Chemtura Reports Improved Second Quarter Results; Announces Plan for Early Redemption of 7.75% Bonds Due in 2023; Merger Integration Progressing 'Exceptionally Well'.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. ), which was formed on July July: see month. 1, 2005, by the merger of Crompton Corporation Crompton Corporation, formerly Crompton and Knowles, is a chemical research, production, sales and distribution company headquartered in Middlebury, Connecticut. The company produces specialty chemicals used for polymers, fire suppressants and retardants, pool and spa water and 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. , today reported results of operations for the second quarter of 2005. Reported results for Chemtura reflect the stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." operations of the former Crompton Corporation. The stand-alone results for the former Great Lakes Chemical Corporation are reported separately as an attachment See attach a file. to this release. Chemtura Corporation's reported earnings 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 second quarter of 2005 were $10.2 million, or $0.09 per share, versus a loss of $0.9 million, or $0.01 per share, in the second quarter of 2004. Second quarter 2005 earnings from continuing operations included pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $23.9 million for 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. Facility closures, severance and related costs of $23.9 million included $20.3 million of unrecoverable future lease costs and asset write-offs related to the closure of the company's former research and development facility in 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. Second quarter 2005 results also included pre-tax charges of $8.7 million for merger costs related to the July 1, 2005 merger and $3.3 million for 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. costs. Net earnings for the second quarter of 2005 were $17.0 million, or $0.14 per share, compared to net earnings of $1.1 million, or $0.01 per share, in the second quarter of 2004. Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. for the current quarter included a gain of $6.4 million, or $0.05 per share, related to the sale of the Refined Products business on June June: see month. 24, 2005. Earnings from Refined Products were $0.5 million, which was less than $0.01 per share, for the quarter compared to $2.0 million, or $0.02 per share, last year. Second quarter 2005 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 were $602.3 million, four percent above prior year net sales of $581.4 million. The increase was the result of a 14 percent increase from higher selling prices and a two percent increase from favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency translation. The increase was partially offset by a six percent decrease from lower volume and a six percent decrease due to the deconsolidation of the Davis-Standard business. On April 29, 2005, the company contributed the assets of its 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 segment to Davis-Standard LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Black Clawson Clawson, city (1990 pop. 13,874), Oakland co., SE Mich., a residential suburb between Pontiac and Detroit; settled c.1833, inc. 1920. Converting Machinery Company, in exchange for a non-controlling interest in the Davis-Standard LLC joint venture. The company is recording its proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of the joint venture's earnings in other (income) expense, net. The tax rate from continuing operations for the second quarter was 45 percent, largely due to a $2.4 million increase in the deferred tax valuation allowance for certain international and state income tax matters. "I am pleased to report that merger integration is progressing exceptionally well and that our intense focus on restoring acceptable sustainable operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before is continuing to yield results," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. L. Wood, chairman, president and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "It is particularly gratifying grat·i·fy tr.v. grat·i·fied, grat·i·fy·ing, grat·i·fies 1. To please or satisfy: His achievement gratified his father. See Synonyms at please. 2. that our people were able to sustain the momentum gained in the first quarter despite potential distractions from merger integration activities and SAP sap, fluid in plants consisting of water and dissolved substances. Cell sap refers to this fluid present in the large vacuole, or cell cavity, that occupies most of the central portion of mature plant cells. convergence convergence Mathematical property of infinite series, integrals on unbounded regions, and certain sequences of numbers. An infinite series is convergent if the sum of its terms is finite. . "The Crompton-Great Lakes merger adds a whole new dimension to both our opportunities and challenges. We have already begun to apply the same discipline to the integration 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. capture process and running of Great Lakes' businesses as we have over the last 18 months to Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). . We expect Great Lakes' market leading positions to yield similar results over the next 18 months. "Results from Great Lakes' second quarter were improved but did not meet our expectations. A recovery plan has been put in place." The second quarter of 2005 net loss for 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). was $91.2 million, or $1.76 per share, which included a loss from discontinued operations of $3.2 million, or $0.06 per share, associated with the 2002 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 Great Lakes' fine chemicals business unit. The loss from continuing operations of $88.0 million, or $1.70 per share, included pre-tax charges of $135.9 million for merger costs primarily related to change in control provisions in employment contracts that were partially offset by a $5.0 million benefit from the termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of Great Lakes' management incentive program. Great Lakes' second quarter 2005 net sales of $491.4 million were 11 percent above the prior year. The increase in sales was due to a 10 percent increase from improved selling prices and a two percent increase due to favorable foreign currency, partially offset by a one percent decrease due to lower volume. The Great Lakes tax rate from continuing operations for the second quarter of 2005 was 10 percent primarily due to non-deductible merger costs and certain other discrete A component or device that is separate and distinct and treated as a singular unit. items. Excluding these discrete items, the second quarter tax rate would have been 31 percent. Also included in this release is a supplemental 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 combined statement of operations See Income statement. . Pro forma statements Pro forma statement A financial statement showing the forecast or projected operating results and balance sheet, as in pro forma income statements, balance sheets, and statements of cash flows. of operations are not necessarily indicative indicative: see mood. of current or future results of operations. Company Announces Plan for Early Redemption The liberation of an estate in real property from a mortgage. Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. of 7.75% Bonds Due in 2023 Separately, Chemtura announced plans to retire retire v. 1) to stop working at one's occupation. 2) to pay off a promissory note, and thus "retire" the loan. 3) for a jury to go into the jury room to decide on a verdict after all evidence, argument and jury instructions have been completed. its outstanding $110 million aggregate principal amount of 7.75% bonds due in 2023. "This action is in line with our plan to reduce debt beginning with the highest cost debt that we are contractually con·trac·tu·al adj. Of, relating to, or having the nature of a contract. con·trac  tu·al·ly adv.Adv. 1. able to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. ," said Karen Karen Any member of a variety of tribal peoples of southern Myanmar (Burma). Constituting the second largest minority in Myanmar, the Karen are not a unitary group in any ethnic sense, as they differ among themselves linguistically, religiously, and economically. R. Osar, executive vice president and CFO See Chief Financial Officer. . The company will finance the redemption with short-term debt Short-term debt Debt obligations, recorded as current liabilities, requiring payment within the year. , which it expects to retire within six months. Chemtura will issue a notice of redemption to the holders of record shortly, outlining the terms and conditions of the anticipated redemption. The bonds will be redeemed re·deem tr.v. re·deemed, re·deem·ing, re·deems 1. To recover ownership of by paying a specified sum. 2. To pay off (a promissory note, for example). 3. at a redemption price Redemption price See: Call price redemption price 1. The price at which an open-end investment company will buy back its shares from the owners. In most cases, the redemption price is the net asset value per share. 2. of 103.021% of the principal amount thereof, plus accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. to the redemption date Redemption date The date on which a bond matures or is redeemed. redemption date The date on which a debt security is scheduled to be redeemed by the issuer. The redemption date is the scheduled maturity date or, if applicable, a call date. . Second Quarter Earnings Q&A Teleconference The company's second quarter earnings conference call will be held on July 29, 2005 at 9 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . The company will post informational slides shortly before the call, which will include an analysis of segment results, to the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of its Web site at www.chemtura.com. 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 (612) 332-0718. Replay of the call will be available for two weeks starting at 12:30 p.m. on July 29. To access the replay, call (320) 365-3844 and enter access code 789400. Chemtura Corporation, with pro forma 2004 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. Headquartered in Middlebury, Connecticut Middlebury is a town in New Haven County, Connecticut, United States. The population was 6,451 at the 2000 census. Geography According to the United States Census Bureau, the town has a total area of 47.8 km² (18.5 mi²). 46.0 km² (17.8 mi²) of it is land and 1.8 km² (0. , the company has approximately 7,300 employees around the world. Additional information concerning Chemtura is available at www.chemtura.com. 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; the outcome and timing of antitrust investigations and related civil lawsuits to which Chemtura is subject; the ability to obtain increases in selling-prices; pension and other post-retirement benefit plan assumptions; energy and raw material prices and availability; production capacity; changes in interest rates and foreign currency exchange rates; changes in technology, market demand and customer requirements; the enactment of more stringent environmental laws and regulations; the ability to realize expected cost savings under Chemtura's cost-reduction initiatives; the amount of any additional 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. payments from General Electric company from the sale of the OrganoSilicones business; the ability to reduce Chemtura's debt levels; and other risks and uncertainties detailed in filings with the Securities and Exchange Commission by Chemtura or its predecessor predecessor - parent companies. The following additional factors relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the merger of Crompton and Great Lakes, among others, could cause actual results to differ from those included in the 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: the risk that the Crompton and Great Lakes businesses will not be integrated successfully; the risk that the Crompton and Great Lakes information systems will not be successfully converged to a single platform without disruption disruption /dis·rup·tion/ (dis-rup´shun) a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process. and that the converged information systems platform may not be successfully extended to subsidiaries not currently on the same software; the risk that the cost savings and other synergies from the transaction may not be fully realized or take longer to realize than anticipated; the inability to achieve cash flow synergies; disruption from the merger making it more difficult to maintain relationships with employees, customers or suppliers; and competition and its effect on pricing, spending, third-party relationships and revenues. 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, and Chemtura's actual results may differ significantly from the results discussed. Forward-looking information is intended to reflect opinions as of the date this release was issued and such information will not necessarily be updated by Chemtura.
