Crompton Reports Fourth Quarter and Annual Results.Business Editors 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:
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 net loss of $12.8 million, or $.11 per share, compared to net earnings of $2.4 million, or $.02 per share, in the fourth quarter of 2002. However, the fourth quarter loss of $12.8 million, or $.11 per share, compares favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. to the fourth quarter 2002 loss from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $14.8 million, or $.13 per share. 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 fourth quarter of 2002 included OSi earnings of $17.3 million, or $.15 per share. The loss for the fourth quarter of 2003 included pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta charges of $5.5 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 and $6.3 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. legal and related costs. The loss from continuing operations for the fourth quarter of 2002 included pre-tax charges of $7.2 million for facility closures, severance and related costs and $6.3 million for antitrust legal and related costs. Fourth quarter sales of $561.0 million were 17 percent above the prior year with eight percent attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the acquisition of the GE 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. business on July July: see month. 31, 2003, four percent due to the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impact of foreign currency translation and five percent due to improved unit volume over slightly lower selling prices. "Our financial performance in the fourth quarter and full year was clearly impacted by a number of well-recognized factors, principal among them being high raw material and energy costs, and the difficulty in offsetting such costs with higher selling prices," said Vincent A. Calarco, chairman. "We are encouraged by the improving economy, the increased volume and our continued ability to reduce operating costs operating costs npl → gastos mpl operacionales without adversely affecting customer service and satisfaction. These factors should lead to an improved pricing environment in 2004 that will help mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the continuing high costs of raw materials and
energy."In speaking about his plans for Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). , recently appointed ap·point tr.v. ap·point·ed, ap·point·ing, ap·points 1. To select or designate to fill an office or a position: appointed her the chief operating officer of the company. 2. 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. Bob Wood said, "I am working diligently dil·i·gent adj. Marked by persevering, painstaking effort. See Synonyms at busy. [Middle English, from Old French, from Latin d to ensure that our resources are well allocated and that our strategies are sound and well executed executed 1) adj. to have been completed. (Example: "it is an executed contract") 2) v. to have completed or fully performed. (Example: "he executed all the promises made in the contract") 3) v. . My goal is to return Crompton to the level of sustained profitability that I know we are capable of delivering. Chief among our short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. priorities is to offset cost increases with improved pricing discipline." Sales for 2003 of $2.19 billion were five percent above the prior year while net earnings of $64.1 million, or $.57 per share, compared to a net loss of $283.5 million, or $2.50 per share, for 2002. Discontinued operations for 2003 included a gain on the sale of the OSi business of $111.7 million, or $.99 per share, and OSi earnings of $26.3 million, or $.23 per share. Discontinued operations for 2002 included OSi earnings of $50.9 million, or $.44 per share. Cumulative effect of accounting change included charges of $401 thousand in 2003 and $299 million, or $2.63 per share, in 2002. The loss from continuing operations before cumulative effect of accounting change in 2003 of $73.5 million, or $.65 per share, compared to a loss of $35.4 million, or $.31 per share, for 2002. The loss from continuing operations before cumulative effect of accounting change for 2003 included pre-tax charges of $19.6 million for facility closures, severance and related costs, $32.5 million for antitrust legal and related costs and $24.7 million for early extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. The loss from continuing operations before cumulative effect of accounting change for 2002 included pre-tax charges of $18.0 million for facility closures, severance