Crompton Corporation Reports Fourth Quarter and Annual Results.Business Editors GREENWICH Greenwich, borough, Greater London, England Greenwich (grĭn`īj, grĕn`–), outer borough (1991 pop. 200,800) of Greater London, SE England, on the Thames River. Manufactures include telephone equipment and underwater cable. , Conn.--(BUSINESS WIRE)--Jan. 31, 2002 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 (NYSE NYSE See: New York Stock Exchange : CK) reported today a fourth quarter loss before special items of $13.8 million or $.12 per share compared to earnings before special items of $11.5 million or $.10 per share in the fourth quarter of 2000. Special items in this year's fourth quarter included 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. charges (85 percent non-cash) 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 ($6.7 million), 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 long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the rubber chemicals and trilene product lines ($50.8 million) and loss on the sale of the industrial colors and nitrile rubber Nitrile rubber, or Buna-N,is a synthetic rubber copolymer of acrylonitrile (ACN) and butadiene. Some trade names are: Nipol, Krynac and Europrene. businesses ($14.1 million). Including special items, the loss was $85.4 million or $.76 per share compared to a loss of $3.5 million or $.03 per share in the fourth quarter of 2000. Fourth quarter sales of $604.9 million were below the prior year by 17 percent primarily due to continued weak demand as U.S. industrial production was down for the last five quarters and average capacity utilization Capacity Utilization measures the rate at which a firm makes use of their capital productive capacities, such as factories and machinery. Capacity Utilization generally rises when the economy is healthy and falls when demand softens. slipped to nearly a 20-year low. In addition, year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. customer inventory adjustments increased over the prior year level. According to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). 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. , Vincent A. Calarco, "Despite lower operating results, total debt decreased $84 million in 2001 as we made good progress in our working capital reduction program and realized 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). proceeds of $35 million. "We believe that the fourth quarter represented trough Trough The stage of the economy's business cycle that marks the end of a period of declining business activity and the transition to expansion. results for the company and barring anything catastrophic in 2002, we expect improved results as the economy emerges from recession." For the year, sales of $2.72 billion were 11 percent below the prior year due primarily to the weak domestic economy. Earnings before special items of $24.9 million or $.14 per share were significantly below the $165.5 million or $.91 per share in 2000. Including special items, the net loss was $123.9 million or $1.10 per share compared to net earnings of $89.3 million or $.78 per share in 2000. Fourth quarter operating results for Crompton Corporation's reporting segments are summarized below. 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). Products Polymer additives sales of $199.3 million declined 18 percent from the prior year due primarily to lower unit volume. Plastic additives sales were down 10 percent as reduced unit volume and lower selling prices resulted from continued weak economic conditions. Rubber chemicals sales decreased 39 percent due primarily to lower volume from weak automotive demand and negative customer reaction to a third quarter price increase. Urethane urethane (yoor´ithān´), n ethyl carbamate used as an anesthetic agent for laboratory animals, formerly used as a hypnotic in humans. chemicals sales declined 10 percent due mainly to lower unit volume. 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. of $2.5 million decreased 85 percent from the prior year due mainly to reduced unit volume and higher manufacturing costs resulting from reduced plant throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. . Polymer sales of $61.7 million decreased 28 percent from the prior year due primarily to lower unit volume. EPDM EPDM Ethylene-Propylene-Diene-Monomer EPDM Enterprise Product Data Management EPDM Ethylene Propylene Dimonomer (industrial/commercial piping/plumbing components) EPDM Engineering Product Data Management sales declined 35 percent as lower unit volume resulted from excess industry capacity and continued softness in the domestic roofing and automotive markets. Urethane polymer sales decreased 19 percent due mainly to continued weakness in industrial production. Operating profit of $6.3 million was down 60 percent from the fourth quarter of 2000 due primarily to lower unit volume and higher manufacturing costs resulting from reduced plant throughput. Polymer processing equipment sales of $44.8 million were down 43 percent from the prior year as a steep decline in domestic capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. resulted in lower unit volume. 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. level of sales resulted in an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $5.7 million, worse than prior year by $10.3 million. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. at the end of December December: see month. was $83 million, down $22 million from the end of 2000. Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Products OrganoSilicones sales of $104.0 million were down 11 percent from the prior year as continued weak domestic demand resulted in reduced unit volume and lower selling prices. Operating profit of $7.3 million declined 58 percent from the fourth quarter of 2000 due to reduced unit volume, lower selling prices and higher manufacturing costs resulting from reduced plant throughput. Crop protection sales of $79.3 million declined five percent from the prior year due primarily to a reduction in unit volume of both actives and surfactants. Operating profit of $7.9 million was 13 percent lower than the prior year due mainly to reduced unit volume. Other sales of $118.8 million were down four percent from the prior year due mainly to lower unit volume. Petroleum additives sales were up eight percent as a domestic motor oil reformulation resulted in improved unit volume. Refined products sales declined three percent. Sales for the industrial colors business, which was sold effective December 1, 2001, were down 46 percent. Glycerine/fatty acids sales declined 13 percent. Operating profit of $7.1 million declined 31 percent from the fourth quarter of 2000 due mainly to reduced unit volume including the impact of the colors sale. Crompton Corporation is a $2.7 billion global producer 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. and polymer products and equipment. Certain statements made in this release are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties, including, but not limited to, general economic conditions, 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, expected restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). activities and cost reductions, the enactment of more stringent environmental laws and regulations, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. These statements are based on currently available information and the Company'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 the Company.