Chemtura Corporation
Index of Financial Statements and Schedules
Chemtura Corporation
--------------------
Consolidated Statements of Earnings (Unaudited) - Second
quarter and six months ended June 2005 and 2004
Consolidated Balance Sheets - June 2005 (Unaudited) and
December 2004
Consolidated Statements of Cash Flows (Unaudited) - Six
months ended June 2005 and 2004
Consolidated Statements of Cash Flows (Unaudited) - Second
quarter ended June 2005 and 2004
Segment Sales and Operating Profit (Unaudited) - Second
quarter and six months ended June 2005 and 2004
Major Factors Affecting Operating Results (Unaudited) -
Second quarter and six months ended June 2005 and 2004
Great Lakes Chemical Corporation
--------------------------------
Consolidated Statements of Income (Unaudited) - Second
quarter and six months ended June 2005 and 2004
Consolidated Balance Sheets - June 2005 (Unaudited) and
December 2004
Consolidated Statements of Cash Flows (Unaudited) - Six
months ended June 2005 and 2004
Consolidated Statements of Cash Flows (Unaudited) - Second
quarter ended June 2005 and 2004
Segment Sales and Operating Profit (Unaudited) - Second
quarter and six months ended June 2005 and 2004
Major Factors Affecting Operating Results (Unaudited) -
Second quarter and six months ended June 2005 and 2004
Pro Forma
---------
Pro Forma Consolidated Statements of Earnings (Unaudited) -
Second quarter and six months ended June 2005 and 2004
CHEMTURA CORPORATION
Consolidated Statements of Earnings
Second quarter and six months ended 2005 and 2004
(In thousands, except per share data)
Second Quarter Six months ended
----------------- ---------------------
2005 2004 2005 2004
-------- -------- ---------- ----------
Net sales $602,329 $581,411 $1,192,059 $1,136,920
Cost of products sold (a) 424,907 448,217 843,576 879,205
Selling, general and
administrative (a) 58,607 66,671 119,878 137,992
Depreciation and amortization 27,737 29,026 57,863 57,906
Research and development 10,472 12,647 20,983 24,046
Equity income (86) (66) (174) (9,693)
Facility closures, severance
and related costs 23,917 3,278 24,075 5,689
Antitrust costs 3,338 4,350 6,504 8,403
Merger costs 8,686 - 8,686 -
-------- -------- ---------- ----------
Operating profit 44,751 17,288 110,668 33,372
Interest expense 24,309 17,162 48,715 35,087
Other (income) expense, net 2,035 3,191 10,834 (89,563)
-------- -------- ---------- ----------
Earnings (loss) from
continuing operations
before income taxes 18,407 (3,065) 51,119 87,848
Income tax expense (benefit) 8,233 (2,193) 22,716 27,927
-------- -------- ---------- ----------
Earnings (loss) from
continuing operations 10,174 (872) 28,403 59,921
Earnings (loss) from
discontinued operations 450 1,956 2,656 2,116
Gain on sale of discontinued
operations 6,406 - 6,406 -
-------- -------- ---------- ----------
Net earnings $ 17,030 $ 1,084 $ 37,465 $ 62,037
======== ======== ========== ==========
Basic earnings (loss) per
common share:
Earnings (loss) from
continuing operations $ 0.09 $ (0.01) $ 0.24 $ 0.52
Earnings from
discontinued operations - 0.02 0.02 0.02
Gain on sale of
discontinued operations 0.05 - 0.06 -
-------- -------- ---------- ----------
Net earnings $ 0.14 $ 0.01 $ 0.32 $ 0.54
======== ======== ========== ==========
Diluted earnings (loss) per
common share:
Earnings (loss) from
continuing operations $ 0.09 $ (0.01) $ 0.24 $ 0.52
Earnings from
discontinued
operations - 0.02 0.02 0.02
Gain on sale of
discontinued
operations 0.05 - 0.05 -
-------- -------- ---------- ----------
Net earnings $ 0.14 $ 0.01 $ 0.31 $ 0.54
======== ======== ========== ==========
Weighted average shares
outstanding - basic 117,769 114,574 117,267 114,550
======== ======== ========== ==========
Weighted average shares
outstanding - diluted 121,523 114,574 120,237 114,805
======== ======== ========== ==========
(a) Reflects the reclassification of 2004 shipping costs from selling,
general and administrative to cost of products sold
($15.4 million and $17.5 million for the second quarter ended June
2005 and 2004, respectively, and $31.1 million and $34.2 million
for the six months ended June 2005 and 2004, respectively).
