Octel Corp. Reports Fourth Quarter and Year End 1999 Results.Business Editors NEWARK Newark, cities, United States Newark. 1 City (1990 pop. 37,861), Alameda co., W Calif., on the east side of San Francisco Bay; inc. 1955. , Delaware--(BUSINESS WIRE)--Feb. 10, 2000 Octel Corp. (NYSE NYSE See: New York Stock Exchange : OTL OTL Office of Technology Licensing OTL Out To Lunch OTL Overtime Loss (hockey) OTL Over The Line (tournament in San Diego, CA, USA) OTL Output Transformer-Less (audio systems) ) today announced financial results for the fourth quarter and year ended December December: see month. 31, 1999. - Fiscal 1999 Highlights - - 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. operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 6% of sales. - Tetraethyl lead tetraethyl lead (tĕt'rəĕth`əl), (C2H5)4Pb, viscous, colorless, poisonous liquid. It is an organometallic compound prepared by reacting ethyl chloride with a sodium-lead alloy. (TEL TEL Telephone TEL Telegram TEL Telugu (langauge) TEL Terrorist Exclusion List TEL Technology-Enhanced Learning TEL Transporter-Erector-Launcher TEL Tetra-Ethyl Lead TEL Team Deutsche Telekom ) gross profit 39% on sales despite additional $10 million 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 provision. - Share buy back program commenced on October October: see month. 15, 1999. - Acquisition of OBOAdler (OBOA OBOA Ontario Building Officials Association ) completed on November November: see month. 9, 1999. Total revenues for the fourth quarter of 1999 were $132.1 million with operating income of $16.6 million and net income of $8.2 million. Earnings per share were $0.58 (diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. ). Fourth quarter earnings included an exchange translation gain of $6 million due to the strength of the dollar and a rationalisation Noun 1. rationalisation - (psychiatry) a defense mechanism by which your true motivation is concealed by explaining your actions and feelings in a way that is not threatening rationalization provision of $13 million compared with the anticipated charge of $3 million. The increase was due to our agreed voluntary severance program which should be completed by June June: see month. 30, 2000. The net effect of these items on earnings per share was a reduction of $0.19 per share. Total revenues for the year ended December 31, 1999 were $516.8 million, compared with $465.0 million in 1998. Operating income and net income were $92.3 million and $42.6 million respectively, compared with $134.9 million and $70.4 million in the same period a year ago. Earnings per share were $3.05 (diluted). The Specialty Chemicals business had an excellent year with sales of $121 million and an operating income of $6.9 million after a full recovery of corporate overheads. Sales for the year were 48% higher than 1998 due to organic growth and the inclusion of Octel Deutschland and the Octel Starreon joint venture in sales revenues. TEL sales for the year were $396 million, an increase of $12 million over 1998. The inclusion of sales to former customers of Ethyl Corporation Ethyl Corporation is a fuel additive company headquartered in Richmond, Virginia. The company is a manufacturer, blender and distributor of fuel additives. Among other products, Ethyl Corporation distributes tetraethyl lead (referred to as TEL to avoid the stigma associated with (Ethyl ethyl (ĕth`əl), CH3CH2, organic free radical or alkyl group derived from ethane by removing one hydrogen atom. ) for the whole of 1999 compared with only three months in 1998 has increased sales revenue, as has the inclusion in 1999 of two months' sales revenue of OBOA. TEL volumes continue to decline in line with decreased global demand. 