Chemtura Reports Fourth Quarter and Full Year 2006 Results.MIDDLEBURY Middlebury College is a liberal-arts college in Middlebury, Vermont, founded in 1800. Middlebury is the name of some places in the United States of America:
See: New York Stock Exchange : CEM CEM contagious equine metritis. CEM selective medium chocolate agar made with Eugon agar and 5% horse blood; used to cultivate Taylorella equigenitalis. ; the "Company") reported today a loss 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 for the fourth quarter of 2006 of $145.9 million, or $0.61 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, and a loss from continuing operations on a non-GAAP basis of $3.3 million or $0.01 per diluted share. The discussion below includes information on both a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). and non-GAAP basis. The Company has presented the non-GAAP financial information because the Company's management uses the non-GAAP information internally to evaluate and manage the performance of the Company's operations, and management believes that the non-GAAP financial information provides useful information to investors. A reconciliation of the GAAP and non-GAAP financial information has been provided in the supplemental schedules included in this release. The following is a summary of the fourth quarter and full year results: [TABLE OMITTED] The following is a summary of the fourth quarter and full year 2006 results on a non-GAAP basis as compared with the fourth quarter and full year 2005 results 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 and non-GAAP basis. The pro forma basis reflects the impact of the merger with Great Lakes Chemical Corporation Great Lakes Chemical Corporation is a chemical research, production, sales and distribution company that produces specialty chemicals used for polymers, fire suppressants and retardants, pool and spa water purification systems and various other applications. (the Merger) as if it occurred on January January: see month. 1, 2005, which has been set forth in the supplemental disclosures attached to this press release: [TABLE OMITTED] "Although we have made progress on a number of fronts during 2006 - strengthening our balance sheet, resolving legacy antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. issues, reshaping our portfolio, and generating cash, results are below our expectations," said Robert Wood There are have been several people named Robert Wood:
EPDM Enterprise Product Data Management EPDM Ethylene Propylene Dimonomer (industrial/commercial piping/plumbing components) EPDM Engineering Product Data Management Polymers and non-Flame Retardant re·tar·dant adj. Acting or tending to retard. Often used in combination: flame-retardant pajamas for children; a fire-retardant security chest. Plastics Additives. We have taken steps and have gained momentum coming into 2007 by addressing all of these matters with the announced divestiture The breakup of AT&T. By federal court order, AT&T divested itself on January 1, 1984 of its 23 operating companies, which became known as the Regional Bell Operating Companies (RBOCs). of Rubber Chemicals and EPDM and the aggressive overhaul of the non-Flame Retardant Plastics Additives business. "Our mandate A judicial command, order, or precept, written or oral, from a court; a direction that a court has the authority to give and an individual is bound to obey. A mandate might be issued upon the decision of an appeal, which directs that a particular action be taken, or upon a for 2007 is clear: Fix non-Flame Retardant Plastics Additives; continue to restructure our portfolio; streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. costs while exploring revenue enhancing opportunities; and continue to strengthen the organization's talent base and processes. We believe that accomplishing these objectives will create improved earnings and lead to 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. success," Wood concluded. Fourth Quarter Results Fourth quarter 2006 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 $873.6 million were less than one percent below fourth quarter 2005 net sales of $876.1 million. The decrease is primarily due to lower sales of $10.4 million related to the sale of the Company's Industrial Water Additives business ("IWA IWA International Water Association IWA International Webmasters Association IWA Inland Waterways Association (UK) IWA International Windsurfing Association IWA Williams-Gateway Airport ") in May 2006 and an $18.1 million decrease in sales volume, which were mostly offset by increased selling prices of $16.1 million and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency translation of $12 million. The 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. for the fourth quarter of 2006 was $15.6 million as compared with an operating loss of $0.4 million for the fourth quarter of 2005. The $15.2 million decrease is primarily due to higher raw material and energy costs of $24.7 million, additional depreciation due to the change in the useful life of certain assets at several of the Company's manufacturing facilities of $7.2 million, higher facility closures, 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 related costs of $9.0 million, the accelerated recognition of asset retirement obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1]. Firms must recognize the ARO liability in the period it was acquired, generally acquisition. of $8.8 million, lower sales volume of $7.2 million, $5.8 million of unfavorable manufacturing costs resulting from lower production volumes, an increase in the provision for doubtful accounts of $5.0 million primarily resulting from 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. economic situation in the agricultural markets in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , $4.2 million costs of other strategic and corporate initiatives, the absence of a $3.2 million gain related to a previously divested business, and inventory write-offs of $3.1 million. These charges were partially offset by a decrease in antitrust costs of $17.1 million, increased selling prices of $16.1 million, reduced merger costs of $16.0 million and cost reduction program savings of $12.8 million. The operating loss also includes $2.3 million ($1.4 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. ) related to incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. stock-based compensation expense for the quarter ended December December: see month. 