------
0.17 1.67 0.21 1.64
----------------------------------------
-------------------------------------------------------------------
Diluted Income (Loss)
Per Share Excluding
Special Items,
Discontinued Operations
and Cumulative Effect
of Accounting Change $ (0.60) $ 0.01 $ 0.15 $ 1.66
=======================================
Arch Chemicals, Inc.
Condensed Consolidated Balance Sheets (a)
(In millions, except per share amounts)
December 31, December 31,
2001 2000
------------------------------------------------------------------
Assets:
Cash & Cash Equivalents $ 4.0 $ 19.1
Accounts Receivable, Net 162.6 212.7
Inventories, Net 131.1 164.7
Other Current Assets 25.6 39.2
Assets Held For Sale 53.5 80.1
------------------------------------------------------------------
Total Current Assets 376.8 515.8
Investments and Advances -
Affiliated Companies at Equity 27.2 32.6
Property, Plant and
Equipment, Net 332.4 330.8
Goodwill 131.6 172.8
Other Intangibles 64.4 10.5
Other Assets 19.6 11.1
------------------------------------------------------------------
Total Assets $952.0 $1,073.6
------------------------------------------------------------------
Liabilities and Shareholders' Equity:
Short-Term Borrowings $ 229.7 $ 95.8
Accounts Payable 111.3 143.5
Accrued Liabilities 85.3 104.2
------------------------------------------------------------------
Total Current Liabilities 426.3 343.5
Long-Term Debt 73.9 247.6
Other Liabilities 64.3 62.7
Commitments and
Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per Share,
Authorized 100.0 Shares:
22.2 Shares Issued and Outstanding in
2001 (22.1 in 2000) 22.2 22.1
Additional Paid-in Capital 424.4 423.3
Retained Earnings (Deficit) (12.5) 6.5
Accumulated Other
Comprehensive Loss (46.6) (32.1)
------------------------------------------------------------------
Total Shareholders' Equity 387.5 419.8
------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $952.0 $1,073.6
------------------------------------------------------------------
(a) Unaudited. Certain prior year amounts have been reclassified to
conform with the current year's presentation.
Arch Chemicals, Inc.
Condensed Consolidated Statements of Cash Flows (a)
(In millions)
Years Ended December 31, 2001 2000
-------------------------------------------------------------------
Operating Activities:
Net Income (Loss) $ (1.3) $ 0.5
Adjustments to Reconcile Net Income
(Loss) to Net Cash and Cash
Equivalents Provided by Operating
Activities Net of Businesses Acquired:
Loss from Discontinued Operations 2.9 -
Equity in Earnings of Affiliates (3.3) (7.8)
Depreciation 50.6 49.8
Amortization of Intangibles 10.7 5.9
Deferred Taxes 4.4 (17.6)
Deferred Income - (11.4)
Impairment Charge - 31.0
Restructuring Charge 1.5 34.0
Restructuring Payments (14.5) (1.3)
Other (Gains) and Losses 1.0 (8.1)
Changes in Assets and Liabilities,
Net of Purchases
and Sale of Businesses:
Receivables 51.8 7.9
Inventories 30.7 1.7
Other Current Assets (0.3) (1.3)
Accounts Payable and
Accrued Liabilities (44.0) (12.0)
Noncurrent Liabilities (0.9) 0.5
Other Operating Activities 3.0 3.1
-------------------------------------------------------------------
Net Operating Activities
from Continuing Operations 92.3 74.9
Change in Net Assets Held for Sale (2.7) 4.8
-------------------------------------------------------------------
Net Operating Activities 89.6 79.7
-------------------------------------------------------------------
Investing Activities:
Capital Expenditures (44.9) (62.0)
Businesses Acquired in Purchase Transactions,
Net of Cash Acquired (2.9) (178.4)
Proceeds From Sale of Business - 21.1
Disposition of Property, Plant and Equipment - 6.3
Investments and Advances - Affiliated
Companies at Equity - (3.4)
Other Investing Activities 0.1 (0.6)
-------------------------------------------------------------------
Net Investing Activities (47.7) (217.0)
-------------------------------------------------------------------
Financing Activities:
Long-Term Debt Borrowings
(Repayments), net (55.3) 98.7
Short-Term Borrowings
(Repayments), net 15.7 72.4
Dividends Paid (17.7) (17.8)
Purchases of Arch Common Stock - (9.5)
Other Financing Activities 2.0 0.4
-------------------------------------------------------------------
Net Financing Activities (55.3) 144.2
-------------------------------------------------------------------
Effect of Exchange Rate Changes
on Cash and Cash Equivalents (1.7) 0.1
-------------------------------------------------------------------
Net (Decrease) Increase in Cash
and Cash Equivalents (15.1) 7.0
Cash and Cash Equivalents,
Beginning of Year 19.1 12.1
-------------------------------------------------------------------
Cash and Cash Equivalents,
End of Year $ 4.0 $ 19.1
-------------------------------------------------------------------
(a) Unaudited. Certain prior year amounts have been reclassified
to conform with the current year's presentation.