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. , Dennis Dennis is a male first name derived from the Greco-Roman name Dionysius meaning "servant of Dionysus", the Thracian god of wine, which is ultimately derived from the Greek Dios (Διος, "of Zeus") combined with Nysos or Nysa (Νυσα), where the Kerrison, commented: &uot;We are very pleased with the significant performance of our Specialty Chemicals businesses. Sales were almost 50% ahead of the previous year and, more importantly, we have shown an 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. return on sales Return on sales A measurement of operational efficiency equalingnet pre-tax profits divided by net sales expressed as a percentage. return on sales The portion of each dollar of sales that a firm is able to turn into income. of 6% compared with 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. in 1998. We continue to invest in these businesses from which we expect to generate profitable growth.&uot; &uot;We have again met expectations, in the face of the continued and somewhat steeper steep 1 adj. steep·er, steep·est 1. Having a sharp inclination; precipitous. 2. At a rapid or precipitous rate: a steep rise in salaries. 3. a. decline in the TEL market. Looking forward, we see 2000 as a difficult year, with a rapid run down, particularly in Western Europe Western Europe The countries of western Europe, especially those that are allied with the United States and Canada in the North Atlantic Treaty Organization (established 1949 and usually known as NATO). , and increased competitive activity. We will continue to seek price increases and cost reductions to cover escalating costs associated with a declining business.&uot; Net cash provided by operating activities in the fourth quarter was $36 million, including $5 million from OBOA for November and December. Net cash provided by operating activities for the year ended 31 December 1999 was $109 million. Octel commenced its 1999 stock buy back program on October 15. To date the Company has purchased 412,000 units of stock under this program at an average price of $11.50. On November 9, 1999 the acquisition of OBOA was completed for $94.5 million plus expenses. The acquisition was funded by additional senior debt on similar terms to Octel's current debt. Octel's 1999 results include two months' trading of OBOA. This increased group sales Group sales Block sale (of large amounts) of securities to institutional investors. group sales The distribution of a new security issue to institutional clients. by $13 million and operating income by $2 million. Octel Corp. was spun off from Great Lakes Chemical Corporation Great Lakes Chemical Corporation is a chemical research, production, sales and distribution company that produces specialty chemicals used for polymers, fire suppressants and retardants, pool and spa water purification systems and various other applications. on May 22, 1998 and entered into a marketing agreement with Ethyl, effective October 1, 1998, to include a significant part of Ethyl's TEL sales in Octel's accounts. Due to these events, the results of the year to December 31, 1999 are not comparable with 1998. Certain of the statements made herein constitute forward looking statements that involve risks and uncertainties, including the risks associated with business plans, the effects of changing economic and competitive conditions and government regulations. Additional information may be obtained by reviewing the Company's reports filed from time to time with the SEC.
Schedule 1
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
Three Months Ended Year Ended
December 31 December 31
---------------------------------------------------
1999 1998 1999 1998
---- ---- ---- ----
(millions of dollars except per share data)
-----------------------------------------
Net sales $ 132.1 $ 112.8 $ 516.8 $ 465.0
Cost of goods sold 88.6 58.1 326.8 244.3
-------- ---------- ---------- ----------
Gross profit 43.5 54.7 190.0 220.7
Operating expenses
Selling, general
and admin. 11.5 12.2 44.9 40.1
Research and
development 0.9 0.2 3.9 3.1
Amortization of
intangible assets 14.5 12.4 48.9 42.6
-------- ---------- ---------- ----------
26.9 24.8 97.7 85.8
-------- ---------- ---------- ----------
Operating income 16.6 29.9 92.3 134.9
Interest expense 6.9 7.5 25.9 25.2
Other expenses/
(income) (6.6) (3.6) (6.9) 0.5
Interest income (1.4) (0.7) (3.9) (2.7)
-------- ---------- ---------- ----------
Income before
income taxes and
minority interest 17.7 26.7 77.2 111.9
Minority interest (1.0) -- (1.9) --
-------- ---------- ---------- ----------
Income before
income taxes 16.7 26.7 75.3 111.9