31, 2006, associated with the adoption of FASB Statement FASB Statement A standard set by the Financial Accounting Standards Board regarding a financial accounting and reporting method. Essentially, FASB statements determine the acceptable accounting practices that Certified Public Accountants use in reporting No. 123R, "Share Based Payment," on January 1, 2006. The loss from continuing operations for the fourth quarter of 2006 was $145.9 million, or $0.61 per diluted share, compared with a loss of $93.0 million, or $0.39 per diluted share, for the fourth quarter of 2005. The decrease was primarily due to an increase in tax expense of $90.1 million. The Company intends to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. cash generated overseas to reduce U.S. debt. Fourth quarter earnings reflect a charge of $123.0 million to establish a deferred tax liability related to this repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. strategy. Other significant changes to the loss from continuing operations include the $15.2 million decrease in operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. discussed above and a $3.8 million increase in the negative effect of foreign exchange partially offset by improvements due to the absence of costs for debt retirement in 2006 as compared with debt retirement charges of $44.2 million in December 2005, lower interest expense of $8.2 million and a gain on the sale of the Company's equity interest in the Davis Standard venture of $5.7 million. During the fourth quarter of 2006, the Company recorded a gain on sale of discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $1.6 million (net of taxes of $0.2 million), or $0.01 per diluted share, related to the sale of the OrganoSilicones business to General Electric Company ("GE") in July July: see month. of 2003. This gain represents the reversal reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its of reserves for certain contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. that the Company no longer expects to incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. . During the fourth quarter of 2005, the Company recorded a gain on sale of discontinued operations of $22.3 million (net of taxes of $7.3 million), or $0.09 per diluted share, primarily due to purchase price adjustments related to the July 2003 sale of the OrganoSilicones business unit and a cumulative effect of accounting change of $0.5 million (net of taxes of $0.3 million), related to the implementation of FASB FASB See: Financial Accounting Standards Board FASB See Financial Accounting Standards Board (FASB). Interpretation No. 47, "Accounting for Conditional Subject to change; dependent upon or granted based on the occurrence of a future, uncertain event. A conditional payment is the payment of a debt or obligation contingent upon the performance of a certain specified act. Asset Retirement Obligations." Fourth Quarter Non-GAAP Results On a non-GAAP basis, fourth quarter 2006 operating profit was $29.5 million as compared with fourth quarter 2005 pro forma non-GAAP operating profit of $47.7 million. The non-GAAP loss from continuing operations for the fourth quarter of 2006 of $3.3 million or $0.01 per diluted share, excludes pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $18.8 million for antitrust costs resulting primarily from settlement offers and legal fees associated with the antitrust investigations and civil lawsuits, $9.1 million for additional depreciation due to the change in the useful life of certain assets at several of the Company's manufacturing facilities, $8.8 million related to the acceleration acceleration, change in the velocity of a body with respect to time. Since velocity is a vector quantity, involving both magnitude and direction, acceleration is also a vector. In order to produce an acceleration, a force must be applied to the body. of asset retirement obligations, $7.4 million for facility closures, severance and related costs and a $5.7 million gain on the sale of the Company's equity interest in the Davis Standard venture. Non-GAAP earnings from continuing operations includes $2.3 million ($1.4 million after-tax) related to the incremental stock-based compensation expense for the quarter ended December 31, 2006, associated with the adoption of FASB Statement No. 123R, "Share Based Payment," on January 1, 2006. Non-GAAP earnings from continuing operations for the fourth quarter of 2005 excludes pre-tax charges of $44.2 million for the loss on early 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, $35.9 million for antitrust costs resulting primarily from settlement offers made to certain rubber chemicals, EPDM and indirect class action claimants and legal fees associated with the antitrust investigations and civil lawsuits, $17.2 million for Merger costs, and a $3.2 million gain related to a previously divested business. Full Year Results Net sales for the year ended December 31, 2006 of $3,722.7 million were $736.1 million above net sales for the comparable period of 2005 of $2,986.6 million. The increase was primarily due to $855.6 million in additional sales resulting from the Merger, a $62.8 million increase in selling prices and $5.0 million due to favorable foreign currency translation, partially offset by a $108.3 million decrease in sales volume, the absence of $48.3 million of sales due to the deconsolidation of the Company's Polymer polymer (pŏl`əmər), chemical compound with high molecular weight consisting of a number of structural units linked together by covalent bonds (see chemical bond). Processing Equipment business in April 2005, $21.5 million due to the divestiture of the IWA business in May 2006 and $9.1 million due to the net effect of other acquisitions and divestitures. Operating profit for the year ended December 31, 