Crompton Corporation Reports Second Quarter Earnings of 12 Cents Per Share.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)--July 25, 2001 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) today reported second quarter net earnings of $13.9 million, or 12 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , at the higher end Coordinates: For other places with the same name, see Billinge. Higher End or Billinge Higher End is a district of the Metropolitan Borough of Wigan, in Greater Manchester, England. of the range projected by the Company on July July: see month. 2nd. Second quarter 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 $724.0 million declined 10 percent from the second quarter of 2000. Two percent of the decline was due to the impact of lower foreign currency translation and the remainder (including lower pricing of one percent) was primarily due to the weak domestic economy. Specifically, the Company has been affected by persistent Permanent. See persistent data, persistent name and persistent object. persistent - persistence softness in domestic auto production, the dramatic drop in industrial production representing the longest period of decline in key industrial indices since the 1982 recession, and significant weakness in 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. for production machinery. Second quarter net earnings of $13.9 million, or 12 cents per share, declined from $41.5 million, or 36 cents per share, in the second quarter of 2000. The decline was primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the impact of lower sales, higher raw material and energy costs ($15 million), unfavorable foreign currency impact ($3 million), offset in part by 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 certain environmental remediation Generally, remediation means providing a remedy, so environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment or from a reserves no longer deemed necessary ($5.9 million), and our continuing efforts to achieve efficiencies and reduce costs. "As the economy improves, we are confident that Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). is well positioned and leveraged to take full advantage of an increase in demand and to translate (1) To change one language into another; for example, assemblers, compilers and interpreters translate source language into machine language. (2) In computer graphics, to move an image on screen without rotating it. that into accelerated profit improvement," said Vincent A. Calarco, chairman, president and chief executive officer. "As indicated on July 2nd, we plan to lower our operating costs operating costs npl → gastos mpl operacionales by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $60 million by the end of 2002 through a program of facility consolidation and workforce reduction, together with improvements in procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. and working capital control. The program is in addition to the $60 million in merger-related savings achieved in 2000. "Current street estimates for the third quarter range from zero to 16 cents per share with a consensus of 11 cents per share for the quarter and 46 cents per share for the year. We are comfortable with the consensus for 2001 and believe that we will be in the range of 8 to 12 cents per share for the third quarter." Calarco noted that the Company anticipates a pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern charge of approximately $90 to $110 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the 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). program. The charge will be recorded in the third quarter and beyond as events trigger (1) A mechanism that initiates an action when an event occurs such as reaching a certain time or date or upon receiving some type of input. A trigger generally causes a program routine to be executed. recognition under 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 . Approximately 50% of the charge relates to non-cash items. The Company also reported that it has obtained ninety-day waivers from its lenders regarding the debt to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become covenant covenant (kŭv`ənənt), agreement entered into voluntarily by two or more parties to do or refrain from doing certain acts. In the Bible and in theology the covenant is the agreement or engagement of God with man as revealed in the contained in its Five-Year and 364-Day Credit Agreements. For the first half of 2001, the Company reported net earnings of $29.7 million, or 26 cents per share, compared to $71.2 million, or 62 cents per share, in the first half of 2000. First half sales of $1.46 billion were seven percent below the first half of 2000. Second 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 $225.7 million declined from the prior year by 11 percent, of which three percent was due to foreign currency translation, two percent to lower pricing and the remainder to lower unit volume resulting from the weak domestic economy. Plastic additives sales decreased 10 percent due primarily to lower unit volume and pricing resulting from a weak domestic economy and unfavorable foreign currency translation. Rubber chemicals sales decreased 16 percent due primarily to a weak automotive market. 