Income taxes 8.5 9.0 32.7 41.5
-------- ---------- ---------- ----------
Net income $ 8.2 $ 17.7 $ 42.6 $ 70.4
======== ========== ========== ==========
Earnings per share:
basic $ 0.60 $ 1.26 $ 3.08 $ 4.85
-------- ---------- ---------- ----------
diluted $ 0.58 $ 1.26 $ 3.05 $ 4.85
-------- ---------- ---------- ----------
Weighted average
shares outstanding
(in thousands):
basic 13,625 13,993 13,827 14,514
---------- ---------- ---------- ----------
diluted 14,019 13,993 13,979 14,514
---------- ---------- ---------- ----------
ANALYSIS OF BUSINESS UNIT RESULTS
1999 1998 1999 1998
---- ---- ---- ----
(millions of dollars)
-------------------
Net sales
TEL $ 98.6 $ 91.0 $ 396.1 $ 383.7
Specialty Chemicals 33.5 21.8 120.7 81.3
------ ------ ------ ------
Total 132.1 112.8 516.8 465.0
------ ------ ------ ------
Gross Profit
TEL 34.2 51.0 155.5 203.1
Specialty Chemicals 9.3 3.7 34.5 17.6
------ ------ ------ ------
Total 43.5 54.7 190.0 220.7
------ ------ ------ ------
Operating income/(loss)
TEL 14.4 32.8 85.4 139.6
Specialty Chemicals 2.2 (2.9) 6.9 (4.7)
------ ------ ------ ------
Total $ 16.6 $ 29.9 $ 92.3 $ 134.9
------ ------ ------ ------
Schedule 2
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
December 31 December 31
1999 1998
-------------- -------------
Assets (millions of dollars)
Current assets
Cash and cash equivalents $ 37.2 $ 26.5
Accounts receivable,
less allowance
of $2.2 (1998 - $0.8)
150.5 120.6
Inventories
Finished products 34.8 61.1
Raw materials and work
in progress 29.5 27.8
------ ------
Total inventories 64.3 88.9
Prepaid expenses 3.8 4.9
------ ------
Total current assets 255.8 240.9
Property, plant and equipment 143.9 147.0
Less accumulated depreciation 39.4 30.9
------ ------
Net property, plant
and equipment 104.5 116.1
Goodwill 379.2 360.5
Intangible asset 22.7 --
Prepaid pension cost 72.2 73.5
Deferred financing costs 12.7 15.7
Other assets 2.4 --
------ ------
$ 849.5 $ 806.7
====== ======
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 78.5 $ 78.6
Accrued expenses 17.0 13.0
Accrued income taxes 31.3 42.6
Current portion of long-term debt 80.0 71.0
------ ------
Total current liabilities 206.8 205.2
Plant closure provisions 55.6 41.7
Deferred income taxes 35.8 21.6
Long-term debt 233.3 229.8
Other liabilities 1.7 1.9
Minority interest 2.4 --
Stockholders' equity
Common stock, $0.01 par value 0.1 0.1
Additional paid-in capital 276.1 276.1
Treasury stock (18.9) (13.2)
Retained earnings 82.5 39.9
Accumulated other
comprehensive income (25.9) (1.8)
------ ------
Total stockholders' equity 313.9 301.1
====== ======
$ 849.5 $ 806.7
====== ======
Schedule 3
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
Year Ended
December 31
1999 1998
---- ----
(millions of dollars)
Cash Flows from Operating Activities
Net income $ 42.6 $ 70.4
Adjustments to reconcile
net income to cash provided by operating
activities:
Depreciation and amortization 68.4 59.7
Deferred income taxes 14.5 1.5
Other (1.2) (0.9)
Changes in operating assets
and liabilities:
Accounts receivable and
prepaid expenses (14.2) 53.6
Inventories 31.6 (5.7)
Accounts payable and
accrued expenses (6.1) 35.7
Income taxes and other
current liabilities (14.0) 45.0
Other non-current assets and
liabilities (12.9) (21.0)
------ ------
Net cash provided by operating activities 108.7 238.3
Cash Flows from Investing Activities
Business combinations, net of cash acquired 11.8 (26.4)
Capital expenditures (8.4) (23.5)
Other (6.4) 1.0
------ ------
Net cash used in investing activities (3.0) (48.9)
Cash Flows from Financing Activities
Net cash paid to GLCC -- (468.5)
Receipt of long-term borrowings 106.0 441.0
Repayment of short-term credit (90.0) --
Repayment of long-term borrowings (93.5) (140.2)
Deferred financing costs -- (15.2)
Repurchase of common stock (5.7) (13.2)
Minority interest 2.4 --
------ ------
Net cash used in financing activities (80.8) (196.1)
Effect of exchange rate changes on cash (14.2) 3.5
------ ------
Net change in cash and cash equivalents 10.7 (3.2)
Cash and cash equivalents
at beginning of period 26.5 29.7
------ ------
Cash and cash equivalents at end of period $ 37.2 $ 26.5
====== ======
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