2006 was $35.6 million as compared with $55.4 million for the twelve months ended December 31, 2005. This 36 percent decrease is primarily a result of a $80.3 million charge related to the impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of non-current assets, higher antitrust costs of $40.4 million due primarily to additional settlements throughout 2006, $90.4 million in higher raw material and energy costs, $55.3 million in lower sales volume, $34.4 million in unfavorable manufacturing costs resulting from lower production volumes, $7.3 million in unfavorable currency translation, higher freight The price or compensation paid for the transportation of goods by a carrier. Freight is also applied to the goods transported by such carriers. The liability of a carrier for freight damaged, lost, or destroyed during shipment is determined by contract, statute, or costs of $14.9 million related to fuel surcharges, $14.4 million costs of other strategic and corporate initiatives, a net loss on sale of IWA of $12.3 million, an increase in the provision for doubtful accounts of $8.5 million primarily resulting from the depressed economic situation in the agricultural markets in Brazil, inventory write-offs of $8.6 million, $7.7 million due to the absence of operating profit due to the sale of IWA, $8.8 million related to the incremental effect of stock option expense, an increase in depreciation and amortization resulting from a full year of depreciation for the Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). assets, and $15.9 million additional depreciation due to the change in useful lives of certain assets at several of the Company's manufacturing facilities. These charges were offset in part by $130.2 million of additional operating profit resulting from businesses acquired in the Merger through the first six months of 2006, $62.8 million in higher selling prices, $74.3 million in cost reduction program savings, lower facility closures, severance and related costs of $17.2 million, lower merger costs of $28.2 million, the absence of the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of in-process research and development of $73.3 million and purchase accounting inventory adjustments of $37.1 million in 2005 related to the Merger. The loss from continuing operations for the year ended December 31, 2006 was $218.1 million, or $0.91 per diluted share, compared with the loss from continuing operations of $184.9 million, or $1.04 per diluted share, for the year ended December 31, 2005. The decrease primarily reflects the decline in operating profit discussed above and an increase in tax expense of $35.5 million. The Company intends to repatriate cash generated overseas to reduce U.S. debt. 2006 earnings reflect a charge of $123.0 million to establish a deferred tax liability related to this repatriation strategy. Additionally, these declines were partly offset by a reduction in costs associated with the loss on early extinguishment of debt of $11.1 million, a decrease in interest expense of $5.2 million, a $5.7 million gain on the sale of the Company's equity interest in the Davis Standard venture as well as $6.3 million of additional equity income generated by this venture in 2006. For the year ended December 31, 2006, the Company recorded a gain on sale of discontinued operations of $47.5 million (net of taxes of $21.3 million), or $0.20 per diluted share, related to the sale of the OrganoSilicones business to GE in July of 2003. This gain primarily represents the recognition of the additional contingent Fortuitous; dependent upon the possible occurrence of a future event, the existence of which is not assured. The word contingent denotes that there is no present interest or right but only a conditional one which will become effective upon the happening of the earn-out Earn-out Refers to an additional payment in a merger or acquisition that is not part of the original acquisition cost, which is based on the acquired company's future earnings relative to a level determined by the merger agreement. proceeds related to the combined performance of GE's existing Silicones business and the OrganoSilicones business from the date of the sale through September September: see month. 30, 2006. Full Year Pro Forma and Non-GAAP Results Net sales for the year ended December 31, 2006 were $3,722.7 million or 5 percent less than pro forma net sales of $3,898.4 million for the year ended December 31, 2005. Of this decrease $221.6 million was attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to lower volume, $48.3 million was due to the deconsolidation of the Polymer Processing Equipment business unit in April 2005, an additional $34 million was due to declines in volume and selling prices resulting from supply agreements related to the divestiture of the IWA business in May 2006, $9.1 million due to the net effect of other acquisitions and divestitures and $9 million due to unfavorable foreign currency effects Foreign Currency Effects The extent to which the changes in a foreign currency affects the return on a foreign investment. Notes: Foreign investments are complicated by the currency fluctuation and conversion between countries. , partially offset by a $146.3 million increase in selling prices. On a non-GAAP basis, operating profit for the year ended December 31, 2006 of $260.9 million was $90.5 million or 26% lower than pro forma non-GAAP operating profit for the year ended December 31, 2006 of $351.4 million. This decrease is comprised of raw material and energy cost increases of $101.2 million, lower volumes of $83.3 million, $50 million of unfavorable manufacturing costs, $14.9 million of higher freight costs, $14.4 million costs of other strategic and corporate initiatives, $7.3 million of unfavorable foreign currency translation, $8.8 million related to the incremental effect of stock option expense, $7.7 million due to the sale of the IWA business in May 2006, $8.6 million of inventory write-offs, an increase in the provision for doubtful accounts of $8.5 million and other net increases in operating costs operating costs npl → gastos mpl operacionales , which were partially offset by selling price