Octel Corp. Reports Second Quarter 1999 Results.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. , Del.--(BUSINESS WIRE)--July 29, 1999-- 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 second quarter ended June June: see month. 30, 1999. Total revenues for the second quarter of fiscal 1999 were $129.8 million, with an 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. of $25.5 million and a net income of $11.7 million. Earnings per share were $0.84. Total revenues for the six months ended June 30, 1999 were $257.8 million with an operating income of $49.6 million and a net income of $22.1 million. Earnings per share were $1.59. Total 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 ) sales for the six months were $200 million, an increase of $2 million over last year. 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. ), effective October October: see month. 1, 1998, has resulted in an increase in sales revenue over the six months to June 30, 1998. TEL volumes continue to decline in line with decreased global demand. Average retail selling prices for the six months to end June 30, 1999 increased by 2 percent over December December: see month. 1998. The 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 continues to make good progress. Sales for the six months at $58 million were 44% higher than last year. This was due to a combination of organic growth, the acquisition of Octel Deutschland and the Octel Starreon joint venture. The third phase of the UK voluntary 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 program agreed in November November: see month. 1998 was completed in the second quarter with a further 127 employees leaving the Company. The total number of employees world-wide at June 30, 1999 was 1072 compared to 1305 at December 31, 1998. The Company is pleased to announce that its subsidiary, The Associated Octel Company Ltd., has signed a Conditional Agreement to purchase the UK company, OBOAdler Co. Ltd. (OBOA OBOA Ontario Building Officials Association ). OBOA owns the shares and assets of the Alcor group of companies, which manufacture and market TEL. Alcor is headquartered in Baar, Switzerland Baar is a municipality in the canton of Zug in Switzerland. and includes a TEL manufacturing plant in Germany Germany (jûr`mənē), Ger. Deutschland, officially Federal Republic of Germany, republic (2005 est. pop. 82,431,000), 137,699 sq mi (356,733 sq km). . Pursuant to an existing Consent Decree A settlement of a lawsuit or criminal case in which a person or company agrees to take specific actions without admitting fault or guilt for the situation that led to the lawsuit. A consent decree is a settlement that is contained in a court order. , Octel has notified the FTC FTC See Federal Trade Commission (FTC). in advance of the purchase. When the Company has satisfied FTC and any other regulatory requests, the agreement will become unconditional HEIR, UNCONDITIONAL. A term used in the civil law, adopted by the Civil Code of Louisiana. Unconditional heirs are those who inherit without any reservation, or without making an inventory, whether their acceptance be express or tacit. Civ. Code of Lo. art. 878. UNCONDITIONAL. . Octel expects to complete the purchase during the second half of fiscal 1999. The acquisition will be funded by additional senior debt on similar terms to Octel's existing debt. Specific details of the transaction, including the purchase price, are subject to various confidentiality agreements and cannot be divulged until such time as the transaction is completed. Furthermore, Alcor is a competitor of Octel and, until the purchase is complete, Octel will continue to treat OBOA as an independent competitor against which it will compete vigorously within its global market. Fuller details of this transaction will be issued on completion. Commenting on the Company's performance, 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, 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. of Octel Corp. said: "Octel has turned in another solid performance broadly meeting expectations. TEL prices are starting to firm although the volume decline continues as forecast. In the second quarter we completed our latest manpower reduction programme, with 282 UK employees leaving the organisation in the last nine months. We are already planning the next stage of rationalising our intermediates at the Ellesmere Port Ellesmere Port, town and district (1991 pop. 78,800), Cheshire, W central England. Ellesmere Port, located on the Manchester Ship Canal near its junction with the Shropshire Union Canal and the entrance into the Mersey estuary, is the principal town of the district. site and details will be announced at the end of the third quarter." "The rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. in a sunset industry A sunset industry is an industry in decline, one that has passed its peak or boom periods. See also