CHEMTURA CORPORATION
Consolidated Balance Sheets
June 30, 2005 and December 31, 2004
(In thousands of dollars)
June 30, December 31,
2005 2004
------------- -------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 49,038 $ 158,700
Accounts receivable 230,579 242,435
Inventories 357,342 383,635
Other current assets 225,003 165,554
Assets held for sale (a) - 97,252
------------- -------------
Total current assets 861,962 1,047,576
------------- -------------
NON-CURRENT ASSETS
Property, plant and equipment 625,937 694,925
Cost in excess of acquired net assets 362,106 407,975
Other assets 602,844 528,233
------------- -------------
$ 2,452,849 $ 2,678,709
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 13,441 $ 4,294
Accounts payable 186,238 228,458
Accrued expenses 302,096 338,709
Income taxes payable 118,313 107,686
Other current liabilities - 23,555
Liabilities held for sale (a) - 6,467
------------- -------------
Total current liabilities 620,088 709,169
------------- -------------
NON-CURRENT LIABILITIES
Long-term debt 843,482 862,251
Pension and post-retirement health care
liabilities 500,513 566,759
Other liabilities 213,418 211,550
STOCKHOLDERS' EQUITY
Common stock 1,192 1,192
Additional paid-in capital 1,033,231 1,032,282
Accumulated deficit (621,905) (647,678)
Accumulated other comprehensive loss (125,941) (22,372)
Treasury stock, at cost (11,229) (34,444)
------------- -------------
Total stockholders' equity 275,348 328,980
------------- -------------
$ 2,452,849 $ 2,678,709
============= =============
(a) Represents the assets and liabilities related to the Refined
Products business, which has been classified as a discontinued
operation.
CHEMTURA CORPORATION
Consolidated Statements of Cash Flows
Six months ended 2005 and 2004
(In thousands of dollars)
Six Months Ended
----------------------
Increase (decrease) to cash 2005 2004
--------------------------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 37,465 $ 62,037
Adjustments to reconcile net earnings
to net cash used in operations:
Gain on sale of discontinued operations (6,406) -
Gain on sale of Gustafson joint venture - (90,938)
Depreciation and amortization 60,643 61,840
Equity income (174) (9,693)
Changes in assets and liabilities, net:
Accounts receivable (77,192) (59,090)
Accounts receivable - securitization 25,483 11,105
Inventories (32,709) (2,251)
Accounts payable (16,206) (15,924)
Deposit for civil antitrust settlement (58,500) -
Pension and post-retirement health care
liabilities (28,018) 2,457
Other (43,876)(a) 16,640
--------- ---------
Net cash used in operations (139,490) (23,817)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from divestments 74,100 137,696
Capital expenditures (31,800) (29,495)
Merger related expenditures (5,918) -
Other investing activities (56) 309
--------- ---------
Net cash provided by investing activities 36,326 108,510
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on domestic credit facility - (57,000)
(Payments on) proceeds from short-term
borrowings (651) 574
Payments on long-term borrowings (10,000) -
Payments for debt issuance costs (726) -
Dividends paid (11,692) (11,455)
Proceeds from exercise of stock options 17,087 4
Other financing activities 1,618 (84)
--------- ---------
Net cash used in financing activities (4,364) (67,961)
--------- ---------
CASH
Effect of exchange rates on cash (2,134) (767)
--------- ---------
Change in cash (109,662) 15,965
Cash at beginning of period 158,700 39,213
--------- ---------
Cash at end of period $ 49,038 $ 55,178
========= =========
(a) Change in other for 2005 includes environmental payments of $14.0
million, a decrease in accrued payroll and benefits of $10.4
million, prepayed costs relating to the Refined Products sale of
$6.8 million and facility closures, severance and related cost
payments in excess of the charge for the period of $5.1 million.
CHEMTURA CORPORATION SUPPLEMENTARY SCHEDULE
Consolidated Statements of Cash Flows ----------------------
Second quarter ended 2005 and 2004
(In thousands of dollars)
Second Quarter Ended
-----------------------
Increase (decrease) to cash 2005 2004
--------------------------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 17,030 $ 1,084
Adjustments to reconcile net earnings
to net cash (used in) provided by
operations:
Gain on sale of discontinued operations (6,406) -
Depreciation and amortization 28,508 30,986
Equity income (86) (66)
Changes in assets and liabilities, net:
Accounts receivable (36,586) (16,448)
Accounts receivable - securitization 23,887 31,438
Inventories (2,541) 2,224
Accounts payable 4,284 (14,117)
Deposit for civil antitrust
settlement (58,500) -
Pension and post-retirement health
care liabilities (24,770) (2,302)
Other (14,587)(a) 5,631
---------- ----------
Net cash (used in) provided by operations (69,767) 38,430
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from divestments 62,303 8,180
Capital expenditures (17,822) (12,855)
Merger related expenditures (5,621) -
Other investing activities (28) (82)
---------- ----------
Net cash provided by (used in) investing
activities 38,832 (4,757)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on domestic credit facility (25,000) (7,600)
Payments on short-term borrowings (489) (153)
Payments on long-term borrowings (10,000) -
Payments for debt issuance costs (726) -
Dividends paid (5,884) (5,728)
Proceeds from exercise of stock options 3,754 -
Other financing activities 627 (251)
---------- ----------
Net cash used in financing activities (37,718) (13,732)
---------- ----------
CASH
Effect of exchange rates on cash (720) (629)
---------- ----------
Change in cash (69,373) 19,312
Cash at beginning of period 118,411 35,866
---------- ----------
Cash at end of period $ 49,038 $ 55,178
========== ==========
(a) Change in other for 2005 includes environmental payments of $11.3
million and prepaid costs relating to the Refined Products sale of
$6.8 million, partially offset by charges for facility closures,
severance and related costs in excess of payments of $11.2
million.