increases of $146.3 million and synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. cost savings of $74.3 million. Non-GAAP earnings from continuing operations for the year ended December 31, 2006 of $92.1 million, or $0.38 per diluted share, excludes pre-tax charges of $89.5 million for antitrust costs resulting primarily from settlement offers made to certain rubber chemicals, plastic additives and urethanes civil and indirect claimants and legal fees associated with the antitrust investigations and civil lawsuits, impairment of non-current assets of $80.3 million, a $44.0 million loss on early extinguishment of debt related to the retirement of the Company's Senior Floating Rate Notes due 2010 and the 9.875% Senior Notes due 2012, $17.0 million for Merger costs, a $12.3 million loss on the sale of the IWA business, $17.8 million for additional depreciation due to the change in the useful life of certain assets at several of the Company's manufacturing facilities, $8.8 million accelerated recognition of asset retirement obligations and $5.5 million for facility closures, severance and related costs. Also excluded from non-GAAP earnings are a $5.7 million gain on sale of the Company's equity interest in the Davis Standard venture, a $4.3 million favorable settlement of a contractual matter and $4.0 million of interest income on a favorable tax settlement. Pro forma non-GAAP earnings from continuing operations for the year ended December 31, 2005 of $143.6 million, or $0.60 per diluted share, excludes pre-tax charges of $23.9 million for facility closures, severance and related costs, which included a charge of $19.5 million related to the closure of the Company's Tarrytown Tarrytown (târ`ētoun), village (1990 pop. 10,739), Westchester co., SE N.Y., a residential suburb of New York City, on the E bank of the Hudson opposite Nyack; settled in the 17th cent. by the Dutch, inc. 1870. , NY facility, $45.2 million of merger costs, $49.1 million for antitrust costs, $55.1 million for the loss on the early extinguishment of debt and $4.6 million for direct costs resulting from Hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita, partially offset by a pre-tax credit of $7.2 million for insurance recoveries related to a fire at the Company's Conyers Conyers, a surname and place name, may refer to:
The non-GAAP effective tax rate for the full year 2006 is 35.3%. Non-GAAP operating profit, non-GAAP earnings from continuing operations and non-GAAP earnings per share from continuing operations are considered non-GAAP financial measures. A reconciliation of the Company's GAAP operating profit to non-GAAP and pro forma operating profit and of the Company's GAAP earnings from continuing operations to non-GAAP and pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. from continuing operations is set forth in the supplemental disclosures attached to this press release. Fourth Quarter Earnings Q&A Teleconference Copies of the release as well as informational slides will be available on the Investor Relations Investor relations The process by which the corporation communicates with its investors. section at www.chemtura.com. The company will host a teleconference to review these results on Monday Monday: see week. , February February: see month. 12, at 9 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy . Interested parties are asked to dial in approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 10 minutes prior to the start time at (913) 981-5592. Replay of the call will be available for two weeks starting at 12:30 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. on February 12. To access the replay, call (719) 457-0820 and enter access code 7042015. Live Internet access See how to access the Internet. to the 2006 fourth quarter conference call will be available through the Investor Relations section of the Company's Web site. Chemtura Corporation, with 2006 sales of $3.7 billion, is a global manufacturer and marketer of 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. , crop protection and pool, spa and home care products. Additional information concerning Chemtura is available at www.chemtura.com. Supplemental Historical Pro Forma and Non-GAAP Financial Information Included in the Appendix appendix, small, worm-shaped blind tube, about 3 in. (7.6 cm) long and 1-4 in. to 1 in. (.64–2.54 cm) thick, projecting from the cecum (part of the large intestine) on the right side of the lower abdominal cavity. to this press release are supplemental financial tables containing unaudited pro forma and non-GAAP adjusted 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 Earnings and Segment Operating Profit. The attached schedules reflect adjustments to previously furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. information for changes in depreciation and amortization related to the Company's fair value adjustment of Great Lakes' property, plant and equipment and 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. . The schedules also reflect certain additional reclassifications to conform the former Great Lakes presentation to the Company's presentation. Unaudited Pro Forma Financial Information The attached unaudited pro forma results of operations for the fourth quarter and year ended December 31, 2005 give effect to the Merger using the purchase method as if the Merger had been consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. as of January 1, 2005. The pro forma unaudited results of operations combine the historical results of operations of the Company and Great Lakes with the following adjustments: (1) Pension - Represents a reduction in pension expense, principally due to the elimination of the impact of amortization of historical gains and losses from Great Lakes' historical net periodic benefit cost. (2) Interest - Represents the impact on interest expense of amortization of the fair value adjustment to Great Lakes' long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . (3) Purchase accounting depreciation - Represents the impact on depreciation expense of the fair value adjustment and change in the remaining useful life of Great Lakes' property, plant and equipment. (4) Amortization - Represents the impact on amortization expense of the fair value adjustment and change in remaining useful life of Great Lakes' intangible assets. (5) Inventory accounting - Represents the impact of conforming con·form v. con·formed, con·form·ing, con·forms v.intr. 1. To correspond in form or character; be similar. 