and related costs, $6.3 million for antitrust legal and related costs and $34.7 million for the loss on the sale of the industrial specialties business (included in other expense). Fourth quarter operating results for the Company's reporting segments are summarized as follows: 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 $324.7 million rose 20% from the prior year, of which 13% was attributable to the acquisition of GE's Specialty Chemicals business on July 31, 2003 and the remainder due to a four percent increase in both unit volume and favorable foreign currency translation, offset in part by lower selling prices of one percent. Plastic additives sales were up 38% due primarily to the Specialty Chemicals business acquisition, increased unit volume and favorable foreign currency translation. Rubber additives sales were down three percent mainly as the result of lower selling prices, partially offset by favorable foreign currency translation. Urethane urethane (yoor´ithān´), n ethyl carbamate used as an anesthetic agent for laboratory animals, formerly used as a hypnotic in humans. additives sales declined one percent due mainly to a reduction in unit volume, offset in part by favorable foreign currency translation. Petroleum additives sales were up two percent due primarily to higher selling prices and favorable foreign currency translation, offset in part by lower unit volume. The operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $.9 million was unfavorable versus the prior year by $18.4 million mainly as a result of higher costs, an unfavorable sales mix sales mix See product mix. and lower selling prices. The increase in costs was mainly due to higher raw material/energy costs, 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. and increased legal expenses, offset in part by the impact of cost saving initiatives. Polymers sales of $72.5 million were up 14% from the prior year due to higher unit volume of 15% and favorable foreign currency translation of three percent, offset in part by lower selling prices of four percent. 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 up 20% mainly as a result of increased unit volume, partially offset by reduced selling prices. Urethanes sales were up eight percent due to a combination of favorable foreign currency translation, higher unit volume and increased selling prices. 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 $7.5 million was down 20% from the fourth quarter of 2002 mainly as a result of lower EPDM selling prices and higher raw material/energy costs, offset in part by increased unit volume and reduced costs attributable to greater plant throughput. Polymer processing equipment sales of $46.6 million were up 11% from the prior year due to an increase in unit volume of seven percent and favorable foreign currency translation of five percent, partially offset by lower selling prices of one percent. Operating profit of $3.4 million was up $8.2 million from the prior year due primarily to reduced costs and the impact of higher unit volume. The 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 2003 of $62 million was $14 million lower than at the end of 2002. 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 Crop protection sales of $61.0 million were up 21% from the prior year due to an increase in unit volume of 16% and favorable foreign currency translation of five percent. Operating profit of $14.1 million was 41% above the prior year due mainly to the impact of increased unit volume, higher joint venture equity income and a favorable sales mix, offset in part by an unfavorable foreign currency impact. Refined products sales of $58.9 million were up four percent from the prior year due primarily to increased selling prices, with favorable foreign currency translation of three percent offsetting lower unit volume. The operating loss of $2.9 million was unfavorable versus the fourth quarter of 2002 by $3.5 million due primarily to higher raw material costs, an unfavorable sales mix and the impact of lower unit volume, offset in part by reduced environmental-related expenses and increased selling prices. Crompton Corporation, with annual sales of $2.2 billion, is a producer and marketer of specialty chemicals and polymer products and equipment. Additional information concerning Crompton Corporation is available at www.cromptoncorp.com. 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. 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 the Company is subject, 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, and other risks and uncertainties detailed in the Company's filings with the Securities and Exchange Commission. These statements are based on our estimates and assumptions and on currently available information. The forward-looking statements include information concerning our possible or assumed future results of operations, 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 Operations
