Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 8-K

 


 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported) April 26, 2005

 


 

ALBEMARLE CORPORATION

(Exact name of Registrant as specified in charter)

 


 

Virginia   1-12658   54-1692118

(State or other jurisdiction

of incorporation)

  (Commission file number)  

(IRS employer

identification no.)

 

330 South Fourth Street, Richmond, Virginia   23219
(Address of principal executive offices)   (Zip code)

 

Registrant’s telephone number, including area code (804) 788-6000

 

Not applicable

(Former name or former address, if changed since last report)

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Section 2 — Financial Information

 

Item 2.02. Results of Operations and Financial Condition.

 

On April 26, 2005, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the first quarter and three months ended March 31, 2005. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on April 26, 2005, the Company will hold a teleconference for analysts and media to discuss results for the first quarter and three months ended March 31, 2005. The teleconference will be webcast on the Company’s website at www.albemarle.com.

 

The press release attached as Exhibit 99.1 includes net income and related per share amounts excluding certain special items. Net income excluding special items is a financial measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). The Company has reported net income excluding special items because management believes that this financial measure is more reflective of the Company’s performance as it presents investors with information about the impact of certain non-recurring items on the Company, and, in doing so, improves transparency to investors and enhances period-to-period comparability of financial performance. Net income excluding special items should not be considered as an alternative to net income determined in accordance with GAAP. The Company has included in the press release a reconciliation of net income excluding special items, a non-GAAP financial measure, to net income, the most directly comparable financial measure calculated and reported in accordance with GAAP.

 

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Section 9 — Financial Statements and Exhibits

 

Item 9.01. Financial Statement and Exhibits.

 

  (c) Exhibits.

 

  99.1 Press release, dated April 26, 2005, issued by the Company.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: April 26, 2005

 

ALBEMARLE CORPORATION
By:  

/s/ Luther C. Kissam, IV


    Luther C. Kissam, IV
    Vice President, General Counsel and Secretary

 

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EXHIBIT INDEX

 

Exhibit

Number


 

Exhibit


99.1   Press release, dated April 26, 2005, issued by the Company.

 

4

Press Release

Exhibit 99.1

 

LOGO  

Contact:

Laura Ruiz

Danielle Paquette

  

804.788.6005

804.788.6045

    

 

Albemarle Announces Record First-Quarter 2005 Results

 

    Net Sales for the quarter were $510 million and represented an all time record for the Company

 

    Net Income, excluding specials, increased 53 percent over first-quarter 2004, resulting in 54 cents per share for the current quarter

 

RICHMOND, Va., April 26 — Albemarle Corporation (NYSE: ALB) reported first-quarter 2005 net income, excluding special items, of $25.2 million, or 54 cents per share, which was 53 percent higher than first-quarter 2004, due to strong performance in each of the Company’s three business segments. The Company reported record net sales of $510 million, up $188 million compared to 2004, due in large part to the July 2004 acquisition of the Akzo Nobel refinery catalysts business.

 

Including special items, net income for first-quarter 2005 was $24.3 million or 52 cents per share. Special items for the quarter totaled $0.9 million, or two cents per share, related to the write-off of deferred financing costs associated with the refinery catalysts acquisition. In the comparable period last year, net income was $13.6 million, or 32 cents per share, including $2.9 million in special items related to a workforce reduction in conjunction with the exit from the zeolites business.

 

Earnings per share were based on 46,885,000 fully diluted average shares outstanding, up from 42,200,000 for the corresponding period in 2004, due mainly to the Company’s January 2005 public offering of common stock totaling 4,573,000 shares.

 

Selected data related to net income, special items and related per share amounts for the first quarters ended March 31, 2005 and 2004 are shown in the Additional Information section below.

 

Quarterly Segment Results

 

Polymer Additives segment net sales were $198.1 million, up $25.4 million versus 2004. This represents the ninth-straight quarter of record sales and can be attributed to continued

 

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improvement in pricing across the segment. Polymer Additives operating profit, including joint ventures (segment income), improved 16.9 percent to $23.8 million as pricing gains outpaced the continued rise in raw material costs.