2. Great Lakes' inventory capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. policy to a consistently applied method utilized by the Company. (6) Merger costs - Represents the reversal of merger costs incurred by Great Lakes in connection with the Merger. (7) In-process research and development costs - Represents the reversal of the write-off of in-process research and development. (8) Purchase accounting - Reversal of purchase accounting inventory fair value impact. The unaudited pro forma results of operations do not give effect to synergies and cost savings. The pro forma results of operations do not purport To convey, imply, or profess; to have an appearance or effect. The purport of an instrument generally refers to its facial appearance or import, as distinguished from the tenor of an instrument, which means an exact copy or duplicate. PURPORT, pleading. to be indicative indicative: see mood. of what the actual results of operations would have been had the Merger been completed on the dates assumed or the results of operations that may be achieved in the future. Conformed Great Lakes The financial information presented as Conformed Great Lakes in the Appendix reflects reclassifications of historical Great Lakes financial information to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the Company's presentation. Non-GAAP Financial Measures The information presented in this press release and in the attached financial tables includes financial measures that are not calculated or presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with 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 in 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. (GAAP). These non-GAAP financial measures consist of adjusted results of operations of the Company that exclude certain expenses, gains and losses that may not be indicative of the core operations of the Company. Excluded items include facility closures, severance and related costs, antitrust costs, Merger costs, asset impairments, increased depreciation due to the change in useful life of assets, unusual and non-recurring catastrophic events or settlements, loss on early extinguishment of debt, and gains and losses on disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of of business units. In addition to the non-GAAP financial measures discussed above, the Company has applied a non-GAAP effective income tax rate to our non-GAAP income before taxes. This rate incorporates an assumed mix of foreign earnings and taxes, permanent book-tax differences, various tax planning Tax planning Devising strategies throughout the year in order to minimize tax liability, for example, by choosing a tax filing status that is most beneficial to the taxpayer. strategies and other assumptions. Reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures are provided in the attached financial tables. The Company believes that such non-GAAP financial measures provide useful information to investors and may assist them in evaluating the Company's underlying performance and identifying operating trends. In addition, management uses these non-GAAP financial measures internally to allocate To reserve a resource such as memory or disk. See memory allocation. resources and evaluate the performance of the Company's operations. While the Company believes that such measures are useful in evaluating the Company's performance, investors should not consider them to be a substitute for financial measures prepared in accordance with GAAP. In addition, these non-GAAP financial measures may differ from similarly titled non-GAAP financial measures used by other companies and do not provide a comparable view of the Company's performance relative to other companies in similar industries. Forward-Looking Statement 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. Certain statements made in this release are forward-looking statements that involve risks and uncertainties, including, but not limited to, general economic conditions; significant international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and interests; the outcome and timing of antitrust investigations and related civil lawsuits to which Chemtura is subject; the ability to obtain increases in selling prices; the ability to retain sales volumes in the event of increasing selling prices; the ability to absorb absorb To offset sell orders or a new security offering with buy orders. fixed cost overhead in the event of lower volumes; pension and other post-retirement benefit plan assumptions; energy and raw material prices, availability and quality; 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; the ability to realize expected cost savings under Chemtura's cost-reduction initiatives; the ability to successfully execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution our portfolio divesture Di`ves´ture n. 1. Divestiture. plan; the ability to reduce Chemtura's debt levels; the ability to successfully integrate the Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). and Great Lakes businesses, operations and information systems and achieve anticipated benefits from the Merger, including costs savings and synergies; and other risks and uncertainties detailed in filings with the Securities and Exchange Commission by Chemtura or its predecessor predecessor - parent companies. These statements are based on Chemtura's estimates and assumptions and on currently available information. The forward-looking statements include information concerning our possible or assumed future results of operations. Chemtura's actual results may differ significantly from the results discussed. 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. information is intended to reflect opinions as of the date this release was issued and such information will not necessarily be updated by Chemtura.