Fourth quarter and twelve months ended 2003 and 2002
(In thousands, except per share data)
Fourth Quarter Twelve Months Ended
--------------------- ---------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Net sales $ 560,981 $ 479,764 $2,185,043 $2,090,271
Cost of products sold 426,243 340,657 1,616,092 1,468,268
Selling, general and
admin. 89,422 89,155 353,026 354,559
Depreciation and
amortization 30,553 25,524 115,369 111,426
Research and development 13,914 13,364 51,467 54,285
Equity income (6,400) (4,449) (13,169) (7,917)
Facility closures,
severance and related
costs 5,489 7,169 19,560 17,969
Antitrust legal and
related costs 6,269 6,306 32,529 6,306
---------- ---------- ---------- ----------
Operating profit (loss) (4,509) 2,038 10,169 85,375
Interest expense 16,715 24,273 89,653 101,704
Loss on early
extinguishment of debt - - 24,699 -
Other expense (income),
net (2,071) (2,556) 5,383 38,021
---------- ---------- ---------- ----------
Loss from continuing
operations before
income taxes and
cumulative effect of
accounting change (19,153) (19,679) (109,566) (54,350)
Income tax benefit (6,311) (4,840) (36,102) (18,904)
---------- ---------- ---------- ----------
Loss from continuing
operations before
cumulative effect of
accounting change (12,842) (14,839) (73,464) (35,446)
Earnings from
discontinued operations - 17,264 26,314 50,920
Gain on sale of
discontinued operations - - 111,692 -
Cumulative effect of
accounting change - - (401) (298,981)
---------- ---------- ---------- ----------
Net earnings (loss) $ (12,842)$ 2,425 $ 64,141 $ (283,507)
========== ========== ========== ==========
Basic and diluted earnings (loss)
per common share:
Loss from continuing
operations before
cumulative effect of
accounting change $ (0.11)$ (0.13)$ (0.65)$ (0.31)
Earnings from
discontinued operations - 0.15 0.23 0.44
Gain on sale of
discontinued operations - - 0.99 -
Cumulative effect of
accounting change - - - (2.63)
---------- ---------- ---------- ----------
Net earnings (loss) $ (0.11)$ 0.02 $ 0.57 $ (2.50)
========== ========== ========== ==========
Weighted average
shares outstanding 112,166 113,788 112,531 113,568
========== ========== ========== ==========
CROMPTON CORPORATION
Consolidated Balance Sheets
December 31, 2003 and 2002
(In thousands of dollars)
December 31, December 31,
2003 2002
-------------- --------------
ASSETS
CURRENT ASSETS
Cash $ 39,213 $ 16,941
Accounts receivable 210,190 183,329
Inventories 390,199 353,556
Other current assets 170,852 112,950
Assets held for sale - 392,887
------------- --------------
Total current assets 810,454 1,059,663
------------- --------------
NON-CURRENT ASSETS
Property, plant and equipment 774,612 695,962
Cost in excess of acquired net assets 418,607 584,633
Other assets 525,509 500,557
------------- --------------
$ 2,529,182 $ 2,840,815
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Short-term borrowings $ 60,695 $ 3,694
Accounts payable 232,127 268,593
Accrued expenses 265,162 260,718
Income taxes payable 130,284 116,111
Other current liabilities 10,667 15,670
Liabilities held for sale - 29,273
------------- --------------
Total current liabilities 698,935 694,059
------------- --------------
NON-CURRENT LIABILITIES
Long-term debt 754,018 1,253,149
Postretirement health care liability 192,935 193,996
Other liabilities 535,398 499,728
STOCKHOLDERS' EQUITY
Common stock 1,192 1,192
Additional paid-in capital 1,034,027 1,048,304
Accumulated deficit (544,970) (586,555)
Accumulated other comprehensive loss (96,463) (200,426)
Treasury stock at cost (45,890) (62,632)
------------- --------------
Total stockholders' equity 347,896 199,883
------------- --------------
$ 2,529,182 $ 2,840,815
============= ==============
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Twelve months ended 2003 and 2002
(In thousands of dollars)
Twelve Months Ended
--------------------------
Increase (decrease) to cash 2003 2002
---------------------------- ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ 64,141 $ (283,507)
Adjustments to reconcile net earnings
(loss) to net cash (used in) provided
by operations:
Cumulative effect of accounting change,
net of tax 401 298,981
Gain on sale of discontinued operations (111,692) -
Loss on sale of business unit - 34,705
Loss on early extinguishment of debt 24,699 -
Depreciation and amortization 136,087 146,550
Equity income (13,169) (7,917)
Changes in assets and liabilities, net:
