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 23, 2008 (April 21, 2008)

 

 

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 1 3e-4(c) under the Exchange Act (17 CFR 240.1 3e-4(c))

 

 

 


Section 2 — Financial Information

 

Item 2.02. Results of Operations and Financial Condition.

On April 21, 2008, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the first quarter ended March 31, 2008. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on April 22, 2008, the Company held a teleconference for analysts and media to discuss results for the first quarter ended March 31, 2008. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes net income excluding special items that relate to severance in conjunction with personnel reductions at the Company’s Richmond headquarters and Singapore sales office. 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”). It is presented to exclude the impact of certain non-recurring items on the Company’s results. The Company has reported net income excluding special items because management believes that this financial measures is more reflective of the Company’s operations, provides transparency to investors and enables 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 Statements and Exhibits.

 

(c)    Exhibits.
   99.1 Press release, dated April 21, 2008, issued by the Company.


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 23, 2008

 

ALBEMARLE CORPORATION
By:  

/s/ Nicole C. Daniel

  Nicole C. Daniel
  Assistant General Counsel and Assistant Secretary


EXHIBIT INDEX

 

Exhibit
Number

 

Exhibit

99.1   Press release, dated April 21, 2008, issued by the Company.
Press Release

Exhibit 99.1

 

LOGO

   Contact:          
   Sandra Rodriguez    225.388.7654   
   Sherry Knapp    804.788.6107   

Albemarle Reports Record Quarterly Net Sales and Operating Results

 

 

First quarter highlights:

 

 

Record quarterly net sales of $668.2 million, up 13.4% year over year and 11.5% sequentially

 

 

Record net income, excluding special items, of $65.4 million, or $0.70 per share, up 12.5% over the same period last year

 

 

Record quarterly Catalysts segment income of $51.7 million resulting in segment income margins of 18.7%

 

     First Quarter Ended
March 31,

In thousands, except per share amounts

   2008     2007

Net Sales

   $ 668,177     $ 589,238

Operating Profit

   $ 83,814     $ 81,592

Net Income

   $ 63,261     $ 58,108

Diluted earnings per share

   $ 0.68     $ 0.60

Diluted earnings per share – special item

   $ (0.02 )   $ —  

Diluted earnings per share excluding special item

   $ 0.70     $ 0.60

RICHMOND, Va., - April 21 — Albemarle Corporation (NYSE: ALB) reported first quarter 2008 net income of $63.3 million, or 68 cents per share, up from $58.1 million, or 60 cents per share, for the first quarter of 2007. Excluding $2.1 million of after tax special item charges, or 2 cents per share, related to severance in conjunction with personnel reductions at the Company’s Richmond headquarters and Singapore sales office, first quarter 2008 net income was $65.4 million, or 70 cents per share. Operating profit increased to $83.8 million as performance in the Company’s Catalysts business segment was partially offset by declines in the Polymer Additives and Fine Chemicals business segments. The Company reported net sales in the first quarter of 2008 totaling $668 million compared to first quarter 2007 net sales of $589 million.

Commenting on results, Mark C. Rohr, President and CEO, stated, “I am extremely pleased with the performance of our company this quarter. Starting the year off with double-digit sales growth over first quarter 2007, we delivered record sales revenue and operating results. These results are particularly rewarding given the unprecedented raw material and energy inflation. While there is much uncertainty facing both U.S. and global economies, we believe our business strategy and our technical foundation will allow us to weather these headwinds and drive shareholder value.”

 

1


Quarterly Segment Results

Polymer Additives delivered record net sales for first quarter 2008 of $244.6 million, a 14 percent increase versus the first quarter of 2007. Net sales increased in our flame retardants primarily due to higher volumes partially offset by slightly lower pricing due to product mix. Net sales increased in our stabilizers and curatives portfolio due primarily to improved pricing and higher volumes. Polymer Additives segment income for the first quarter of 2008 declined 17 percent from the first quarter of 2007 to $29.8 million due primarily to higher raw material costs, partially offset by improved product volumes, pricing and mix.