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CHEMTURA CORPORATION
Non-GAAP Condensed Consolidated Statement of Earnings (Unaudited)
(In thousands, except per share data)
Chemtura
Quarter Ended
December 31, Pro Forma
2005 Adjustments
------------- -----------
Net sales $ 876,133 $ -
Cost of products sold 657,030 -
Selling, general and administrative 105,308 -
Depreciation and amortization 53,715 -
Research and development 15,261 -
Facility closures, severance and related
costs (1,582) -
Antitrust costs 35,889 -
Merger costs 17,166 -
In-process research and development (2,100) 2,100
(Gain) loss on sale of businesses, net
(*) (3,199)
Equity income (989) -
------------- -----------
Operating profit (loss) (366) (2,100)
Interest expense 29,815 -
Loss on early extinguishment of debt 44,232 -
Other expense, net 4,665 -
------------- -----------
Earnings (loss) from continuing
operations
before income taxes (79,078) (2,100)
Income tax expense (benefit) 13,890 -
------------- -----------
Earnings (loss) from continuing
operations $ (92,968) $ (2,100)
============= ===========
Pro Forma Adjustments consist of the
following: Pro Forma
-------------
In-process research and development $ (2,100)
-------------
Pre-Tax (2,100)
Adjustment to apply a pro forma
effective tax rate -
-------------
After-Tax $ (2,100)
=============
Non-GAAP Adjustments consist of the
following: Non-GAAP
-------------
Facility closures, severance and related
costs $ (1,582)
Antitrust costs 35,889
Merger costs 17,166
Gain/Loss on disposition of business (3,199)
Loss on early extinguishment of debt 44,232
Change in useful life of assets 1,923
-------------
Pre-Tax 94,429
Adjustment to apply a pro forma
effective tax rate (9,251)
-------------
After-Tax $ 103,680
=============
Pro Forma
Pro Forma Non-GAAP
Combined Combined
Quarter Ended Quarter Ended
December 31, Non-GAAP December 31,
2005 Adjustments 2005
------------- ----------- -------------
Net sales $ 876,133 $ - $ 876,133
Cost of products sold 657,030 - 657,030
Selling, general and
administrative 105,308 - 105,308
Depreciation and
amortization 53,715 (1,923) 51,792
Research and development 15,261 - 15,261
Facility closures,
severance and related
costs (1,582) 1,582 -
Antitrust costs 35,889 (35,889) -
Merger costs 17,166 (17,166) -
In-process research and
development - - -
(Gain) loss on sale of
businesses, net (*) (3,199) 3,199 -
Equity income (989) - (989)
------------- ----------- -------------
Operating profit (loss) (2,466) 50,197 47,731
Interest expense 29,815 - 29,815
Loss on early
extinguishment of debt 44,232 (44,232) -
Other expense, net 4,665 - 4,665
------------- ----------- -------------
Earnings (loss) from
continuing operations
before income taxes (81,178) 94,429 13,251
Income tax expense
(benefit) 13,890 (9,251) 4,639
------------- ----------- -------------
Earnings (loss) from
continuing operations $ (95,068) $ 103,680 $ 8,612
============= =========== =============
Diluted earnings per share
from continuing
operations $ (0.40) $ 0.04
============= =============
Diluted weighted average
shares outstanding 239,937 242,616
============= =============
CHEMTURA CORPORATION
Pro Forma Non-GAAP Condensed Consolidated Statement of Earnings
(Unaudited)
(In thousands, except per share data)
Conformed
Chemtura Great Lakes
Twelve Months Twelve Months
Ended Ended
December 31, December 31, Pro Forma
2005 2005 Adjustments
------------- -------------- -----------
Net sales $ 2,986,608 $ 911,834 $ -
Cost of products sold 2,203,115 673,401 (37,563)
Selling, general and
administrative 333,080 110,849 (480)
Depreciation and
amortization 157,822 39,748 3,880
Research and development 51,826 13,301 (104)
Facility closures,
severance and related
costs 22,713 1,228 -
Antitrust costs 49,109 - -
Merger costs 45,230 138,429 (138,429)
In-process research and
development 73,300 - (73,300)
(Gain) loss on sale of
businesses, net (*) (3,199) - -
Equity income (1,765) (738) -
------------- -------------- -----------
Operating profit (loss) 55,377 (64,384) 245,996
Interest expense 107,701 13,814 (4,404)
Loss on early
extinguishment of debt 55,091 - -
Other expense, net 12,237 1,164 -
------------- -------------- -----------
Earnings (loss) from
continuing operations
before income taxes (119,652) (79,362) 250,400
Income tax expense
(benefit) 65,198 (3,833) 37,232
------------- -------------- -----------
Earnings (loss) from
