Crompton Reports Second Quarter 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 second quarter net loss of $9.1 million, or eight 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. , compared to a net loss of $6.3 million, or six cents per share, in the second quarter of 2002. As a result of the previously announced agreement to sell the OrganoSilicones business to General Electric Company, the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial statements reflect the OrganoSilicones business as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Second quarter 2003 earnings from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $10.3 million, or nine cents per share, were equivalent to the prior year. The 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 $19.4 million, or 17 cents per share, compared to a loss of $16.9 million, or 15 cents per share, for the second quarter of 2002. The loss from continuing operations for the second 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 $12.4 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 costs and $2.7 million for previously announced 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. The loss from continuing operations for the second quarter of 2002 included pre-tax charges of $34.7 million for the loss on the sale of the Company's industrial specialties business and $6.4 million for facility closures, severance and related costs. The second quarter losses from continuing operations for 2003 and 2002 included pre-tax overhead expenses previously absorbed Absorbed 1. In a general business sense, when a cost is treated as an expense instead of being passed on to the customer in the form of higher prices. 2. In underwriting, when an issue has been completely sold to the public. 3. by the OrganoSilicones business of $4.6 million and $3.5 million, respectively. Second quarter sales from continuing operations of $532.9 million were seven percent below the prior year due primarily to the 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). of the industrial specialties business in June June: see month. 2002. A five percent increase in foreign currency translation was offset primarily by a reduction in unit volume. "This was a tough quarter for the chemical industry as a whole and for Crompton Cromp·ton , Samuel 1753-1827. British inventor of the spinning mule (1779). in particular," said Vincent A. Calarco, chairman, president and chief executive officer. "The combined impact of higher raw material and energy costs, reduced unit volume from a generally weaker global economic environment and lower selling prices had a significant negative impact on our earnings. In keeping with our practice of aggressive cost containment cost containment, n the features of a dental benefits program or of the administration of the program designed to reduce or eliminate certain charges to the plan. , we are implementing a cost reduction program to eliminate, at a minimum, overhead expenses previously absorbed by the OrganoSilicones business. "Going forward, we will continue to focus on growing sales by providing innovative products that meet customer needs; maintaining a cost competitive position; and reducing debt. As external factors improve, we are operationally leveraged 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. top-line growth into improved results and improved cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses ." For the first six months of 2003, the Company reported a net loss of $3.3 million, or three cents per share, compared to a net loss of $298.5 million, or $2.63 per share, for 2002. Earnings from discontinued operations for the first six months of 2003 were $23.3 million, or 20 cents per share, compared to $18.8 million, or 16 cents per share, in 2002. The loss from continuing operations of $26.1 million, or 23 cents per share, for the first half of 2003 compared to a loss of $18.3 million, or 16 cents per share, in 2002. The loss from continuing operations for the first six months of 2003 included pre-tax charges of $20.9 million for antitrust legal costs and $3.5 million for previously announced facility closures, severance and related costs. The loss from continuing operations for the first six months of 2002 included pre-tax charges of $34.7 million for the loss on the sale of the company's industrial specialties business and $6.4 million for facility closures, severance and related costs. The loss from continuing operations for the first six months of 2003 and 2002 included pre-tax overhead expenses previously absorbed by the OrganoSilicones business of $7.2 million and $6.2 million, respectively. The net loss for the first half of 2003 and 2002 included a cumulative effect of accounting change of $401 thousand and $299 million, respectively. The Company will incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. additional legal costs in future periods in connection with the governmental investigations and the related civil litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , but we expect that those costs will be lower in each of the third and fourth quarters than the pre-tax total of $12.4 million incurred in the second quarter. Second 