 

Catalysts segment net sales were $172.8 million, up $149.9 million versus first-quarter 2004, due mainly to the addition of the refinery catalyst business and strong sales of hydroprocessing catalysts. Polyolefin catalysts also posted strong volumes for the quarter due to increased demand for our products. Catalysts segment income for first-quarter 2005 amounted to $25.1 million, up $22.3 million from last year, driven by hydroprocessing catalyst shipments, good cost management and solid contribution from joint ventures.

 

Fine Chemicals segment net sales were $139.0 million, up $12.6 million versus last year, driven by improved pricing and demand in bromine and derivatives and improved product mix in Fine Chemistry Services. Fine Chemicals segment income was $11.6 million, up $7.8 million compared to first-quarter 2004, which included a $4.5 million charge associated with the exit from the zeolite business. In addition to higher prices and favorable product mix, the Company’s Jordan bromine joint venture contributed positive earnings that helped to offset continued pressure from higher raw material costs.

 

During the quarter, interest and financing expenses increased $8.7 million versus 2004, including a $1.4 million special charge for the write-off of unamortized bridge loan fees incurred in connection with the acquisition of the refinery catalysts business. The corporate effective income tax rate for first-quarter 2005 amounted to 31.4%, up from first-quarter 2004 due largely to geographical income mix.

 

Commentary

 

Commenting on first-quarter 2005 results, Mark C. Rohr, President and CEO of Albemarle Corporation said, “We are obviously very pleased with our results this quarter. Catalysts operating results were significantly higher than anticipated, driven by strong demand for hydroprocessing catalysts, excellent pricing momentum and cost synergies. Our Fine Chemicals turnaround plan is paying off with higher value products in our portfolio. We now have 96 new products in our pharmaceutical-related pipeline with an additional 45 non-pharmaceutical products. Polymer Additives continues its record net sales growth for yet another quarter.

 

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We realized the results of exceptional pricing execution across our business segments, offsetting over $20 million of raw material and energy cost increases in Polymer Additives and Fine Chemicals. During the quarter we announced further price increases for key flame retardant products, which become effective April 1, 2005. In addition, we announced a 9 percent worldwide price increase for fluid catalytic cracking (FCC) catalysts. Continued growth in demand should allow us to further support margin improvement in 2005.”

 

Earnings Call

 

The Company’s performance for the first quarter ended March 31, 2005 will be discussed on a conference call at 1:00 PM Eastern Daylight Time on April 26, 2005, which can be accessed through Albemarle’s website under Investor Information at www.albemarle.com.

 

Albemarle Corporation, headquartered in Richmond, Virginia, is a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals for consumer electronics; petroleum and petrochemical processing; transportation and industrial products; pharmaceuticals; agricultural products; construction and packaging materials. The Company operates in three business segments, Polymer Additives, Catalysts and Fine Chemicals, and serves customers in approximately 100 countries.

 

Forward-Looking Statement

 

Some of the information presented in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations as reflected are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: the inability to pass through increases in costs and expenses for raw materials and energy; competition from other manufacturers; changes in demand for our products; the gain or loss of significant customers; fluctuations in foreign currencies; increased government regulation of our operations or our products; and the integration of the Akzo Nobel Refinery Catalysts business or future acquisitions into our operations. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in our Form 10-K, filed March 14, 2005.

 

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Albemarle Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(In Thousands of Dollars, Except Share and Per-Share Amounts) (Unaudited)

 

     First Quarter Ended March 31,

 
     2005

    2004

 

Net sales

   $ 509,965     $ 322,009  

Cost of goods sold

     402,643 (a)     261,225 (a)
    


 


Gross profit

     107,322       60,784  

Selling, general and administrative expenses

     57,026       30,354  

Research and development expenses

     10,980       4,579  

Reduction in force adjustments

     —         4,507 (b)
    


 


Operating profit

     39,316       21,344  

Interest and financing expenses

     (10,253 )(c)     (1,559 )

Equity in net income (losses) of unconsolidated investments

     7,392       (13 )

Other (expense), net including minority interest

     (996 )     (1,070 )
    


 


Income before income taxes

     35,459       18,702  

Income taxes

     11,140       5,095  
    


 


Net income

   $ 24,319     $ 13,607  
    


 


Basic earnings per share:

                

Net income

   $ 0.53     $ 0.33  
    


 


Shares used to compute basic earnings per share

     45,538       41,365  
    


 


Diluted earnings per share:

                

Net income

   $ 0.52     $ 0.32  
    


 


Shares used to compute diluted earnings per share

     46,885       42,200  
    


 


 

See accompanying notes to the condensed consolidated financial statements following the balance sheets.