rationalize manufacturing logistics, and distribute TEL safely and efficiently as the world-wide decline continues." "I am particularly pleased that the improved performance of our Specialty Chemicals business, mentioned in the first quarter, has been sustained and that growth in turnover and profit is based on organic growth as well as on the acquisition and joint venture." 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 first half of 1999 are not comparable with the corresponding period last year. Octel Corp., a Delaware corporation A Delaware corporation is a corporation chartered in the U.S. state of Delaware. Delaware is well known as a corporate haven, and thus, over 50% of US publicly-traded corporations and 58% of the Fortune 500 companies are incorporated in the state. , is an international chemical company specializing in the manufacture, distribution and marketing of fuel additives. The Company is comprised of three primary operating businesses: Lead Alkyls, Petroleum Specialties and Performance Chemicals. The Company was spun off from Great Lakes Great Lakes, group of five freshwater lakes, central North America, creating a natural border between the United States and Canada and forming the largest body of freshwater in the world, with a combined surface area of c.95,000 sq mi (246,050 sq km). Chemical Corp. (NYSE: GLK GLK Glucokinase ) in May 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. -0-
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
June 30 June 30
----------------------------------------
1999 1998 1999 1998
(millions of dollars except per share data)
Net sales $ 129.8 $ 115.6 $ 257.8 $ 238.8
Cost of
goods sold 80.6 59.9 159.2 123.7
------- ------- ------- -------
Gross profit 49.2 55.7 98.6 115.1
Operating expenses
Selling, general
and admin. 11.9 8.8 24.1 17.8
Research and
development 0.9 0.8 2.0 1.6
Amortization of
intangible assets 10.9 10.2 22.9 18.8
------- ------- ------- -------
23.7 19.8 49.0 38.2
------- ------- ------- -------
Operating income 25.5 35.9 49.6 76.9
Interest expense 6.3 7.5 13.3 9.6
Other expenses 0.1 -- 2.0 1.4
Interest income (1.4) (0.7) (1.8) (1.3)
Other income (1.6) (0.2) (5.6) (0.3)
------- ------- ------- -------
Income before
income taxes
and minority 22.1 29.3 41.7 67.5
interest
Minority interest 0.1 -- 0.2 --
------- ------- ------- -------
Income before
income taxes 22.0 29.3 41.5 67.5
Income taxes 10.3 12.7 19.4 25.3
------- ------- ------- -------
Net income $ 11.7 $ 16.6 $ 22.1 $ 42.2
======= ======= ======= =======
Earnings per
share:
Basic $ 0.84 $ 1.12 $ 1.59 $ 2.86
------- ------- ------- -------
Diluted $ 0.81 $ 1.12 $ 1.54 $ 2.86
------- ------- ------- -------
Weighted average
shares
outstanding
(in thousands)
Basic 13,889 14,763 13,911 14,763
------- ------- ------- -------
Diluted 14,434 14,763 14,291 14,763
------- ------- ------- -------
ANALYSIS OF BUSINESS UNIT RESULTS
1999 1998 1999 1998
(millions of dollars)
Net sales
TEL $ 101.1 95.7 $ 199.5 198.2
Specialty Chemicals 28.7 19.9 58.3 40.6
------ ----- ------ -----
Total 129.8 115.6 257.8 238.8
------ ----- ------ -----
Gross Profit
TEL 41.1 50.6 82.0 105.3
Specialty Chemicals 8.1 5.1 16.6 9.8
------ ----- ------ -----
Total 49.2 55.7 98.6 115.1
------ ----- ------ -----
Operating income/(loss)
TEL 24.9 36.2 47.8 77.5
Specialty Chemicals 0.6 (0.3) 1.8 (0.6)
------ ----- ------ -----
Total $ 25.5 35.9 $ 49.6 76.9
------ ----- ------ -----
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30 December 31
1999 1998
(Unaudited)
(millions of dollars)
Assets
Current Assets
Cash and cash equivalents $ 16.0 $ 26.5
Accounts receivable,
less allowance
of $2.1 (1998 - $0.8) 141.8 120.6
Inventories 71.0 88.9
Prepaid expenses 4.8 4.9
------ ------
Total current assets 233.6 240.9
Property, plant and equipment 106.2 116.1
Goodwill 339.9 360.5
Prepaid pension cost 70.1 73.5
Deferred financing costs 12.7 15.7
Other Assets 7.8 --
====== ======
$ 770.3 $ 806.7
====== ======
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable $ 67.7 $ 78.6
Accrued expenses 14.0 13.0
Accrued income taxes 54.9 42.6
Current portion of
long-term debt 60.0 71.0
------ ------
Total current liabilities 196.6 205.2
Plant closure provisions 33.3 47.1
Deferred income taxes 22.8 21.6
Long-term debt 209.0 229.8
Other liabilities 1.4 1.9
Minority interest 0.9 --
Stockholders' equity 306.3 301.1
====== ======
$ 770.3 $ 806.7
====== ======
OCTEL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30
1999 1998
(millions of dollars)
Cash Flows from Operating Activities
Net income $ 22.1 $ 42.2
Adjustments to reconcile net
income to cash provided
by operating
activities:
Depreciation and amortization 32.5 29.0
Deferred income taxes 1.2 --
Other -- (0.1)
Changes in operating assets
and liabilities:
Accounts receivable and
prepaid expenses (27.7) 37.9
Inventories 14.1 1.8
Accounts payable and
accrued expenses (4.2) (12.6)
Income taxes and other
current liabilities 13.0 25.0
Other non-current assets
and liabilities (11.0) (8.4)
----- ------
Net cash provided by operating
activities 40.0 114.8
Cash flows from Investing Activities
Capital expenditures (5.8) (8.1)
Business combinations, net
of cash acquired (3.9) --
Other (6.0) (7.3)
----- ------
Net cash used in investing
activities (15.7) (15.4)
Cash flows from Financing Activities
Net cash paid to GLCC -- (468.5)
Receipt of long-term borrowings 16.0 430.0
Repayment of long-term borrowings (47.7) --
Fees related to spin financing -- (40.0)
Repurchase of common stock (1.0) --
Minority interest 0.9 (11.0)
----- ------
Net cash used in financing
activities (31.8) (89.5)
Effect of exchange rate
changes on cash (3.0) 2.4
----- ------
Net change in cash and cash
equivalents (10.5) 12.3
Cash and cash equivalents
at beginning of period 26.5 29.7
----- ------
Cash and cash equivalents
at end of period $ 16.0 $ 42.0
===== ======
The accompanying footnotes are an integral part of these
unaudited condensed financial statements
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