CHEMTURA CORPORATION
Segment Sales and Operating Profit
Second quarter and six months ended 2005 and 2004
(In thousands of dollars)
Second Quarter Six Months Ended
------------------- ---------------------
2005 2004 2005 2004
--------- --------- ---------- ----------
NET SALES
Polymer Products
Polymer Additives $ 403,238 $ 369,759 $ 784,607 $ 733,102
Polymers 103,754 83,183 198,290 164,395
Polymer Processing
Equipment (a) 7,945 45,926 48,338 84,354
Eliminations (3,584) (3,681) (8,065) (7,629)
--------- --------- ---------- ----------
511,353 495,187 1,023,170 974,222
--------- --------- ---------- ----------
Specialty Products
Crop Protection 90,976 86,224 168,889 162,698
--------- --------- ---------- ----------
90,976 86,224 168,889 162,698
--------- --------- ---------- ----------
Total net sales $ 602,329 $ 581,411 $1,192,059 $1,136,920
========= ========= ========== ==========
OPERATING PROFIT
Polymer Products
Polymer Additives $ 47,773 $ 7,897 $ 94,167 $ 16,845
Polymers 25,292 11,641 45,813 21,836
Polymer Processing
Equipment (2,533) 1,508 (3,003) (256)
--------- --------- ---------- ----------
70,532 21,046 136,977 38,425
--------- --------- ---------- ----------
Specialty Products
Crop Protection 25,205 21,329 44,702 49,770
--------- --------- ---------- ----------
25,205 21,329 44,702 49,770
--------- --------- ---------- ----------
General corporate expense (15,045) (15,101) (31,746) (35,799)
Unabsorbed overhead expense
from discontinued
operations - (2,358) - (4,932)
Facility closures,
severance and related
costs (23,917) (3,278) (24,075) (5,689)
Antitrust costs (3,338) (4,350) (6,504) (8,403)
Merger costs (8,686) - (8,686) -
--------- --------- ---------- ----------
Total operating profit $ 44,751 $ 17,288 $ 110,668 $ 33,372
========= ========= ========== ==========
(a) As a result of the April 29, 2005 contribution of the assets of
the Polymer Processing Equipment segment in exchange for a
non-controlling interest in the Davis-Standard LLC joint venture,
Polymer Processing Equipment ceased to be a reporting segment of
the Company. The Company is recording its proportionate share of
the joint venture's earnings in other (income) expense, net.
CHEMTURA CORPORATION SUPPLEMENTARY SCHEDULE
Major Factors Affecting Operating Results ----------------------
Second quarter and six months ended 2005
versus 2004
(In millions of dollars)
The following table summarizes the major factors contributing to the
second quarter and six months changes in operating results versus the
prior year:
Second Quarter Six Months Ended
------------------- --------------------
Pre-tax Pre-tax
Net Earnings Net Earnings
Sales (Loss) Sales (Loss)
--------- --------- --------- ---------
2004 $ 581.4 $ (3.1)(a) $1,136.9 $ 87.8(a)
2004 Facility closures,
severance and related
costs - 3.3 - 5.7
2004 Antitrust costs - 4.4 - 8.4
2004 Supplemental executive
retirement costs - - - 5.9
2004 Divestment gains,
primarily Gustafson - - - (94.6)
--------- --------- --------- ---------
581.4 4.6 1,136.9 13.2
Higher selling prices 82.9 82.9 156.8 156.8
Reduced unit volume/mix (32.9) (2.6) (83.4) (10.9)
Foreign currency impact 8.9 0.4 17.8 0.5
Polymer Processing
Equipment - unconsolidated
joint venture (38.0) (4.7) (36.0) (3.5)
Cost savings - 20.7 - 39.2
Higher raw materials/energy
costs - (41.5) - (82.1)
Decrease in Gustafson
equity income - - - (9.6)
Higher management incentive
plan expense - (1.4) - (4.8)
(Higher) lower legal and
environmental expense - (0.3) - 3.4
Interest income on tax
refund - 2.2 - 2.2
Higher interest expense - (7.1) - (13.6)
Other - 1.1 - (0.4)
--------- --------- --------- ---------
602.3 54.3 1,192.1 90.4
2005 Facility closures,
severance and related
costs - (23.9) - (24.1)
2005 Antitrust costs - (3.3) - (6.5)
2005 Merger costs - (8.7) - (8.7)
--------- --------- --------- ---------
2005 $ 602.3 $ 18.4 $1,192.1 $ 51.1
========= ========= ========= =========
(a) Represents the pre-tax earnings (loss) from continuing operations.