 

4


Albemarle Corporation

Consolidated Summary of Segment Results (d)

(In Thousands of Dollars) (Unaudited)

 

Three Months Ended

March 31, 2005


   Polymer
Additives


   Catalysts

   Fine
Chemicals


    Unallocated

    Total

 

Net sales

   $ 198,102    $ 172,824    $ 139,039       —       $ 509,965  
    

  

  


 


 


Operating profit (a)

   $ 22,018    $ 20,589    $ 10,344     $ (13,635 )   $ 39,316  

Equity in net income (losses) of unconsolidated investments

     1,780      4,470      1,206       (64 )     7,392  
    

  

  


 


 


Segment income (loss)

   $ 23,798    $ 25,059    $ 11,550     $ (13,699 )     46,708  
    

  

  


 


       

Interest and financing expenses (c)

                                   (10,253 )

Other (expense), net including minority interest

                                   (996 )
                                  


Income before income taxes

                                 $ 35,459  
                                  


Three Months Ended

March 31, 2004


   Polymer
Additives


   Catalysts

   Fine
Chemicals


    Unallocated

    Total

 

Net sales

   $ 172,662    $ 22,877    $ 126,470       —       $ 322,009  
    

  

  


 


 


Operating profit (a,b)

   $ 18,859    $ 2,639    $ 5,136     $ (5,290 )   $ 21,344  

Equity in net income (losses) of unconsolidated investments

     1,502      76      (1,417 )     (174 )     (13 )
    

  

  


 


 


Segment income (loss)

   $ 20,361    $ 2,715    $ 3,719     $ (5,464 )     21,331  
    

  

  


 


       

Interest and financing expenses

                                   (1,559 )

Other (expense), net including minority interest

                                   (1,070 )
                                  


Income before income taxes

                                 $ 18,702  
                                  


 

See accompanying notes to the condensed consolidated financial statements following the balance sheets.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In Thousands of Dollars) (Unaudited)

 

     Three Months Ended
March 31,


 
     2005

    2004

 

Cash and cash equivalents at beginning of year

   $ 46,390     $ 35,173  
    


 


Cash flows from operating activities:

                

Net income

     24,319       13,607  

Adjustments to reconcile net income to cash flows from operating activities:

                

Depreciation and amortization

     29,045       21,566  

Change in compensation payable in common stock and options

     2,529       —    

Working capital changes, net of the effects of acquisitions

     (53,120 )     11,023  

Equity in (net income) losses of unconsolidated investments

     (7,392 )     13  

Decrease (increase) in prepaid pension assets

     614       (636 )

Other, net

     1,562       (388 )
    


 


Net cash (used in) provided from operating activities

     (2,443 )     45,185  
    


 


Cash flows from investing activities:

                

Capital expenditures

     (18,801 )     (8,398 )

Acquisitions (e)

     (10,277 )     (600 )

Investments in joint ventures and nonmarketable securities

     (391 )     (4,725 )

Other

     672       (460 )
    


 


Net cash used in investing activities

     (28,797 )     (14,183 )
    


 


Cash flows from financing activities:

                

Proceeds from issuance of senior notes

     324,665       —    

Proceeds from issuance of common stock

     147,862       —    

Proceeds from borrowings

     68,533       7,965  

Proceeds from exercise of stock options

     2,295       3,499  

Net receipt on treasury lock agreements

     196       —    

Repayments of long-term debt

     (470,992 )     (19,369 )

Dividends paid to shareholders

     (4,998 )     (5,963 )

Payment of financing costs

     (2,306 )     —    

Purchases of common stock

     —         (827 )

Dividends paid to minority interest

     —         (500 )
    


 


Net cash provided from (used in) financing activities

     65,255       (15,195 )
    


 


Net effect of foreign exchange on cash and cash equivalents

     (6,625 )     (459 )
    


 


Increase in cash and cash equivalents

     27,390       15,348  
    


 


Cash and cash equivalents at end of period

   $ 73,780     $ 50,521  
    


 


 

See accompanying notes to the consolidated financial statements.