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 $294.6 million were up two percent from the prior year due to favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. foreign currency translation of five percent, offset in part by a decline in unit volume of two percent and lower selling prices of one percent. Plastic additives sales increased five percent due mainly to 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. and petroleum additives sales rose 11 percent and seven percent, respectively, due primarily to favorable foreign currency translation and increased demand. Rubber additives sales declined 15 percent mainly as a result of lower selling prices and reduced 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 $6.9 million was down 72 percent from the prior year due primarily to higher raw material costs, an unfavorable sales mix sales mix See product mix. , lower selling prices, an environmental charge of $1.3 million and the absence of a prior year vendor settlement credit of $1.2 million. Polymers sales of $70.3 million were down three percent from the second quarter of 2002 as a result of lower selling prices of five percent and reduced unit volume of one percent, partially offset by favorable foreign currency translation of three 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 declined two percent mainly as a result of the negative impact of industry overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. on selling prices, offset in part by higher unit volume and favorable foreign currency translation. Urethanes sales were down four percent due mainly to reduced demand, partially offset by favorable foreign currency translation. Operating profit of $4.9 million was down 61 percent from the prior year mainly as a result of lower EPDM selling prices, higher raw material costs and reduced unit volume in urethanes. Polymer processing equipment sales of $40.6 million were down nine percent from the prior year due to reduced demand for capital equipment, offset in part by five percent improvements in both selling prices and foreign currency translation. Operating profit of $1.0 million was up $3.7 million from the prior year due primarily to lower operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and favorable selling prices, partially offset by lower 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 June was $75 million, down $1 million from 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 $71.6 million were up one percent from the prior year due to favorable foreign currency translation of five percent, offset by a decline in unit volume of four percent. Operating profit of $14.2 million was down 31 percent from the second quarter of 2002 mainly as a result of lower unit volume, an unfavorable sales mix resulting from increased sales of resale resale n. selling again, particularly at retail. In many states a "resale license" or "resale number" is required so that the state can monitor the collection of sales tax on retail sales. RESALE. products and the absence of a prior year vendor settlement credit of $1.6 million. Other sales of $59.4 million were down 41 percent from the prior year due mainly to the divestment divestment to strip one's investment from an entity. of the industrial specialties business in June 2002. Refined products sales were up two percent as higher selling prices and favorable foreign currency translation more than offset 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 $.6 million was unfavorable versus the prior year by $2.7 million due primarily to the divestiture of the industrial specialties business and increased environmental-related expenses of $2.6 million, partially offset by higher selling prices. General corporate expense of $6.2 million included in the attached Segment Sales and Operating Profit decreased $5.6 million from the second quarter of 2002 due primarily to the gain on the Company's equity derivative In finance, an equity derivative is a class of financial instruments whose value is at least partly derived from one or more underlying equity securities. Market participants trade equity derivatives in order to transfer or transform certain risks associated with the contract that matured in May, 2003. Discontinued Operations Sales included in discontinued operations of $113.3 million were down four percent from the prior year due to a decline in selling prices of six percent and lower volume of four percent, offset in part by favorable foreign currency translation of six percent. Earnings from discontinued operations of $10.3 million (net of income taxes of $3.5 million) were 3% lower than the prior year of $10.6 million (net of income taxes of $2.6 million), mainly as a result of reduced selling prices and lower unit volume, partially offset by lower operating expenses and the absence of a prior year pre-tax charge for facility closures, severance and related costs of $2.9 million. Forward Looking Statements 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, 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
Second quarter and six months ended 2003 and 2002
(In thousands, except per share data)
Second Quarter Six Months Ended