continuing operations $ (184,850) $ (75,529) $ 213,168
============= ============== ===========
Pro Forma Adjustments
consist of the
following: Pre-Tax
-------------
Pension $ 1,950
Interest 4,404
Purchase accounting
depreciation 5,274
Amortization (9,154)
Inventory Accounting (903)
Merger costs 138,429
Purchase accounting
inventory fair value
impact 37,100
In-process research and
development 73,300
-------------
250,400
Adjustment to apply a pro
forma effective tax rate (37,232)
-------------
After-Tax $ 213,168
=============
Non-GAAP Adjustments
consist of the
following: Pre-Tax
-------------
Facility closures,
severance and related
costs $ 23,941
Antitrust costs 49,109
Merger costs 45,230
Gain/Loss on disposition
of Business (3,199)
Hurricane costs 4,563 (a)
Conyers fire insurance (b)
recoveries (7,163)
Loss on early
extinguishment of debt 55,091
Change in useful life of
assets 1,923
-------------
169,495
Adjustment to apply a pro
forma effective tax rate 21,287
-------------
After-Tax $ 190,782
=============
Pro Forma
Pro Forma Non-GAAP
Combined Combined
Twelve Months Twelve Months
Ended Ended
December 31, Non-GAAP December 31,
2005 Adjustments 2005
------------- ----------- -------------
Net sales $ 3,898,442 $ - $ 3,898,442
Cost of products sold 2,838,953 2,600 2,841,553
Selling, general and
administrative 443,449 - 443,449
Depreciation and
amortization 201,450 (1,923) 199,527
Research and development 65,023 - 65,023
Facility closures,
severance and related
costs 23,941 (23,941) -
Antitrust costs 49,109 (49,109) -
Merger costs 45,230 (45,230) -
In-process research and
development - - -
(Gain) loss on sale of
businesses, net (*) (3,199) 3,199 -
Equity income (2,503) - (2,503)
------------- ----------- -------------
Operating profit (loss) 236,989 114,404 351,393
Interest expense 117,111 - 117,111
Loss on early
extinguishment of debt 55,091 (55,091) -
Other expense, net 13,401 - 13,401
------------- ----------- -------------
Earnings (loss) from
continuing operations
before income taxes 51,386 169,495 220,881
Income tax expense
(benefit) 98,597 (21,287) 77,310
------------- ----------- -------------
Earnings (loss) from
continuing operations $ (47,211) $ 190,782 $ 143,571
============= =========== =============
Diluted earnings per share
from continuing
operations $ (0.20) $ 0.60
============= =============
Diluted weighted average
shares outstanding 235,925 239,646
============= =============
(a) Includes direct expenses due to Hurricanes Katrina and Rita.
(b) Represents insurance recoveries related to a fire at the Company's
Conyers, Georgia facility.
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CHEMTURA CORPORATION
Pro Forma Non-GAAP Segment Net Sales and Operating Profit (Loss)
(Unaudited)
(In thousands of dollars)
Quarter Ended
December 31, Pro Forma
2005 Adjustments
------------- ------------
NET SALES
Plastic Additives $ 363,797 $ -
Polymers 126,253 -
Specialty Additives 140,147 -
Crop Protection 82,068 -
Consumer Products 120,964 -
Other 42,904 -
------------- ------------
$ 876,133 $ -
============= ============
OPERATING PROFIT (LOSS)
Plastic Additives $ 15,938 $ -
Polymers 18,671 -
Specialty Additives 19,736 -
Crop Protection 7,850 -
Consumer Products 12,707 -
Other 3,347 -
------------- ------------
78,249 -
------------- ------------
General corporate expense (32,441) -
Facility closures, severance and
related costs 1,582 -
Antitrust costs (35,889) -
Merger costs (17,166) -
In-process research and development 2,100 (2,100)
(Gain) loss on sale of businesses,
net (*) 3,199 -
------------- ------------
Total operating profit (loss) $ (366) $ (2,100)
============= ============
Pro Forma Adjustments consist of the Operating
following: Profit
-------------
In-process research and development $ (2,100)
-------------
$ (2,100)
=============
Non-GAAP Adjustments consist of the Operating
following: Profit
-------------
Facility closures, severance and related
costs $ (1,582)
Antitrust costs 35,889
Merger costs 17,166
Change in useful life of assets 1,923
(Gain) loss on sale of businesses, net
(*) (3,199)
-------------
$ 50,197
=============
Pro Forma
Pro Forma Non-GAAP
Combined Combined
Quarter Ended Quarter Ended
December 31, Non-GAAP December 31,
2005 Adjustments 2005
------------- ----------- -------------
NET SALES
Plastic Additives $ 363,797 $ - $ 363,797
Polymers 126,253 - 126,253