Arch Chemicals, Inc.
Segment Information (a)
(In millions)
2001
------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
----------------------------------------------------------------------
Sales:
Microelectronic Materials $ 54.8 $ 41.9 $ 31.8 $ 30.4 $ 158.9
HTH Water Products 59.0 94.6 37.9 16.7 208.2
Treatment Products 61.2 65.3 58.8 48.4 233.7
Performance Products 63.7 61.7 59.2 56.5 241.1
Other Specialty Products 16.9 21.4 20.8 19.8 78.9
---------------------------------------------------------------------
Total Sales $ 255.6 $ 284.9 $ 208.5 $ 171.8 $ 920.8
---------------------------------------------------------------------
Operating Income (Loss):
Microelectronic Materials $ 4.7 $ (1.4) $ (5.0) $ (5.7) $ (7.4)
HTH Water Products 8.7 10.7 (6.7) (14.9) (2.2)
Treatment Products 7.7 9.4 6.1 3.6 26.8
Performance Products 0.7 3.8 0.5 (0.7) 4.3
Other Specialty Products 0.4 4.2 2.5 4.6 11.7
-------------------------------------------
22.2 26.7 (2.6) (13.1) 33.2
General Corporate
Expenses (d) (2.3) (1.7) (1.5) (3.5) (9.0)
---------------------------------------------------------------------
Total Operating
Income (Loss) (e) $ 19.9 $ 25.0 $ (4.1) $ (16.6) $ 24.2
---------------------------------------------------------------------
2000
-------------------------------------------
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
---------------------------------------------------------------------
Sales:
Microelectronic Materials $ 57.1 $ 57.8 $ 59.9 $ 58.8 $ 233.6
HTH Water Products 73.7 108.3 40.3 22.0 244.3
Treatment Products (b) 23.0 26.5 32.0 55.2 136.7
Performance Products (b) 39.1 41.8 48.9 66.9 196.7
Other Specialty Products 19.0 19.0 19.2 18.6 75.8
-------------------------------------------
211.9 253.4 200.3 221.5 887.1
Superior Pool
Products (c) 16.8 28.7 8.6 - 54.1
---------------------------------------------------------------------
Total Sales $ 228.7 $ 282.1 $ 208.9 $ 221.5 $ 941.2
---------------------------------------------------------------------
Operating Income (Loss):
Microelectronic
Materials (f) $ 1.6 $ 2.0 $ 3.3 $ 3.6 $ 10.5
HTH Water Products 14.4 22.0 (3.3) (10.5) 22.6
Treatment Products (b) 2.5 2.3 4.2 3.3 12.3
Performance
Products (b) 5.2 4.6 6.5 5.5 21.8
Other Specialty
Products 1.3 3.5 0.4 1.2 6.4
-------------------------------------------
25.0 34.4 11.1 3.1 73.6
Superior Pool
Products (c) 0.2 2.2 0.1 - 2.5
General Corporate
Expenses (d) (3.2) (3.2) (2.3) (2.0) (10.7)
---------------------------------------------------------------------
Total Operating
Income (e) $ 22.0 $ 33.4 $ 8.9 $ 1.1 $ 65.4
---------------------------------------------------------------------
(a) Unaudited.
(b) Includes the results of Hickson and Brooks from the dates of
acquisition (August 22, 2000 and November 30, 2000,
respectively).
(c) Superior Pool Products, Inc. was sold on July 31, 2000.
(d) Includes certain general expenses of the corporate
headquarters that are not allocated to the business segments.
(e) Includes equity income and excludes special items.
(f) Excludes a $3.0 million charge for inventory write-down and
disposal costs in the fourth quarter due to the process
chemicals restructuring and the exiting of certain product
lines.
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