Great Lakes Chemical Corporation
Consolidated Statements of Income
Second quarter and six months ended 2005 and 2004
(In millions, except per share data)
Second Quarter Six months ended
----------------- ------------------
2005 2004 2005 2004
-------- -------- -------- ---------
Net sales $ 491.4 $ 443.2 $ 911.8 $ 801.3
Cost of products sold 386.3 343.4 716.8 634.5
Selling, general and
administrative 60.7 72.1 128.5 135.9
Asset impairments - 4.6 - 4.9
-------- -------- -------- ---------
Operating profit 44.4 23.1 66.5 26.0
Interest (income) expense, net 6.4 6.2 12.9 12.5
Other (income) expense, net (0.2) 4.3 (5.9) 9.3
Merger costs 135.9 - 138.4 -
Minority interest (0.2) 0.1 0.5 -
-------- -------- -------- ---------
Earnings (loss) from continuing
operations before income taxes (97.5) 12.5 (79.4) 4.2
Income tax expense (benefit) (9.5) (13.7) (3.9) (16.4)
-------- -------- -------- ---------
Earnings (loss) from continuing
operations (88.0) 26.2 (75.5) 20.6
Loss from discontinued
operations (3.2) (12.6) (3.2) (12.0)
-------- -------- -------- ---------
Net earnings (loss) $ (91.2) $ 13.6 $ (78.7) $ 8.6
======== ======== ======== =========
Basic earnings (loss) per common
share:
Earnings (loss) from
continuing operations $ (1.70) $ 0.52 $ (1.46) $ 0.41
Loss from discontinued
operations (0.06) (0.25) (0.06) (0.24)
-------- -------- -------- ---------
Net earnings (loss) $ (1.76) $ 0.27 $ (1.52) $ 0.17
======== ======== ======== =========
Diluted earnings (loss) per
common share:
Earnings (loss) from
continuing operations $ (1.70)$ 0.52 $ (1.46)$ 0.41
Loss from discontinued
operations (0.06) (0.25) (0.06) (0.24)
-------- -------- -------- ---------
Net earnings (loss) $ (1.76)$ 0.27 $ (1.52)$ 0.17
======== ======== ======== =========
Weighted average shares
outstanding - basic 52.1 50.7 51.8 50.7
======== ======== ======== =========
Weighted average shares
outstanding - diluted 52.1 51.0 51.8 50.9
======== ======== ======== =========
Great Lakes Chemical Corporation
Consolidated Balance Sheets
June 30, 2005 and December 31, 2004
(In millions of dollars)
June 30, December 31,
2005 2004
---------- ------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 125.6 $ 222.2
Accounts and notes receivable 371.7 320.7
Inventories 338.3 324.2
Prepaid expenses 77.2 26.0
Deferred income taxes 17.2 17.3
Current assets - discontinued operations 5.2 8.6
---------- ------------
Total current assets 935.2 919.0
---------- ------------
NON-CURRENT ASSETS
Property, plant and equipment 525.8 549.3
Goodwill 204.0 212.3
Intangible assets 67.8 72.8
Investments in and advances to
unconsolidated affiliates 21.1 22.6
Other assets 22.6 24.0
Deferred income taxes 2.3 -
Non-current assets-discontinued operations 1.4 1.5
---------- ------------
$ 1,780.2 $1,801.5
========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 29.8 $ 10.4
Accounts payable 169.5 204.4
Accrued expenses 221.0 115.3
Income taxes payable 35.3 17.0
Dividends payable - 5.1
Current liabilities-discontinued
operations 11.9 12.1
---------- ------------
Total current liabilities 467.5 364.3
---------- ------------
NON-CURRENT LIABILITIES
Long-term debt 425.2 428.9
Deferred income taxes - 24.4
Other non-current liabilities 77.1 70.7
Non-current liabilities-discontinued
operations 4.9 5.7
Minority interest 31.5 32.0
STOCKHOLDERS' EQUITY
Common stock 74.4 73.6
Additional paid-in capital 169.3 130.7
Retained earnings 1,567.1 1,656.3
Accumulated other comprehensive loss (14.7) 37.0
Treasury stock at cost (1,022.1) (1,022.1)
---------- ------------
Total stockholders' equity 774.0 875.5
---------- ------------
$ 1,780.2 $1,801.5
========== ============
Great Lakes Chemical Corporation
Consolidated Statements of Cash Flows
Six months ended 2005 and 2004
(In millions of dollars)
Six Months Ended
Increase (decrease) to cash 2005 2004
---------------------------- ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (78.7) $ 8.6
Adjustments to reconcile net earnings (loss)
to net cash used in operations:
Depreciation and depletion 36.4 51.2
Amortization of intangible assets 3.3 3.3
Deferred income taxes 0.1 -
Losses of unconsolidated affiliates 0.6 1.2
Loss on disposition of assets 1.0 12.7
Asset impairments - 4.9
Income tax reserve release (20.8) (17.5)
Other 15.6 (1.5)
Changes in assets and liabilities, net:
Accounts receivable (65.2) (103.3)