Specialty Additives 140,147 - 140,147
Crop Protection 82,068 - 82,068
Consumer Products 120,964 - 120,964
Other 42,904 - 42,904
------------- ----------- -------------
$ 876,133 $ - $ 876,133
============= =========== =============
OPERATING PROFIT (LOSS)
Plastic Additives $ 15,938 $ - $ 15,938
Polymers 18,671 - 18,671
Specialty Additives 19,736 - 19,736
Crop Protection 7,850 - 7,850
Consumer Products 12,707 - 12,707
Other 3,347 - 3,347
------------- ----------- -------------
78,249 - 78,249
------------- ----------- -------------
General corporate
expense (32,441) 1,923 (30,518)
Facility closures,
severance and related
costs 1,582 (1,582) -
Antitrust costs (35,889) 35,889 -
Merger costs (17,166) 17,166 -
In-process research and
development - - -
(Gain) loss on sale of
businesses, net (*) 3,199 (3,199) -
------------- ----------- -------------
Total operating
profit (loss) $ (2,466) $ 50,197 $ 47,731
============= =========== =============
CHEMTURA CORPORATION
Condensed Pro Forma Non-GAAP Segment Net Sales and Operating Profit
(Loss) (Unaudited)
(In thousands of dollars)
Conformed
Great Lakes
Twelve Months Twelve Months
Ended Ended
December 31, December 31, Pro Forma
2005 2005 Adjustments
------------- ------------- -----------
NET SALES
Plastic Additives $ 1,156,627 $ 432,733 $ -
Polymers 517,471 - -
Specialty Additives 561,090 20,143 -
Crop Protection 353,610 23,164 -
Consumer Products 261,258 345,954 -
Other 136,552 89,840 -
------------- ------------- -----------
$ 2,986,608 $ 911,834 $ -
============= ============= ===========
OPERATING PROFIT (LOSS)
Plastic Additives $ 73,466 $ 34,902 $ 8,623
Polymers 94,355 - -
Specialty Additives 95,978 2,478 308
Crop Protection 82,106 7,216 162
Consumer Products 23,215 31,642 (4,295)
Other 5,208 10,225 1,357
------------- ------------- -----------
374,328 86,463 6,155
------------- ------------- -----------
General corporate expense (94,698) (11,190) (8,988)
Facility closures,
severance and
related costs (22,713) (1,228) -
Antitrust costs (49,109) - -
Merger costs (45,230) (138,429) 138,429
Purchase accounting -
inventory fair value
impact (37,100) - 37,100
In-process research and
development (73,300) - 73,300
(Gain) loss on sale of
businesses, net (*) 3,199 - -
------------- ------------- -----------
Total operating profit
(loss) $ 55,377 $ (64,384) $ 245,996
============= ============= ===========
Pro Forma Adjustments Operating
consist of the following: Profit
-------------
Pension $ 1,950
Purchase Accounting
Depreciation 5,274
Amortization (9,154)
Purchase accounting -
inventory fair value
impact 36,197
Merger Costs 138,429
In-process research and
development 73,300
-------------
$ 245,996
=============
Non-GAAP Adjustments Operating
consist of the following: Profit
-------------
Facility closures,
severance and related
costs $ 23,941
Antitrust costs 49,109
Merger Costs 45,230
(Gain) loss on sale of
businesses, net (*) (3,199)
Hurricane costs 4,563
Conyers fire costs (7,163)
Change in useful life of
assets 1,923
-------------
$ 114,404
=============
Pro Forma
Pro Forma Non-GAAP
Combined Combined
Twelve Months Twelve Months
Ended Ended
December 31, Non-GAAP December 31,
2005 Adjustments 2005
-------------- ----------- --------------
NET SALES
Plastic Additives $ 1,589,360 $ - $ 1,589,360
Polymers 517,471 - 517,471
Specialty Additives 581,233 - 581,233
Crop Protection 376,774 - 376,774
Consumer Products 607,212 - 607,212
Other 226,392 - 226,392
------------- ----------- -------------
$ 3,898,442 $ - $ 3,898,442
============= =========== =============
OPERATING PROFIT (LOSS)
Plastic Additives $ 116,991 $ 1,998 $ 118,989
Polymers 94,355 880 95,235
Specialty Additives 98,764 1,028 99,792
Crop Protection 89,484 - 89,484
Consumer Products 50,562 1,494 52,056
Other 16,790 - 16,790
------------- ----------- -------------
466,946 5,400 472,346
------------- ----------- -------------
General corporate expense (114,876) (6,077) (120,953)
Facility closures,
severance and
related costs (23,941) 23,941 -
Antitrust costs (49,109) 49,109 -
Merger costs (45,230) 45,230 -
Purchase accounting -
inventory fair value
impact - - -
In-process research and
development - - -
(Gain) loss on sale of
businesses, net (*) 3,199 (3,199) -
------------- ----------- -------------
Total operating profit
(loss) $ 236,989 $ 114,404 $ 351,393
============= =========== =============
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