Crompton Corporation Reports Third Quarter Results; Restructuring Program on Track to Achieve $60 Million in Cost Savings by End of 2002.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)--Oct. 24, 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) reported today that third quarter earnings per share before special items were at breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations as projected by the Company on October October: see month. 9th. After the special charge for 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 , plant closures and related costs pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. to the Company's cost reduction initiative announced earlier in the quarter, the Company reported a net loss of $68.2 million, or 60 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. . Third quarter sales of $651.9 million were below the prior year by $86.5 million or 12 percent, as lower selling prices and foreign currency translation accounted for two percent of the decline. 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 accounted for approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one-half of the total shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. due to severe cutbacks 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. . Positive sales comparisons in crop protection and petroleum additives were more than offset by negative comparisons in other businesses. At breakeven, third quarter earnings before special items declined from $21.6 million, or 19 cents per share, in the third 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 and pricing resulting from the continued weakness in the industrial sector of the economy, significantly exacerbated by the tragic events of September September: see month. 11. The magnitude magnitude, in astronomy, measure of the brightness of a star or other celestial object. The stars cataloged by Ptolemy (2d cent. A.D.), all visible with the unaided eye, were ranked on a brightness scale such that the brightest stars were of 1st magnitude and the of the impact more than offset our continuing efforts to achieve efficiencies and reduce costs. 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, "Already weak demand declined sharply after the September 11 terrorist attacks, resulting in lower than expected September sales. The positive effects of declining prices for raw materials and energy were more than offset by lower unit volumes and pricing pressure in many of our businesses. "A number of facility closings and workforce reductions have been implemented as part of the $60 million cost reduction initiative announced earlier this year. We are on track to achieve $10 million in cost savings by the end of this year and further savings of $50 million in 2002." For the first nine months of 2001, the Company reported net earnings before special items of $29.8 million, or 26 cents per share, compared to $92.8 million or 81 cents per share, for the comparable period in 2000. Nine-month sales of $2.1 billion were nine percent below the first nine months of 2000. Third quarter operating results for Crompton Corporation's reporting segments are summarized below. Polymer Products Polymer additives sales of $208.7 million were down from the prior year by 12 percent, of which 10 percent was due to a decline in unit volume, one percent to lower prices and one percent to foreign currency translation. Plastic additives sales declined eight percent due mainly to continued weak economic conditions resulting in lower unit volume and lower pricing. Rubber chemicals sales decreased 28 percent due mainly to a weak automotive market and lower unit sales unit sales Sales measured in terms of physical units rather than dollars. Unit sales data are often used by financial analysts when evaluating the health of a company. resulting from a recently announced 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 two percent due primarily 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 $9.1 million was 52 percent lower than the third quarter of 2000 due mainly to lower unit volume and lower selling prices. Polymer sales of $68.1 million declined 17 percent from the third quarter of 2000 due mainly to lower domestic unit volume and a three percent reduction in selling prices. 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 were down 18 percent due primarily to lower unit volume and lower pricing resulting from continued weakness in domestic automotive and roofing markets. Urethane polymer sales declined 16 percent due primarily to a decline in industrial production. Operating profit of $11.1 million was down 36 percent from the third quarter of 2000 due primarily to lower unit volume and lower selling prices, partially offset by lower EPDM raw material costs. Polymer processing equipment sales of $41.0 million were 50 percent lower than the prior year due primarily to lower unit volume resulting from severe cutbacks in domestic capital spending. The lower 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 $6.7 million, which was $14.6 million worse than the third quarter of 2000. 