Inventories (26.4) (10.0)
Accounts payable and accrued expenses 81.0 5.4
Other (27.0) (5.5)
------- -------
Net cash used in operations (80.1) (50.5)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (30.2) (31.8)
Proceeds from sale of assets 0.1 4.8
Other investing activities (0.3) (1.7)
------- -------
Net cash used in investing activities (30.4) (28.7)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments on commercial paper and long-term
borrowings (0.6) 1.8
Net borrowings on short term credit lines 17.6 (3.5)
Dividends paid (15.6) (9.6)
Proceeds from exercise of stock options 20.2 2.2
Other - 0.4
------- -------
Net cash provided by (used in) financing
activities 21.6 (8.7)
------- -------
CASH
Effect of exchange rates on cash (7.7) 0.4
------- -------
Change in cash (96.6) (87.5)
Cash at beginning of period 222.3 171.5
------- -------
Cash and cash equivalents at end of period $ 125.7 $ 84.0
======= =======
Cash and cash equivalents-continuing operations $ 125.6 $ 83.7
Cash and cash equivalents-discontinued operations 0.1 0.3
------- -------
Cash and cash equivalents at end of period $ 125.7 $ 84.0
======= =======
Great Lakes Chemical Corporation SUPPLEMENTARY SCHEDULE
Consolidated Statements of Cash Flows ----------------------
Second quarter ended 2005 and 2004
(In millions of dollars)
Second Quarter Ended
Increase (decrease) to cash 2005 2004
--------------------------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (91.2) $ 13.6
Adjustments to reconcile net earnings (loss)
to net cash provided by operations:
Depreciation and depletion 18.3 28.2
Amortization of intangible assets 1.6 1.8
Losses of unconsolidated affiliates 0.6 0.4
Loss on disposition of assets 0.5 11.8
Asset impairments - 4.6
Income tax reserve release (20.8) (17.5)
Other 16.7 (3.2)
Changes in assets and liabilities, net:
Accounts receivable 7.4 (9.4)
Inventories 15.5 7.2
Accounts payable and accrued expenses 105.8 17.3
Other (39.0) (8.3)
--------- ---------
Net cash provided by operations 15.4 46.5
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (12.5) (19.3)
Business combinations, net of cash acquired - (1.5)
Proceeds from sale of assets - 4.9
Other investing activities (0.1) (0.5)
--------- ---------
Net cash used in investing activities (12.6) (16.4)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments on commercial paper and long-
term borrowings (0.1) 1.6
Net borrowings on short term credit lines 19.7 0.6
Dividends paid (10.5) (4.8)
Proceeds from exercise of stock options 5.8 1.1
Other - 1.2
--------- ---------
Net cash provided by (used in) financing
activities 14.9 (0.3)
--------- ---------
CASH
Effect of exchange rates on cash (4.2) 1.1
--------- ---------
Change in cash 13.5 30.9
Cash at beginning of period 112.2 53.1
--------- ---------
Cash and cash equivalents at end of
period $ 125.7 $ 84.0
========= =========
Cash and cash equivalents-continuing
operations $ 125.6 $ 83.7
Cash and cash equivalents-discontinued
operations 0.1 0.3
--------- ---------
Cash and cash equivalents at end of
period $ 125.7 $ 84.0
========= =========
Great Lakes Chemical Corporation
Segment Sales and Operating Profit
Second quarter and six months ended 2005 and 2004
(In millions of dollars)
Second Quarter Six Months Ended
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
NET SALES
Industrial Products $ 285.4 $ 246.8 $ 565.9 $ 476.7
Consumer Products 206.0 196.4 345.9 324.6
-------- -------- -------- --------
Total net sales $ 491.4 $ 443.2 $ 911.8 $ 801.3
======== ======== ======== ========
OPERATING PROFIT
Industrial Products $ 24.4 $ 9.4 $ 50.4 $ 15.2
Consumer Products 25.1 30.6 29.8 41.6
Corporate and other (5.1) (16.9) (13.7) (30.8)
-------- -------- -------- --------
Operating profit 44.4 23.1 66.5 26.0
======== ======== ======== ========
Great Lakes Chemical Corporation SUPPLEMENTARY SCHEDULE
Major Factors Affecting Operating Results ----------------------
Second quarter and six months ended 2005
versus 2004
(In millions of dollars)
The following table summarizes the major factors contributing to the
second quarter and six months changes in operating results versus
the prior year:
Second Quarter Six Months Ended
----------------- -----------------
Pre-tax Pre-tax
Net Earnings Net Earnings
Sales (Loss) Sales (Loss)
-------- -------- -------- --------
2004 $443.2 $12.5(a) $801.3 $4.2(a)