Accounts receivable 75,407 7,858
Accounts receivable - securitization (38,051) (157)
Inventories 39,421 22,683
Accounts payable (82,220) 28,945
Other (109,854) (46,387)
------------ ------------
Net cash (used in) provided by operations (14,830) 201,754
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net proceeds from sale of businesses 633,427 80,000
Capital expenditures (87,591) (100,309)
Other investing activities 1,707 (1,526)
------------ ------------
Net cash provided by (used in) investing
activities 547,543 (21,835)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Payments on long-term notes (478,380) (11,742)
Proceeds (payments) on domestic credit
facility 32,000 (130,000)
Payments on other short-term borrowings (1,824) (27,186)
Premium paid on early extinguishment of
debt (23,804) -
Dividends paid (22,556) (22,698)
Treasury stock acquired (22,080) -
Other financing activities 2,323 6,415
------------ ------------
Net cash used in financing activities (514,321) (185,211)
------------ ------------
CASH
Effect of exchange rates on cash 3,880 727
------------ ------------
Change in cash 22,272 (4,565)
Cash at beginning of period 16,941 21,506
------------ ------------
Cash at end of period $ 39,213 $ 16,941
============ ============
CROMPTON CORPORATION
Segment Sales and Operating Profit (Loss)
Fourth quarter and twelve months ended 2003 and 2002
(In thousands of dollars)
Fourth Quarter Twelve Months Ended
--------------------- ---------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
NET SALES
Polymer Products
Polymer Additives $ 324,682 $ 270,863 $1,232,022 $1,110,804
Polymers 72,519 63,802 285,669 270,954
Polymer Processing
Equipment 46,611 41,970 166,539 172,702
Eliminations (2,810) (3,856) (13,302) (15,064)
---------- ---------- ---------- ----------
441,002 372,779 1,670,928 1,539,396
---------- ---------- ---------- ----------
Specialty Products
Crop Protection 61,048 50,476 270,870 240,142
Other 58,931 56,509 243,245 310,733
---------- ---------- ---------- ----------
119,979 106,985 514,115 550,875
---------- ---------- ---------- ----------
Total net sales $ 560,981 $ 479,764 $2,185,043 $2,090,271
========== ========== ========== ==========
OPERATING PROFIT
Polymer Products
Polymer Additives $ (907)$ 17,449 $ 24,392 $ 79,403
Polymers 7,515 9,405 28,018 41,028
Polymer Processing
Equipment 3,427 (4,762) 5,164 (13,766)
---------- ---------- ---------- ----------
10,035 22,092 57,574 106,665
---------- ---------- ---------- ----------
Specialty Products
Crop Protection 14,130 10,002 64,963 60,241
Other (2,915) 551 (3,283) 7,960
---------- ---------- ---------- ----------
11,215 10,553 61,680 68,201
---------- ---------- ---------- ----------
General corporate expense (14,001) (14,774) (48,551) (53,701)
Unabsorbed overhead
expense from
discontinued operations - (2,358) (8,445) (11,515)
Facility closures,
severance and related
costs (5,489) (7,169) (19,560) (17,969)
Antitrust legal and
related costs (6,269) (6,306) (32,529) (6,306)
---------- ---------- ---------- ----------
Total operating
profit (loss) $ (4,509)$ 2,038 $ 10,169 $ 85,375
========== ========== ========== ==========
CROMPTON CORPORATION SUPPLEMENTARY SCHEDULE
Major Factors Affecting Operating Results ----------------------
Fourth quarter and twelve months ended 2003 versus 2002
(In millions of dollars)
Fourth Quarter Twelve Months Ended
--------------------- ---------------------
Net Pre-tax Net Pre-tax
Sales Loss * Sales Loss *
---------- ---------- ---------- ----------
2002 $479.8 $(19.7) $2,090.3 $(54.4)
2002 Facility closures,
severance and related
costs - 7.2 - 18.0
2002 Antitrust legal and
related costs - 6.3 - 6.3
2002 Loss on sale of
Industrial Specialties - - - 34.7
---------- ---------- ---------- ----------
479.8 (6.2) 2,090.3 4.6
Divested - Industrial
Specialties - - (81.8) (3.4)
Acquired - GE Specialty
Chemicals 35.9 2.8 61.6 6.0
Unit volume/mix 29.2 4.3 44.0 4.0
Lower selling prices (3.8) (3.8) (14.1) (14.1)
Foreign currency
translation 19.9 (3.2) 85.0 (1.6)
Costs savings - 6.6 - 26.9
Raw materials/energy - (16.4) - (62.6)
Interest expense - 7.6 - 12.1
Other - 0.9 - (4.7)
---------- ---------- ---------- ----------
561.0 (7.4) 2,185.0 (32.8)
2003 Facility closures,
severance and related costs - (5.5) - (19.6)
2003 Antitrust legal and
related costs - (6.3) - (32.5)
2003 Loss on early
extinguishment of debt - - - (24.7)
---------- ---------- ---------- ----------
2003 $561.0 $(19.2) $2,185.0 $(109.6)
========== ========== ========== ==========
* Balances for 2002 and 2003 represent the losses from continuing
operations before cumulative effect of accounting change.
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