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 five percent due mainly to lower foreign currency translation. 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 $9.9 million was down 55 percent from the second quarter of 2000 due primarily to lower unit volume and selling prices, and higher raw material and energy costs. Polymer sales of $77.4 million declined 10 percent from the second quarter of 2000 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 nine percent due mainly to reduced demand attributable to continued weakness in domestic auto production. Urethane polymer sales decreased 11 percent due primarily to the decline in industrial production. Operating profit of $12.1 million was 37 percent lower than the second quarter of 2000 due primarily to lower unit volume and higher product costs including energy. Polymer processing equipment sales of $58.1 million were down 27 percent from the prior year due mainly to lower unit volume caused by an industry-wide decline not seen in the past 20 years. Lower sales and an unfavorable mix of lower margin systems business resulted in a second quarter 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 $4.3 million that was unfavorable to the prior year by $12.2 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 June June: see month. was $92 million, down $13 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 $108.6 million declined 11 percent from the second quarter of 2000 due to lower unit volume mainly attributable to continued weakness in the U.S. economy and a two percent impact each in lower selling prices and lower foreign currency translation. Operating profit of $13.8 million was down 46 percent from the prior year due primarily to lower sales and higher product costs including energy. Crop protection sales of $126.8 million were five percent lower than the second quarter of 2000 primarily due to lower unit volume and one percent lower foreign currency translation. Actives sales were down four percent due equally to lower unit volume and foreign currency translation, while surfactants sales declined eight percent due mainly to lower unit volume. Operating profit of $32.9 million declined 10 percent from the prior year due mainly to lower unit volume and higher raw material costs. Other sales of $130.2 million were down two percent from the second quarter of 2000 due primarily to a decline in unit volume, partially offset by higher selling prices of two percent. Petroleum additives sales were up four percent due mainly to improved unit volume. Refined products sales were down two percent as a result of lower unit volume, partially offset by increased selling prices. Industrial colors sales were down 13 percent due primarily to reduced unit volume. Glycerine/fatty acids sales were down eight percent due equally to lower selling prices and reduced unit volume. Operating profit of $5.3 million was 38 percent lower than the prior year due mainly to lower unit volume and higher energy/raw material costs that were only partially recovered through higher selling prices. Crompton Corporation is a $3.0 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 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
Second quarter and six months ended 2001 and 2000
(In thousands, except per share data)
Second Quarter Six Months Ended
-------------- ----------------
2001 2000 2001 2000
---- ---- ---- ----
Net sales $ 724,032 $ 802,886 $1,461,968 $1,571,904
Cost of
products sold 503,002 530,794 1,017,589 1,048,510
Selling, general
and admin 105,066 110,302 211,705 222,746
Depreciation
and amortization 46,793 44,920 93,717 90,684
Research and
development 20,669 23,094 41,233 45,536
Equity income (1,821) (3,989) (7,808) (11,534)
---------- ---------- ---------- ----------
Operating profit 50,323 97,765 105,532 175,962
Interest expense 27,731 29,674 56,485 57,895
Other expense 882 924 2,697 2,273
---------- ---------- ---------- ----------
Earnings before
income taxes 21,710 67,167 46,350 115,794
Income taxes 7,816 25,626 16,686 44,580
---------- ---------- ---------- ----------
Net earnings $ 13,894 $ 41,541 $ 29,664 $ 71,214
========== ========== ========== ==========
Basic earnings
per common share:
Net earnings $ 0.12 $ 0.36 $ 0.26 $ 0.62
========== ========== ========== ==========
Weighted avg shares
outstanding 113,113 113,884 113,041 114,109
========== ========== ========== ==========