CROMPTON CORPORATION
Consolidated Statements of Earnings
Fourth quarter and year ended 2001 and 2000
(In thousands, except per share data)
Fourth Quarter Year Ended
-------------------- ----------------------
2001 2000 2001 2000
--------- --------- ---------- ----------
Net sales $ 604,909 $ 728,070 $2,718,798 $3,038,430
Cost of products sold 432,757 514,697 1,897,819 2,074,121
Selling, general and
admin. 104,744 99,161 421,554 417,643
Depreciation and
amortization 44,966 46,049 185,570 182,017
Research and development 20,128 18,426 82,334 84,571
Equity income (3,812) (572) (9,278) (11,405)
--------- --------- ---------- ----------
Operating profit before
special items 6,126 50,309 140,799 291,483
Interest expense 26,115 31,637 109,877 120,476
Other expense 1,619 409 6,008 5,485
--------- --------- ---------- ----------
Earnings (loss) before income
taxes and special items (21,608) 18,263 24,914 165,522
Income tax expense
(benefit) (7,780) 6,764 8,968 61,249
--------- --------- ---------- ----------
Earnings (loss) before
after-tax special items (13,828) 11,499 15,946 104,273
Facility closures,
severance and related
costs (6,693) (15,000) (75,011) (15,000)
Impairment of long-lived
assets (50,788) - (50,788) -
Loss on sale of businesses (14,091) - (14,091) -
--------- --------- ---------- ----------
Net earnings (loss) $ (85,400) $ (3,501) $ (123,944) $ 89,273
========= ========= ========== ==========
Basic earnings (loss) per common share:
Earnings (loss) before after
-tax special items $ (0.12) $ 0.10 $ 0.14 $ 0.91
========= ========= ========== ==========
Net earnings (loss) $ (0.76) $ (0.03) $ (1.10) $ 0.78
========= ========= ========== ==========
Weighted avg shares
outstanding 113,020 112,768 113,061 113,644
========= ========= ========== ==========
Diluted earnings (loss) per common share:
Earnings (loss) before after
-tax special items $ (0.12) $ 0.10 $ 0.14 $ 0.91
========= ========= ========== ==========
Net earnings (loss) $ (0.76) $ (0.03) $ (1.10) $ 0.78
========= ========= ========== ==========
Weighted avg shares
outstanding 113,020 112,768 113,061 115,165
========= ========= ========== ==========
CROMPTON CORPORATION
Segment Sales and Operating Profit
Fourth quarter and year ended 2001 and 2000
(In thousands of dollars)
Fourth Quarter Year Ended
-------------------- ----------------------
2001 2000 2001 2000
--------- --------- ---------- ----------
NET SALES
Polymer Products
Polymer Additives $ 199,341 $ 243,738 $ 878,603 $ 992,690
Polymers 61,693 85,725 288,742 335,081
Polymer Processing
Equipment 44,825 78,896 202,653 310,490
Eliminations (3,018) (3,980) (13,805) (14,175)
--------- --------- ---------- ----------
302,841 404,379 1,356,193 1,624,086
--------- --------- ---------- ----------
Specialty Products
OrganoSilicones 103,978 116,689 432,255 484,424
Crop Protection 79,285 82,999 411,311 413,706
Other 118,805 124,003 519,039 516,214
--------- --------- ---------- ----------
302,068 323,691 1,362,605 1,414,344
--------- --------- ---------- ----------
Total net sales $ 604,909 $ 728,070 $2,718,798 $3,038,430
========= ========= ========== ==========
OPERATING PROFIT
Polymer Products
Polymer Additives $ 2,504 $ 16,306 $ 34,274 $ 79,482
Polymers 6,322 15,863 44,534 71,771
Polymer Processing
Equipment (5,703) 4,550 (15,647) 24,640
--------- --------- ---------- ----------
3,123 36,719 63,161 175,893
--------- --------- ---------- ----------
Specialty Products
OrganoSilicones 7,269 17,475 46,135 84,139