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 September was $97 million, down $8 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 $107.8 million were down nine percent from the third quarter of 2000 due to a five percent decline in unit volume mainly attributable to continued weakness in the domestic economy, with the remainder due equally to lower prices and unfavorable foreign currency translation. Operating profit of $13.7 million was 29 percent lower than the prior year due mainly to lower unit volume, lower selling prices and an unfavorable product mix. Crop protection sales of $99.9 million were up nine percent from the third quarter of 2000 due to improved unit volume and a one percent increase in selling prices. Higher international unit volume was responsible for a 20 percent increase in actives sales which more than offset a six percent decline in surfactants sales. Operating profit of $14.0 million was down two percent from the prior year due primarily to lower joint venture equity income, an unfavorable product mix in surfactants and certain non-recurring income in 2000. Other sales of $130.6 million were up two percent from the third quarter of 2000 mainly as a result of higher petroleum additives sales. Petroleum additives sales rose 15 percent mainly due to greater demand attributable to a domestic motor oil reformulation. Refined products sales declined one percent due primarily to a reduction in unit volume. Industrial colors and glycerine/fatty acids sales were down five percent and 11 percent, respectively, due to lower unit volume and lower selling prices. Operating profit of $7.1 million increased 8 percent from the third quarter of 2000 due mainly to an increase in unit volume and improved sales mix sales mix See product mix. . Crompton Corporation is a $3 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
Third quarter and nine months ended 2001 and 2000
(In thousands, except per share data)
Third Quarter
---------------------------------
2001 2000
--------------- --------------
Net sales $ 651,921 $ 738,456
Cost of
products sold 447,473 510,914
Selling, general
and admin. 105,105 95,736
Depreciation and
amortization 46,887 45,284
Research and
development 20,973 20,609
Equity loss
(income) 2,342 701
--------------- --------------
Operating
profit
before special
items 29,141 65,212
Interest expense 27,277 30,944
Other expense 1,692 2,803
--------------- --------------
Earnings
before
income taxes
and special
items 172 31,465
Income taxes 62 9,905
--------------- --------------
Earnings before
after-tax
special items 110 21,560
Facility closures,
severance and
related costs (68,318) -
--------------- --------------
Net earnings
(loss) (68,208) 21,560
=============== ==============
Basic earnings
(loss) per
common share:
Earnings
before
after-tax
special
items $ 0.00 $ 0.19
=============== ==============
Net earnings
(loss) $ (0.60) $ 0.19
=============== ==============
Weighted
avg shares
outstanding 113,141 113,599
=============== ==============
Diluted earnings
(loss) per
common share:
Earnings before
after-tax
special items $ 0.00 $ 0.19
=============== ==============
Net earnings
(loss) $ (0.60) $ 0.19
=============== ==============
Weighted avg
shares
outstanding 113,141 114,101
=============== ==============
Nine Months Ended
--------------------------------------
2001 2000
----------------- -----------------
Net sales $ 2,113,889 $ 2,310,360
Cost of
products sold 1,465,062 1,559,424
Selling, general
and admin. 316,810 318,482
Depreciation and
amortization 140,604 135,968
Research and
development 62,206 66,145
Equity loss
(income) (5,466) (10,833)
----------------- ----------------
Operating
profit
before special
items 134,673 241,174
Interest expense 83,762 88,839
Other expense 4,389 5,076
----------------- ----------------
Earnings
before
income taxes
and special
items 46,522 147,259
Income taxes 16,748 54,485
----------------- ----------------
Earnings before
after-tax
special items 29,774 92,774
Facility closures,
severance and
related costs (68,318) -
----------------- ----------------
Net earnings
(loss) (38,544) 92,774
================= ================
Basic earnings
(loss) per
common share:
Earnings
before
after-tax
special
items $ 0.26 $ 0.81
================= ================
Net earnings
(loss) $ (0.34) $ 0.81
================= ================
Weighted
avg shares
outstanding 113,075 113,938
================= ================
Diluted earnings
(loss) per
common share:
Earnings before
after-tax
special items $ 0.26 $ 0.81
================= ================
Net earnings
(loss) $ (0.34) $ 0.81
================= ================
Weighted avg
shares
outstanding 113,075 115,149
================= ================
CROMPTON CORPORATION
Segment Sales and Operating Profit
Third quarter and nine months ended 2001 and 2000
(In thousands of dollars)
Third Quarter
--------------------------
2001 2000
-------- --------
NET SALES
Polymer Products
Polymer Additives $ 208,735 $ 238,454
Polymers 68,117 82,040
Polymer Processing
Equipment 40,966 82,464
Eliminations (4,113) (2,766)