Diluted earnings
per common share:
Net earnings $ 0.12 $ 0.36 $ 0.26 $ 0.62
========== ========== ========== ==========
Weighted avg shares
outstanding 116,104 115,200 116,142 115,674
========== ========== ========== ==========
CROMPTON CORPORATION
Segment Sales and Operating Profit
Second quarter and six months ended 2001 and 2000
(In thousands of dollars)
Second Quarter Six Months Ended
-------------- ----------------
2001 2000 2001 2000
---- ---- ---- ----
NET SALES
Polymer Products
Polymer Additives $ 225,670 $ 252,665 $ 470,527 $ 510,498
Polymers 77,430 85,899 158,932 167,315
Polymer Processing
Equipment 58,116 80,049 116,862 149,130
Eliminations (2,750) (3,885) (6,674) (7,429)
---------- ---------- ---------- ----------
358,466 414,728 739,647 819,514
---------- ---------- ---------- ----------
Specialty Products
OrganoSilicones 108,587 121,655 220,477 248,690
Crop Protection 126,795 133,882 232,175 239,344
Other 130,184 132,621 269,669 264,356
---------- ---------- ---------- ----------
365,566 388,158 722,321 752,390
---------- ---------- ---------- ----------
Total net sales $ 724,032 $ 802,886 $1,461,968 $1,571,904
========== ========== ========== ==========
OPERATING PROFIT
Polymer Products
Polymer Additives $ 9,901 $ 21,956 $ 22,713 $ 44,293
Polymers 12,104 19,253 27,102 38,572
Polymer Processing
Equipment (4,282) 7,936 (3,225) 12,188
---------- ---------- ---------- ----------
17,723 49,145 46,590 95,053
---------- ---------- ---------- ----------
Specialty Products
OrganoSilicones 13,760 25,538 25,130 47,306
Crop Protection 32,868 36,385 58,892 60,362
Other 5,304 8,524 14,044 15,558
---------- ---------- ---------- ----------
51,932 70,447 98,066 123,226
---------- ---------- ---------- ----------
General corporate
expense including
amortization (19,332) (21,827) (39,124) (42,317)
---------- ---------- ---------- ----------
Total operating
profit $ 50,323 $ 97,765 $ 105,532 $ 175,962
========== ========== ========== ==========
CROMPTON CORPORATION
Consolidated Balance Sheets
June 30, 2001 and December 31, 2000
(In thousands of dollars)
June 30, 2001 December 31, 2000
------------- -----------------
ASSETS
CURRENT ASSETS
Cash $ 7,048 $ 20,777
Accounts receivable 320,660 323,097
Inventories 558,312 552,386
Other current assets 168,452 180,635
----------- -----------
Total current assets 1,054,472 1,076,895
----------- -----------
NON-CURRENT ASSETS
Property, plant
and equipment 1,158,918 1,182,087
Cost in excess of
acquired net assets 924,707 938,792
Other assets 332,306 330,553
----------- -----------
$ 3,470,403 $ 3,528,327
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 42,905 $ 27,429
Accounts payable 306,884 234,955
Accrued expenses 271,222 306,680
Income taxes payable 122,235 127,950
Other current liabilities 17,502 18,449
----------- -----------
Total current liabilities 760,748 715,463
----------- -----------
NON-CURRENT LIABILITIES
Long-term debt 1,422,101 1,479,394
Postretirement health
care liability 204,433 206,469
Other liabilities 344,589 373,025
STOCKHOLDERS' EQUITY
Common Stock 1,194 1,194
Additional paid-in capital 1,051,815 1,051,371
Accumulated deficit (115,508) (133,864)
Accumulated other
comprehensive income (124,799) (86,221)
Treasury stock at cost (74,170) (78,504)
----------- -----------
Total stockholders' equity 738,532 753,976
----------- -----------
$ 3,470,403 $ 3,528,327
=========== ===========
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Six months ended 2001 and 2000
(In thousands of dollars)
Six Months Ended
----------------
Increase (decrease) to cash 2001 2000
----------------------------- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 29,664 $ 71,214
Adjustments to reconcile
net earnings to net
cash provided by operations:
Depreciation and amortization 93,717 90,684
Equity income (7,808) (11,534)
Changes in assets
and liabilities, net (20,244) (67,378)
--------- ---------
Net cash provided
by operations 95,329 82,986
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (76,635) (68,030)
Merger related expenditures (3,863) (45,244)
Other investing activities 6,788 (24,553)
--------- ---------
Net cash used in
investing activities (73,710) (137,827)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on senior notes -- 593,754
Payments on long-term and
short-term borrowings (35,930) (472,867)
Proceeds (repurchases) of
accounts receivable 9,221 (12,928)
Treasury stock acquired -- (43,464)
Dividends paid (11,308) (11,418)
Other financing activities 3,680 4,428
--------- ---------
Net cash (used in) provided
by financing activities (34,337) 57,505
--------- ---------
CASH
Effect of exchange
rates on cash (1,011) (226)
--------- ---------
Change in cash (13,729) 2,438
Cash at beginning
of period 20,777 10,543
--------- ---------
Cash at end of period $ 7,048 $ 12,981
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