Crop Protection 7,915 9,066 80,804 83,756
Other 7,137 10,300 28,319 32,449
--------- --------- ---------- ----------
22,321 36,841 155,258 200,344
--------- --------- ---------- ----------
General corporate expense
including amortization (19,318) (23,251) (77,620) (84,754)
--------- --------- ---------- ----------
Total operating profit
before special items $ 6,126 $ 50,309 $ 140,799 $ 291,483
========= ========= ========== ==========
CROMPTON CORPORATION
Consolidated Balance Sheets
December 31, 2001 and 2000
(In thousands of dollars)
December 31, December 31,
2001 2000
---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 21,506 $ 20,777
Accounts receivable 188,133 323,097
Inventories 491,693 552,386
Other current assets 113,742 180,635
---------- ----------
Total current assets 815,074 1,076,895
---------- ----------
NON-CURRENT ASSETS
Property, plant and equipment 1,021,983 1,182,087
Cost in excess of acquired net assets 897,404 938,792
Other assets 497,727 330,553
---------- ----------
$3,232,188 $3,528,327
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 29,791 $ 27,429
Accounts payable 234,985 234,955
Accrued expenses 285,329 306,680
Income taxes payable 111,905 127,950
Other current liabilities 20,608 18,449
---------- ----------
Total current liabilities 682,618 715,463
---------- ----------
NON-CURRENT LIABILITIES
Long-term debt 1,392,833 1,479,394
Postretirement health care liability 199,583 206,469
Other liabilities 409,613 373,025
STOCKHOLDERS' EQUITY
Common Stock 1,192 1,194
Additional paid-in capital 1,051,257 1,051,371
Accumulated deficit (280,350) (133,864)
Accumulated other comprehensive income (151,839) (86,221)
Treasury stock at cost (72,719) (78,504)
---------- ----------
Total stockholders' equity 547,541 753,976
---------- ----------
$3,232,188 $3,528,327
========== ==========
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Year ended 2001 and 2000
(In thousands of dollars)
Year Ended
-------------------------------
Increase (decrease) to cash 2001 2000
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (123,944) $ 89,273
Adjustments to reconcile net earnings
(loss) to net cash provided by operations:
Facility closures, severance and
related costs 114,033 23,148
Impairment of long-lived assets 80,366 -
Loss on sale of businesses 19,121 -
Depreciation and amortization 185,570 182,017
Equity income (9,278) (11,405)
Changes in assets and liabilities,
net (80,219) (107,988)
---------- ----------
Net cash provided by operations 185,649 175,045
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of businesses 35,061 -
Capital expenditures (136,642) (154,814)
Merger related expenditures (5,855) (66,740)
Other investing activities 6,788 (25,303)
---------- ----------
Net cash used in investing activities (100,648) (246,857)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on senior notes - 593,754
Payments on long-term and short-term
borrowings (81,968) (478,874)
Proceeds from sale of accounts
receivable 19,358 35,560
Treasury stock acquired - (54,003)
Dividends paid (22,542) (22,763)
Other financing activities 1,555 8,959
---------- ----------
Net cash (used in) provided by
financing activities (83,597) 82,633
---------- ----------
CASH
Effect of exchange rates on cash (675) (587)
---------- ----------
Change in cash 729 10,234
Cash at beginning of period 20,777 10,543
---------- ----------
Cash at end of period $ 21,506 $ 20,777
========== ==========
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