2004 Facility closures,
severance and related costs,
and asset impairments - 7.0 - 15.2
2004 Change in useful life of
enterprise software - 7.8 - 12.6
2004 Gain on sale of
non-operating site - (3.2) - (3.2)
-------- -------- -------- --------
443.2 24.1 801.3 28.8
Change in unit volume/mix (5.1) 1.8 20.3 6.2
Higher selling prices 45.7 45.7 77.5 77.5
Foreign currency impact 7.6 (1.5) 12.7 (1.0)
Raw material costs - (31.7) - (44.7)
Manufacturing productivity - (11.7) - (20.4)
Conyers fire - 5.5 - 12.6
Reversal of management
incentive accruals - 5.0 - 5.0
Other - 1.4 - (3.8)
-------- -------- -------- --------
491.4 38.6 911.8 60.2
2005 Merger costs - (135.9) - (138.4)
2005 Facility closures,
severance and related costs - (0.2) - (1.2)
-------- -------- -------- --------
2005 $491.4 $(97.5) $911.8 $(79.4)
======== ======== ======== ========
(a) Represents the pre-tax loss from continuing operations.
CHEMTURA CORPORATION
Pro Forma Consolidated Statements of Earnings
Second quarter and six months ended 2005 and 2004
(In thousands, except per share data)
Second Quarter Six months ended
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Net sales $1,093,738 $1,024,603 $2,103,893 $1,938,198
Cost of products sold 792,396 772,939 1,525,701 1,472,535
Selling, general and
administrative 111,093 120,857 230,248 240,929
Depreciation and
amortization 47,714 58,245 97,611 111,688
Research and development 16,986 18,548 34,179 35,683
Equity income (86) (66) (174) (9,693)
Facility closures,
severance and related
costs 25,145 9,773 25,303 19,926
Antitrust costs 3,338 4,350 6,504 8,403
Merger costs 8,686 - 8,686 -
---------- ---------- ---------- ----------
Operating profit 88,466 39,957 175,835 58,727
Interest expense 28,824 21,670 58,126 44,389
Other (income) expense,
net (461) 5,647 1,172 (83,986)
---------- ---------- ---------- ----------
Earnings from continuing
operations before income
taxes 60,103 12,640 116,537 98,324
Income tax expense
(benefit) 26,934 (14,677) 49,218 13,966
---------- ---------- ---------- ----------
Earnings from continuing
operations $ 33,169 $ 27,317 $ 67,319 $ 84,358
========== ========== ========== ==========
Basic earnings per common
share:
Earnings from
continuing operations $ 0.14 $ 0.12 $ 0.29 $ 0.37
========== ========== ========== ==========
Diluted earnings per
common share:
Earnings from
continuing operations $ 0.14 $ 0.12 $ 0.28 $ 0.37
========== ========== ========== ==========
Weighted average shares
outstanding - basic 234,638 227,743 233,305 227,642
========== ========== ========== ==========
Weighted average shares
outstanding - diluted 239,008 228,025 236,821 228,216
========== ========== ========== ==========
The above pro forma unaudited statements of earnings reflect
operations as if the merger had occurred at the beginning of each of
the periods. The pro forma unaudited statements of earnings do not
reflect any synergies, cost savings and one-time charges or the impact
of final valuations of the assets and liabilities of Great Lakes. The
pro forma unaudited statements of earnings are not necessarily
indicative of current or future results of operations.
Pro forma adjustments reflect the reduction in pension expense
principally due to the elimination of the impact of amortization of
historical gains and losses from the net periodic benefit cost, the
impact on interest expense of amortization of the fair value
adjustment to long-term debt, the reversal of merger costs incurred by
Great Lakes, and tax expense attributable to the pro forma adjustments
at the estimated federal, foreign and state combined statutory rate of
39%, exclusive of any tax benefit related to $67 million of non-
deductible merger costs.
The increase in earnings before income taxes related to each
adjustment is as follows:
Second Quarter Six months ended
--------------------- ---------------------
2005 2004 2005 2004
---------- ---------- ---------- ----------
Reduction in pension
expense $ 975 $ 1,327 $ 1,950 $ 2,654
Reduction in interest
expense 2,330 1,890 4,404 3,609
Reversal of merger costs 135,880 - 138,429 -
---------- ---------- ---------- ----------
$ 139,185 $ 3,217 $ 144,783 $ 6,263
========== ========== ========== ==========
Net of tax $ 111,033 $ 1,962 $ 114,448 $ 3,820
========== ========== ========== ==========
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