 

6


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands of Dollars) (Unaudited)

 

     March 31,
2005


   December
31, 2004


ASSETS

             

Cash and cash equivalents

   $ 73,780    $ 46,390

Other current assets

     768,371      701,020
    

  

Total current assets

     842,151      747,410
    

  

Property, plant and equipment

     2,091,106      2,064,585

Less accumulated depreciation and amortization

     1,181,644      1,168,601
    

  

Net property, plant and equipment

     909,462      895,984

Other assets and intangibles

     751,761      799,351
    

  

     $ 2,503,374    $ 2,442,745
    

  

LIABILITIES & SHAREHOLDERS’ EQUITY

             

Current liabilities

   $ 391,116    $ 373,746

Long-term debt

     820,456      899,584

Other noncurrent liabilities

     209,344      209,289

Deferred income taxes

     210,890      248,751

Shareholders’ equity

     871,568      711,375
    

  

     $ 2,503,374    $ 2,442,745
    

  


Notes (In Thousands of Dollars, Except Per Share Amounts):

(a) Cost of goods sold includes foreign exchange transaction (losses) gains of ($375) and $392 for the three-month periods ended March 31, 2005, and 2004, respectively.
(b) Special items for 2004 include a charge in the Fine Chemical segment totaling $4,507 ($2,871 after income taxes or seven cents per diluted share) for layoffs at the zeolite facility and associated SFAS No. 88 curtailment charges.
(c) Interest and financing expenses include the January 2005 write-off of deferred financing expenses associated with the 364-day bridge loan that was converted to public debt totaling $1,386 ($883 net of income taxes, or two cents per diluted share).
(d) Certain reclassifications have been made in the statement of segment results to conform to current presentation. Equity in net income (losses) of unconsolidated investments changes are now included in segment income.
(e) On July 31, 2004, the Company completed the acquisition of the Akzo Nobel refinery catalysts business for approximately $763 million including expenses at applicable exchange rates. In the fourth quarter of 2004 and the first quarter of 2005, the Company adjusted the purchase price by approximately $23 million and $10 million, respectively, due primarily to payments to Akzo Nobel as part of the post-closing working capital adjustments. The acquisition was funded by a combination of a bridge loan and long-term financing.

 

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Additional Information

 

It should be noted that net income excluding special items is a financial measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. It is presented here to exclude the impact of certain non-recurring items on our results. We believe this measure is more reflective of our operations, provides transparency to investors and enables period-to-period comparability of financial performance.

 

Reconciliation of other non-GAAP financial measures used by us from time to time can be found in the Investor Information section of our website at www.albemarle.com, under “Disclosure of Non-GAAP Financial Measures”.

 

     For the three months ended

 

In Thousands of Dollars, Except Per-Share Amounts


   March 31, 2005

    March 31, 2004

 
   As
Reported


    Special
Items


    Excluding
Special
Items


    As
Reported


    Special
Items


    Excluding
Special
Items


 

Net sales

   $ 509,965     $ —       $ 509,965     $ 322,009     $ —       $ 322,009  

Cost of goods sold

     (402,643 )     —         (402,643 )     (261,225 )     —         (261,225 )

Reduction in force adjustments

     —         —         —         (4,507 )     4,507 (b)     —    

Selling, general and administrative expenses (including SFAS No.2 R&D)

     (68,006 )     —         (68,006 )     (34,933 )     —         (34,933 )
    


 


 


 


 


 


Operating profit

     39,316       —         39,316       21,344       4,507 (b)     25,851  

Interest and financing expenses

     (10,253 )     1,386 (c)     (8,867 )     (1,559 )     —         (1,559 )

Equity in net income (losses) of unconsolidated investments

     7,392       —         7,392       (13 )             (13 )

Other (expense), net including minority interest

     (996 )     —         (996 )     (1,070 )     —         (1,070 )
    


 


 


 


 


 


Income before income taxes

     35,459       1,386       36,845       18,702       4,507       23,209  

Income tax expense

     (11,140 )     (503 )(c)     (11,643 )     (5,095 )     (1,636 )(b)     (6,731 )
    


 


 


 


 


 


Net income

   $ 24,319     $ 883     $ 25,202     $ 13,607     $ 2,871     $ 16,478  
    


 


 


 


 


 


Diluted earnings per share

   $ 0.52     $ 0.02     $ 0.54     $ 0.32     $ 0.07     $ 0.39  
    


 


 


 


 


 


 

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