Catalysts generated record net sales for the first quarter of 2008 of $276.1 million, an increase of 17 percent versus first quarter 2007, due primarily to improved pricing in FCC refinery catalysts, improved product mix in HPC refinery catalysts and polyolefin catalysts, as well as pass through of higher materials costs and favorable foreign currency exchange rates. Catalysts segment income for the first quarter of 2008 increased 31 percent versus the first quarter of 2007 to $51.7 million, a quarterly record, due primarily to improved product mix in polyolefin catalysts, improved pricing in FCC refinery catalysts and favorable foreign currency exchange rates, partially offset by higher raw material costs.

Fine Chemicals net sales for the first quarter of 2008 were $147.5 million, a 6 percent increase versus the first quarter of 2007 due primarily to higher volumes from fine chemistry services. Segment income for the first quarter of 2008 decreased 4 percent versus the first quarter of 2007 to $21.5 million due to reduced volumes and higher costs in performance chemicals.

Cash Flow

In the first quarter of 2008, our cash and cash flow from operations funded capital expenditures for plant machinery and equipment of $20 million and dividends to shareholders of $9.7 million. We utilized availability under our credit agreement for repurchases of 4.1 million shares of our common stock for an aggregate cost of $151 million. During the quarter, interest and financing expenses were $10.2 million versus first quarter 2007 expenses of $8.9 million.

Taxes

Our first quarter 2008 effective income tax rate was 21.8 percent, slightly less than the 23 percent rate in first quarter 2007 but higher than the 2007 full year effective rate of 19.8 percent. Our tax rate is lower than the previously estimated annual effective tax rate forecast range for 2008 of 23.5 percent to 24.5 percent principally due to the level and mix of income sources for the quarter and the year and tax planning.

Outlook

We are increasing our presence in China with expansions underway that will help us grow flame retardants, antioxidants and fine chemicals in 2008. Absent a major global recession, we expect oil demand to remain strong and we have the catalyst production capacity on line to meet this growth in demand for 2008 and 2009. While general business conditions are concerning, our business fundamentals remain sound. However, we are experiencing dramatic inflation in raw materials and energy in all of our businesses that continues to pressure operating margins. We will continue to work with our customer base to pass through these rapidly escalating costs.

 

2


Earnings Call

The Company’s performance for the first quarter ended March 31, 2008 will be discussed on a conference call at 8:00 AM Eastern Daylight time on April 22, 2008, 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 Statements

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; and increased government regulation of our operations or our products. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2007 and in our other public filings with the Securities and Exchange Commission. Readers are urged to review and consider carefully the disclosures we make in our filings with the Securities and Exchange Commission.

 

3


Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

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

 

     First Quarter Ended
March 31,
 
     2008     2007  

Net sales

   $ 668,177     $ 589,238  

Cost of goods sold

     500,766       429,449  
                

Gross profit

     167,411       159,789  

Selling, general and administrative expenses

     63,519       62,486  

Research and development expenses

     16,800       15,711  

Severance charges

     3,278 (a)     —    
                

Operating profit

     83,814       81,592  

Interest and financing expenses

     (10,216 )     (8,910 )

Other income, net

     2,846       952  
                

Income before income tax expense, minority interests and equity in net income of unconsolidated investments

     76,444       73,634  

Income tax expense

     (16,626 )     (16,936 )
                

Income before minority interests and equity in net income of unconsolidated investments

     59,818       56,698  

Minority interests in income of consolidated subsidiaries (net of tax)

     (3,585 )     (4,951 )

Equity in net income of unconsolidated investments (net of tax)

     7,028       6,361  
                

Net income

   $ 63,261     $ 58,108  
                

Basic earnings per share

   $ 0.69     $ 0.61  

Diluted earnings per share

   $ 0.68     $ 0.60  

Weighted-average common shares outstanding—Basic

     92,349       95,288  

Weighted-average common shares outstanding—Diluted

     93,688       97,504  
                

See accompanying notes to the condensed consolidated financial information.