-------------- --------------
313,705 400,192
-------------- --------------
Specialty Products
OrganoSilicones 107,800 119,044
Crop Protection 99,851 91,362
Other 130,565 127,858
-------------- --------------
338,216 338,264
-------------- --------------
Total net
sales $ 651,921 $ 738,456
============== ==============
OPERATING PROFIT
Polymer Products
Polymer Additives $ 9,057 $ 18,883
Polymers 11,110 17,335
Polymer Processing
Equipment (6,719) 7,902
-------------- --------------
13,448 44,120
-------------- --------------
Specialty Products
OrganoSilicones 13,736 19,358
Crop Protection 13,997 14,328
Other 7,138 6,591
-------------- --------------
34,871 40,277
-------------- --------------
General corporate
expense including
amortization (19,178) (19,185)
-------------- --------------
Total operating
profit before
special items $ 29,141 $ 65,212
============== ==============
Nine Months Ended
-------------------------------------
2001 2000
---------------- ----------------
NET SALES
Polymer Products
Polymer Additives $ 679,262 $ 748,952
Polymers 227,049 249,355
Polymer Processing
Equipment 157,828 231,594
Eliminations (10,787) (10,195)
---------------- ----------------
1,053,352 1,219,706
---------------- ----------------
Specialty Products
OrganoSilicones 328,277 367,734
Crop Protection 332,026 330,706
Other 400,234 392,214
---------------- ----------------
1,060,537 1,090,654
---------------- ----------------
Total net
sales $ 2,113,889 $ 2,310,360
================ ================
OPERATING PROFIT
Polymer Products
Polymer Additives $ 31,770 $ 63,176
Polymers 38,212 55,907
Polymer Processing
Equipment (9,944) 20,090
---------------- ----------------
60,038 139,173
---------------- ----------------
Specialty Products
OrganoSilicones 38,866 66,664
Crop Protection 72,889 74,690
Other 21,182 22,149
---------------- ----------------
132,937 163,503
---------------- ----------------
General corporate
expense including
amortization (58,302) (61,502)
---------------- ----------------
Total operating
profit before
special items $ 134,673 $ 241,174
================ ================
CROMPTON CORPORATION
Consolidated Balance Sheets
September 30, 2001 and December 31, 2000
(In thousands of dollars)
September 30, December 31,
2001 2000
----------------------------------
ASSETS
CURRENT ASSETS
Cash $ 10,810 $ 20,777
Accounts receivable 257,908 323,097
Inventories 536,479 552,386
Other current assets 184,275 180,635
------------ -------------
Total current assets 989,472 1,076,895
------------ -------------
NON-CURRENT ASSETS
Property, plant and
equipment 1,126,788 1,182,087
Cost in excess of
acquired net assets 919,205 938,792
Other assets 340,270 330,553
------------ -------------
$ 3,375,735 $ 3,528,327
============ =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 16,257 $ 27,429
Accounts payable 268,571 234,955
Accrued expenses 288,238 306,680
Income taxes
payable 108,746 127,950
Other current
liabilities 15,118 18,449
------------ -------------
Total current
liabilities 696,930 715,463
------------ -------------
NON-CURRENT LIABILITIES
Long-term debt 1,455,865 1,479,394
Postretirement
health care liability 205,855 206,469
Other liabilities 339,728 373,025
STOCKHOLDERS' EQUITY
Common Stock 1,194 1,194
Additional paid-in capital 1,051,554 1,051,371
Accumulated deficit (189,372) (133,864)
Accumulated other
comprehensive income (112,455) (86,221)
Treasury stock at cost (73,564) (78,504)
------------ -------------
Total stockholders'
equity 677,357 753,976
------------ -------------
$ 3,375,735 $ 3,528,327
============ =============
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Nine months ended 2001 and 2000
(In thousands of dollars)
Nine Months Ended
--------------------------
Increase (decrease) to cash 2001 2000
---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (38,544) $ 92,774
Adjustments to
reconcile net
earnings (loss) to
net cash provided by
operations:
Facility closures,
severance and
related costs 103,071 -
Depreciation and
amortization 140,604 135,968
Equity income (5,466) (10,833)
Changes in assets and
liabilities, net (90,401) (105,349)
---------- ----------
Net cash provided
by operations 109,264 112,560
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital
expenditures (101,328) (108,136)
Merger related
expenditures (4,288) (48,798)
Other investing activities 6,788 (25,303)
---------- ----------
Net cash used in
investing activities (98,828) (182,237)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on senior notes - 593,754
Payments on long-term
and short-term
borrowings (34,713) (460,024)
Proceeds (repurchases)
of accounts receivable 27,481 (12,928)
Treasury stock acquired - (48,453)
Dividends paid (16,964) (17,114)
Other financing activities 4,319 6,203
---------- ----------
Net cash (used in)
provided by
financing activities (19,877) 61,438
---------- ----------
CASH
Effect of exchange
rates on cash (526) (677)
---------- ----------
Change in cash (9,967) (8,916)
Cash at beginning of period 20,777 10,543
---------- ----------
Cash at end of period $ 10,810 $ 1,627
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