----------------- ---------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
Net sales $532,901 $571,489 $1,064,873 $1,102,571
Cost of products sold 394,637 398,097 779,595 778,234
Selling, general and admin. 84,757 90,401 172,100 177,529
Depreciation and amortization 27,379 29,072 54,498 58,670
Research and development 12,726 14,388 24,786 27,663
Equity income (2,228) (1,997) (7,842) (4,261)
Facility closures, severance
and related costs 2,686 6,380 3,505 6,380
Antitrust legal costs 12,386 - 20,875 -
-------- -------- ---------- ----------
Operating profit 558 35,148 17,356 58,356
Interest expense 25,559 26,092 52,274 52,230
Other expense, net 3,827 38,946 4,040 37,385
-------- -------- ---------- ----------
Loss from continuing
operations before income
taxes and cumulative effect
of accounting change (28,828) (29,890) (38,958) (31,259)
Income tax benefit (9,426) (13,036) (12,838) (12,952)
-------- -------- ---------- ----------
Loss from continuing
operations before cumulative
effect of accounting change (19,402) (16,854) (26,120) (18,307)
Earnings from discontinued
operations 10,292 10,560 23,257 18,768
Cumulative effect of
accounting change - - (401) (298,981)
-------- -------- ---------- ----------
Net loss $ (9,110)$ (6,294)$ (3,264)$ (298,520)
======== ======== ========== ==========
Basic and Diluted earnings
(loss) per common share:
Loss from continuing
operations before
cumulative effect of
accounting change $ (0.17)$ (0.15)$ (0.23)$ (0.16)
Earnings from discontinued
operations 0.09 0.09 0.20 0.16
Cumulative effect of
accounting change - - - (2.63)
-------- -------- ---------- ----------
Net loss $ (0.08)$ (0.06)$ (0.03)$ (2.63)
======== ======== ========== ==========
Weighted average shares
outstanding 112,639 113,512 113,389 113,394
======== ======== ========== ==========
CROMPTON CORPORATION
Consolidated Balance Sheets
June 30, 2003 and December 31, 2002
(In thousands of dollars)
June 30, December 31,
2003 2002
---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 18,366 $ 16,941
Accounts receivable 192,293 183,329
Inventories 382,569 353,556
Other current assets 91,755 112,950
Assets held for sale 383,097 392,887
---------- ----------
Total current assets 1,068,080 1,059,663
---------- ----------
NON-CURRENT ASSETS
Property, plant and equipment 705,158 695,962
Cost in excess of acquired net assets 586,115 584,633
Other assets 500,701 500,557
---------- ----------
$2,860,054 $2,840,815
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 9,684 $ 3,694
Accounts payable 253,708 268,593
Accrued expenses 234,939 260,718
Income taxes payable 83,446 116,111
Other current liabilities 15,156 15,670
Liabilities held for sale 28,181 29,273
---------- ----------
Total current liabilities 625,114 694,059
---------- ----------
NON-CURRENT LIABILITIES
Long-term debt 1,286,709 1,253,149
Postretirement health care liability 192,004 193,996
Other liabilities 501,397 499,728
STOCKHOLDERS' EQUITY
Common stock 1,192 1,192
Additional paid-in capital 1,045,094 1,048,304
Accumulated deficit (601,252) (586,555)
Accumulated other comprehensive loss (111,820) (200,426)
Treasury stock at cost (78,384) (62,632)
---------- ----------
Total stockholders' equity 254,830 199,883
---------- ----------
$2,860,054 $2,840,815
========== ==========
CROMPTON CORPORATION
Consolidated Statements of Cash Flows
Six months ended 2003 and 2002
(In thousands of dollars)
Six Months Ended
---------------------
Increase (decrease) to cash 2003 2002
--------------------------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,264)$ (298,520)
Adjustments to reconcile net loss to net
cash provided by operations:
Cumulative effect of accounting change, net of
tax 401 298,981
Loss on sale of business unit - 34,705
Depreciation and amortization 72,407 76,024
Equity income (7,842) (4,261)
Changes in assets and liabilities, net:
Accounts receivable 3,688 (75,225)
Accounts receivable - securitization 14,641 39,193
Inventories (4,832) 32,474
Accounts payable (26,095) 18,707
Other (17,959) 10,478
---------- ----------
Net cash provided by operations 31,145 132,556
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of business unit - 80,000
Capital expenditures (32,721) (36,048)
Other investing activities (154) 1,090
---------- ----------
Net cash (used in) provided by investing
activities (32,875) 45,042
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (payments) on long-term borrowings 28,113 (144,102)
Proceeds (payments) on short-term borrowings 5,855 (26,918)
Dividends paid (11,433) (11,343)
Treasury stock acquired (22,080) -
Other financing activities 1,036 3,908
---------- ----------
Net cash provided by (used in) financing
activities 1,491 (178,455)
---------- ----------
CASH
Effect of exchange rates on cash 1,664 153
---------- ----------
Change in cash 1,425 (704)
Cash at beginning of period 16,941 21,506
---------- ----------
Cash at end of period $ 18,366 $ 20,802
========== ==========
Note - Certain reclassifications have been made to the prior year to
conform with this year's presentation, including the
classification of accounts receivable - securitization as part
of net cash provided by operations rather than as part of net
cash provided by (used in) financing activities.