 

4


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands of Dollars) (Unaudited)

 

     March 31,
2008
   December 31,
2007

ASSETS

     

Cash and cash equivalents

   $ 135,130    $ 130,551

Other current assets

     1,008,317      922,887
             

Total current assets

     1,143,447      1,053,438
             

Property, plant and equipment

     2,373,532      2,314,509

Less accumulated depreciation and amortization

     1,308,764      1,275,966
             

Net property, plant and equipment

     1,064,768      1,038,543

Other assets and intangibles

     767,180      738,469
             

Total assets

   $ 2,975,395    $ 2,830,450
             

LIABILITIES & SHAREHOLDERS’ EQUITY

     

Current portion of long-term debt

   $ 19,285    $ 16,627

Other current liabilities

     389,353      386,290
             

Total current liabilities

     408,638      402,917
             

Long-term debt

     861,065      707,311

Other noncurrent liabilities

     330,654      334,828

Deferred income taxes

     125,718      107,089

Shareholders’ equity

     1,249,320      1,278,305
             

Total liabilities & shareholders’ equity

   $ 2,975,395    $ 2,830,450
             

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Selected Cash Flows Data

(In Thousands of Dollars) (Unaudited)

 

     Three Months Ended
March 31,
 
     2008     2007  

Cash and cash equivalents at beginning of year

   $ 130,551     $ 149,499  

Cash and cash equivalents at end of period

   $ 135,130     $ 125,016  

Sources of cash and cash equivalents:

    

Net income

     63,261       58,108  

Proceeds from borrowings

     199,928       17,824  

Proceeds from exercise of stock options

     3,398       10,952  

Uses of cash and cash equivalents:

    

Capital expenditures

     (20,139 )     (26,241 )

Purchases of common stock

     (151,137 )     (18,647 )

Repayments of long-term debt

     (45,273 )     (12,441 )

Dividends paid to shareholders

     (9,707 )     (8,628 )

Dividends paid to minority interests

     (5,486 )     (4,374 )

Non-cash items:

    

Depreciation and amortization

     26,542       27,349  

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands of Dollars) (Unaudited)

 

     First Quarter Ended
March 31,
 
     2008     2007  

Net sales:

    

Polymer Additives

   $ 244,590     $ 214,319  

Catalysts

     276,097       235,827  

Fine Chemicals

     147,490       139,092  
                

Total net sales

   $ 668,177     $ 589,238  
                

Segment operating profit:

    

Polymer Additives

   $ 30,269     $ 36,460  

Catalysts

     46,156       34,581  

Fine Chemicals

     23,480       25,247  
                

Subtotal

   $ 99,905     $ 96,288  
                

Minority interests in income of consolidated subsidiaries:

    

Polymer Additives

   $ (1,989 )   $ (2,252 )

Catalysts

     —         —    

Fine Chemicals

     (1,935 )     (2,735 )

Corporate & other

     339       36  
                

Total minority interests in income of consolidated subsidiaries

   $ (3,585 )   $ (4,951 )
                

Equity in net income of unconsolidated investments:

    

Polymer Additives

   $ 1,472     $ 1,515  

Catalysts

     5,566       4,824  

Fine Chemicals

     —         —    

Corporate & other

     (10 )     22  
                

Total equity in net income of unconsolidated investments

   $ 7,028     $ 6,361  
                

Segment income:

    

Polymer Additives

   $ 29,752     $ 35,723  

Catalysts

     51,722       39,405  

Fine Chemicals

     21,545       22,512  
                

Total segment income

     103,019       97,640  

Corporate & other

     (12,484 )     (14,638 )

Severance charges (a)

     (3,278 )     —    

Interest and financing expenses

     (10,216 )     (8,910 )

Other income, net

     2,846       952  

Income tax expense

     (16,626 )     (16,936 )
                

Net income

   $ 63,261     $ 58,108  
                

See accompanying notes to the condensed consolidated financial information.

 

7


Notes to the Condensed Consolidated Financial Information

 

(a) The three-month period ended March 31, 2008 includes charges amounting to $3.3 million ($2.1 million after income taxes, or 2 cents per share) that relate to severance in conjunction with personnel reductions at the Company’s Richmond headquarters and Singapore sales office.

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.

A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investor Information section of our website at www.albemarle.com, under “Non-GAAP Reconciliations” under “Investor Relations.”

 

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