CROMPTON CORPORATION
Segment Sales and Operating Profit
Second quarter and six months ended 2003 and 2002
(In thousands of dollars)
Second Quarter Six Months Ended
----------------- ---------------------
2003 2002 2003 2002
-------- -------- ---------- ----------
NET SALES
Polymer Products
Polymer Additives $294,562 $287,676 $ 596,136 $ 554,911
Polymers 70,282 72,475 138,465 139,955
Polymer Processing Equipment 40,640 44,652 81,748 94,457
Eliminations (3,523) (3,971) (7,176) (7,290)
-------- -------- ---------- ----------
401,961 400,832 809,173 782,033
-------- -------- ---------- ----------
Specialty Products
Crop Protection 71,581 70,538 131,961 123,010
Other 59,359 100,119 123,739 197,528
-------- -------- ---------- ----------
130,940 170,657 255,700 320,538
-------- -------- ---------- ----------
Total net sales $532,901 $571,489 $1,064,873 $1,102,571
======== ======== ========== ==========
OPERATING PROFIT
Polymer Products
Polymer Additives $ 6,914 $ 24,324 $ 20,427 $ 35,955
Polymers 4,875 12,432 14,149 21,081
Polymer Processing Equipment 982 (2,700) 2,060 (2,620)
-------- -------- ---------- ----------
12,771 34,056 36,636 54,416
-------- -------- ---------- ----------
Specialty Products
Crop Protection 14,203 20,615 33,854 35,085
Other (605) 2,130 (157) 5,611
-------- -------- ---------- ----------
13,598 22,745 33,697 40,696
-------- -------- ---------- ----------
General corporate expense (6,172) (11,809) (21,381) (24,142)
Unabsorbed overhead expense
from discontinued operations (4,567) (3,464) (7,216) (6,234)
Facility closures, severance
and related costs (2,686) (6,380) (3,505) (6,380)
Antitrust legal costs (12,386) - (20,875) -
-------- -------- ---------- ----------
Total operating profit $ 558 $ 35,148 $ 17,356 $ 58,356
======== ======== ========== ==========
CROMPTON CORPORATION SUPPLEMENTARY SCHEDULE
Major Factors Affecting Results ----------------------
Second quarter and six months ended 2003 versus 2002
(In millions of dollars)
The following table summarizes the major factors contributing to the
second quarter and six month changes in net sales and pre-tax loss
from continuing operations versus the prior year:
Second Quarter Six Months Ended
--------------------- ---------------------
Net Pre-tax Net Pre-tax
Sales Loss Sales Loss
Continuing Continuing Continuing Continuing
Operations Operations Operations Operations
---------- ---------- ---------- -----------
2002 $ 571.5 $ (29.9) $ 1,102.6 $ (31.3)
2002 Facility closures,
severance and related
costs - 6.4 - 6.4
2002 Loss on sale of
Industrial Specialties - 34.7 - 34.7
--------- --------- --------- ---------
571.5 11.2 1,102.6 9.8
Divested operations (41.7) (1.7) (81.8) (3.4)
Unit volume/mix (18.8) (10.9) 1.4 (4.9)
Lower selling prices (2.0) (2.0) (7.8) (7.8)
Foreign currency
translation 23.9 0.9 50.5 2.8
Costs savings - 8.6 - 14.5
Raw materials/energy - (18.2) - (28.4)
Absorption variances - 2.8 - 12.4
Other - (4.4) - (9.6)
--------- --------- --------- ---------
532.9 (13.7) 1,064.9 (14.6)
2003 Facility closures,
severance and related
costs - (2.7) - (3.5)
2003 Antitrust legal costs - (12.4) - (20.9)
--------- --------- --------- ---------
2003 $ 532.9 $ (28.8) $ 1,064.9 $ (39.0)
========= ========= ========= =========
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion