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) July 26, 2010

 

 

ALBEMARLE CORPORATION

(Exact name of Registrant as specified in charter)

 

 

 

Virginia   001-12658   54-1692118

(State or other jurisdiction

of incorporation)

 

(Commission

file number)

 

(IRS employer

identification no.)

 

451 Florida Street, Baton Rouge, Louisiana   70801
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code

(225) 388-8011

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 July 26, 2010, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the second quarter ended June 30, 2010. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on July 27, 2010, the Company will hold a teleconference for analysts and media to discuss results for the second quarter ended June 30, 2010. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes presentations of earnings, per share amounts and effective income tax rates which exclude special items and one-time tax items, as well as presentations of segment operating profit and segment income. These are financial measures that are not required by, nor presented in accordance with, accounting principles generally accepted in the United States (“GAAP”), but are included to provide more reflective views of our operations, provide transparency to investors and enable period-to-period comparability of financial performance.

Our presentations of earnings, per share amounts and effective income tax rates which exclude special items and one-time tax items should not be considered as alternatives to earnings, per share amounts and effective tax rates, as determined in accordance with GAAP. Additionally, segment operating profit and segment income should not be considered as an alternative to operating profit or net income attributable to Albemarle Corporation, respectively, as determined in accordance with GAAP. The Company has included in the press release reconciliation information for these measures to their most directly comparable financial measures 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.

 

  (d) Exhibits.

99.1 Press release, dated July 26, 2010, 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: July 26, 2010

 

ALBEMARLE CORPORATION
By:  

/s/ Nicole C. Daniel

  Nicole C. Daniel
  Vice President, Chief Compliance Officer and Corporate Secretary


EXHIBIT INDEX

 

Exhibit

Number

 

Exhibit

99.1   Press release, dated July 26, 2010, issued by the Company.
Press Release

Exhibit 99.1

 

   Contact:
LOGO    Sandra Rodriguez                225.388.7654
  

Albemarle Reports Record Quarterly Operating Results

 

 

Second quarter 2010 highlights:

 

 

Achieved record quarterly earnings of 89 cents per share, more than double the prior year.

 

 

Net sales for the quarter increased 33% from prior year to $592.5 million.

 

 

Outstanding operating performance with strong year over year and sequential profit growth across all three segments, including record segment income for Polymer Solutions and Catalysts for the second consecutive quarter.

 

 

Strong cash generation. Cash and cash equivalents of $324 million at June 30, 2010.

 

     Second Quarter Ended
June 30,
    Six Months Ended
June 30,
 

In thousands of dollars, except per share amounts

   2010    2009     2010     2009  

Net Sales

   $ 592,483    $ 445,299      $ 1,172,753      $ 931,890   

Operating Profit

   $ 106,635    $ 30,991      $ 182,899      $ 59,918   

Net Income attributable to Albemarle Corporation

   $ 81,751    $ 38,493      $ 145,059      $ 63,892   

Diluted earnings per share

   $ 0.89    $ 0.42      $ 1.57      $ 0.70   

Special item per share

   $ —      $ (0.09   $ (0.05   $ (0.09

Per share amount for one-time tax items

   $ —      $ 0.10      $ —        $ 0.13   

Diluted earnings per share excluding special and one-time tax items

   $ 0.89    $ 0.41      $ 1.62      $ 0.66   

BATON ROUGE, La., - July 26, 2010 – Albemarle Corporation (NYSE: ALB) reported second quarter 2010 earnings of $81.8 million, or 89 cents per share, compared to second quarter 2009 earnings of $38.5 million, or 42 cents per share. Second quarter 2009 results included a $12.4 million pre-tax charge ($8.2 million or 9 cents per share after tax) related to the costs of a final contract settlement arising from the 2008 divestiture of the Port de Bouc, France facility and a $9.2 million (10 cents per share) benefit related mainly to a tax issue settlement with the U.S. Internal Revenue Service for the years 2005 through 2007. The Company reported net sales in the second quarter of 2010 totaling $592.5 million compared to second quarter 2009 net sales of $445.3 million.

Earnings for the first half of 2010 were $145.1 million, or $1.57 per share, compared to $63.9 million, or 70 cents per share, for the first half of 2009. Excluding the $7.0 million ($4.6 million after tax, or 5 cents per share) charge for restructuring costs at our Bergheim, Germany site in first quarter 2010, and first half 2009 special and one-time tax items, earnings for the first half 2010 were $149.7 million, or $1.62 per share, and earnings for the first half 2009 were $60.4 million, or 66 cents per share. Net sales for the first half of 2010 were $1.17 billion compared to $932 million for the first half of 2009.

 

1


Commenting on results, Mark C. Rohr, Chairman and CEO, stated, “For the second consecutive quarter, we achieved record earnings, expanded our margins across all three segments and generated strong cash flow. The strength of our portfolio, our innovative technologies and the structural improvements we are implementing are flowing through to the bottom line. These capabilities and actions, coupled with the positive trends we are seeing in the global markets we serve, contributed to a very solid second quarter.”

Quarterly Segment Results

Polymer Solutions delivered net sales for the second quarter of 2010 of $235.3 million, a 36 percent increase versus net sales in the second quarter of 2009 due primarily to improved volumes in our fire safety businesses. Polymer Solutions segment income for the second quarter of 2010 more than tripled to $47.0 million from $14.7 million in the second quarter of 2009. This increase was due primarily to the strong volume improvements across the fire safety portfolio, particularly in brominated flame retardants, as well as higher production utilization rates.

Catalysts generated net sales for the second quarter of 2010 of $216.0 million, an increase of 28 percent versus the second quarter of 2009 due primarily to higher volumes and favorable product mix mainly in our hydroprocessing refinery catalysts business, as well as volumes in our polyolefins business. Catalysts segment income for the second quarter of 2010 was $66.2 million, up 76 percent versus $37.7 million for the second quarter of 2009. This improvement was attributable primarily to higher volumes and improved realization of metals costs in hydroprocessing refinery catalysts, favorable product mix and higher equity income.

Fine Chemistry net sales for the second quarter of 2010 were $141.2 million, up 36 percent versus the second quarter of 2009, due primarily to increased volumes in both our performance chemicals and fine chemistry services businesses, and partly offset by product mix. Segment income for the second quarter of 2010 was $17.5 million compared to $5.2 million in the second quarter of 2009. Improved sales and production volumes, particularly in performance chemicals, drove the more than three-fold increase in segment income.

Corporate and Other

Corporate and other expense for the three- and six-month periods ended June 30, 2010 was $18.0 million and $34.8 million, respectively. These charges were up over the comparable periods of 2009 due mainly to higher personnel related costs. Also, the six-month period ended June 30, 2009 included $7.8 million in favorable adjustments associated with the reversal of certain long-term employee benefit accruals.

 

2


Cash Flow

In the first half of 2010, cash on hand funded capital expenditures for plant, machinery and equipment of $33.9 million and dividends to shareholders of $24.1 million. During the quarter, interest and financing expenses were $6.0 million versus $6.1 million in the second quarter of 2009.

At June 30, 2010, the Company had approximately $324.1 million in cash and cash equivalents. In addition, the Company has additional capacity to borrow in excess of $460 million under existing lines of credit and has no significant debt maturities before 2013. Our continued focus on inventory levels resulted in lower balances at June 30, 2010 as compared to December 31, 2009 despite the increase in business activity.

Taxes

Our second quarter 2010 effective income tax rate was 24.4 percent versus 14.6 percent in 2009 (excluding the effects of the Port de Bouc charge and the one-time tax items). The full year 2010 effective tax rate is expected to be 24.4 percent. This increase versus 2009 is due mainly to level and mix of income, principally significantly higher net income in the U.S. in the current year.

Outlook

Our outlook for the year remains positive. As we continue to monitor global economic indicators, industry trends and customer order patterns, we believe most signs indicate a strong third quarter with a typical seasonal contraction in the fourth quarter. We believe effective implementation of announced price increases, continued focus on cost and innovative product development should help sustain solid performance and healthy financial returns throughout the remainder of the year and into 2011.

Earnings Call

The Company’s performance for the second quarter ended June 30, 2010 will be discussed on a conference call at 9:00 AM Eastern Daylight time on July 27, 2010. The call can be accessed by dialing 866-804-6924 (International Dial In # 857-350-1670), and entering conference ID 76650993. The Company’s earnings presentation and supporting material can be accessed through Albemarle’s website under Investor Information at www.albemarle.com/Investor_information.

About Albemarle

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading global developer, manufacturer, and marketer of highly-engineered specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, automotive/transportation, pharmaceuticals, crop protection, food-safety and custom chemistry services. The Company is committed to global sustainability and is advancing its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry. Corporate Responsibility Magazine recently selected Albemarle to its prestigious “100 Best Corporate Citizens” list for 2010. Albemarle employs approximately 4,000 people and serves customers in approximately 100 countries. To learn more, visit www.albemarle.com.

 

3


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: deterioration in economic and business conditions; future financial and operating performance of our major customers and industries served by us; 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, 2009 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.

 

4


Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

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

 

     Second Quarter Ended
June 30,
    Six Months Ended
June 30,
 
     2010     2009     2010     2009  

Net sales

   $ 592,483      $ 445,299      $ 1,172,753      $ 931,890   

Cost of goods sold

     404,316        335,481        820,115        731,566   
                                

Gross profit

     188,167        109,818        352,638        200,324   

Selling, general and administrative expenses

     66,865        51,481        133,395        96,915   

Research and development expenses

     14,667        14,953        29,386        31,098   

Restructuring and other charges

     —          —          6,958  (a)      —     

Port de Bouc charges

     —          12,393  (b)      —          12,393  (b) 
                                

Operating profit

     106,635        30,991        182,899        59,918   

Interest and financing expenses

     (5,984     (6,088     (11,920     (12,362

Other (expense) income, net

     (729     1,276        281        145   
                                

Income before income taxes and equity in net income of unconsolidated investments

     99,922        26,179        171,260        47,701   

Income tax (expense) benefit

     (24,331     7,749  (c)      (41,031     7,224  (c) 
                                

Income before equity in net income of unconsolidated investments

     75,591        33,928        130,229        54,925   

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

     10,495        6,204        20,771        12,153   
                                

Net income

     86,086        40,132        151,000        67,078   

Net income attributable to noncontrolling interests

     (4,335     (1,639     (5,941     (3,186
                                

Net income attributable to Albemarle Corporation

   $ 81,751      $ 38,493      $ 145,059      $ 63,892   
                                

Basic earnings per share

   $ 0.90      $ 0.42      $ 1.59      $ 0.70   

Diluted earnings per share

   $ 0.89      $ 0.42      $ 1.57      $ 0.70   

Weighted-average common shares outstanding – Basic

     91,308        91,474        91,347        91,427   

Weighted-average common shares outstanding – Diluted

     92,111        92,011        92,152        91,904   

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands of Dollars) (Unaudited)

 

     June 30,
2010
   December  31,
2009

ASSETS

     

Cash and cash equivalents

   $ 324,123    $ 308,791

Other current assets

     756,963      723,296
             

Total current assets

     1,081,086      1,032,087
             

Property, plant and equipment

     2,365,696      2,406,129

Less accumulated depreciation and amortization

     1,388,352      1,379,246
             

Net property, plant and equipment

     977,344      1,026,883

Other assets and intangibles

     672,640      712,587
             

Total assets

   $ 2,731,070    $ 2,771,557
             

LIABILITIES & EQUITY

     

Current portion of long-term debt

   $ 8,603    $ 36,310

Other current liabilities

     308,545      316,954
             

Total current liabilities

     317,148      353,264
             

Long-term debt

     784,959      776,403

Other noncurrent liabilities

     284,169      307,131

Deferred income taxes

     95,332      81,441

Albemarle Corporation shareholders’ equity

     1,197,490      1,205,696

Noncontrolling interests

     51,972      47,622
             

Total liabilities & equity

   $ 2,731,070    $ 2,771,557
             

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flows Data

(In Thousands of Dollars) (Unaudited)

 

     Six Months Ended
June 30,
 
     2010     2009  

Cash and cash equivalents at beginning of year

   $ 308,791      $ 253,303   

Cash and cash equivalents at end of period

   $ 324,123      $ 172,476   

Sources of cash and cash equivalents:

    

Net income

     151,000        67,078   

Proceeds from borrowings

     8,310        32,748   

Proceeds from exercise of stock options

     1,771        2,207   

Uses of cash and cash equivalents:

    

Capital expenditures

     (33,930     (60,459

Purchases of common stock

     (14,945     —     

Repayments of long-term debt

     (28,524     (117,762

Dividends paid to shareholders

     (24,129     (21,948

Dividends paid to noncontrolling interests

     —          (8,911

Contributions to defined benefit plans

     (23,528     (7,341

Non-cash items:

    

Depreciation and amortization

     48,411        50,404   

Restructuring and other charges (a)

     6,958        —     

Port de Bouc charges (b)

     —          (12,393

Equity in net income of unconsolidated investments

     (20,771     (12,153

See accompanying notes to the condensed consolidated financial information.

 

7


Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands of Dollars) (Unaudited)

 

     Second Quarter Ended
June 30,
    Six Months Ended
June 30,
 
     2010     2009     2010     2009  

Net sales:

        

Polymer Solutions

   $ 235,289      $ 172,720      $ 451,942      $ 295,920   

Catalysts

     216,000        168,603        443,653        411,190   

Fine Chemistry

     141,194        103,976        277,158        224,780   
                                

Total net sales

   $ 592,483      $ 445,299      $ 1,172,753      $ 931,890   
                                

Segment operating profit:

        

Polymer Solutions

   $ 46,131      $ 15,882      $ 86,494      $ 4,319   

Catalysts

     58,340        31,708        105,335        61,469   

Fine Chemistry

     19,884        5,760        32,452        16,043   
                                

Subtotal

   $ 124,355      $ 53,350      $ 224,281      $ 81,831   
                                

Equity in net income of unconsolidated investments:

        

Polymer Solutions

   $ 2,625      $ 222      $ 4,819      $ 270   

Catalysts

     7,898        6,009        16,007        11,937   

Fine Chemistry

     —          —          —          —     

Corporate & other

     (28     (27     (55     (54
                                

Total equity in net income of unconsolidated investments

   $ 10,495      $ 6,204      $ 20,771      $ 12,153   
                                

Net income attributable to noncontrolling interests:

        

Polymer Solutions

   $ (1,724   $ (1,440   $ (2,514   $ (1,655

Catalysts

     —          —          —          —     

Fine Chemistry

     (2,354     (605     (3,152     (2,158

Corporate & other

     (257     406        (275     627   
                                

Total net income attributable to noncontrolling interests

   $ (4,335   $ (1,639   $ (5,941   $ (3,186
                                

Segment income:

        

Polymer Solutions

   $ 47,032      $ 14,664      $ 88,799      $ 2,934   

Catalysts

     66,238        37,717        121,342        73,406   

Fine Chemistry

     17,530        5,155        29,300        13,885   
                                

Total segment income

     130,800        57,536        239,441        90,225   

Corporate & other

     (18,005     (9,587     (34,754     (8,947

Restructuring and other charges (a)

     —          —          (6,958     —     

Port de Bouc charges (b)

     —          (12,393     —          (12,393

Interest and financing expenses

     (5,984     (6,088     (11,920     (12,362

Other (expense) income, net

     (729     1,276        281        145   

Income tax (expense) benefit (c)

     (24,331     7,749        (41,031     7,224   
                                

Net income attributable to Albemarle Corporation

   $ 81,751      $ 38,493      $ 145,059      $ 63,892   
                                

See accompanying notes to the condensed consolidated financial information.

 

8


Notes to the Condensed Consolidated Financial Information

 

(a) The six-month period ended June 30, 2010 included charges amounting to $7.0 million ($4.6 million after income taxes, or 5 cents per share) that related principally to planned reductions in force at our Bergheim, Germany site.
(b) The three- and six-month periods ended June 30, 2009 included charges amounting to $12.4 million ($8.2 million after income taxes, or 9 cents per share) that related to the costs of a final contract settlement arising from our 2008 disposition of the Port de Bouc, France facility.
(c) The three- and six-month periods ended June 30, 2009 included a $9.2 million (10 cents per share) one-time benefit due mainly from a tax issue settlement for the years 2005 through 2007 with the U.S. Internal Revenue Service and a $4.2 million benefit associated with the Port de Bouc charge described in footnote (b). The six-month period ended June 30, 2009 also included tax items of approximately $2.5 million (3 cents per share) resulting from adjustments related to prior periods.

Additional Information

It should be noted that earnings or per share amounts excluding special items, one-time tax items, segment operating profit and segment income are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. These measures are presented here to provide more reflective views of our operations, provide transparency to investors and enable 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.” Also, see page 10 for a supplemental reconciliation of our segment operating profit and segment income amounts to GAAP Operating profit and GAAP Net income attributable to Albemarle Corporation, respectively.

 

9


ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliation

(In Thousands of Dollars)

(Unaudited)

Our segment information includes measures we refer to as “segment operating profit” and “segment income” which are financial measures that are not required by, or presented in accordance with GAAP. The Company has reported segment operating profit and segment income because management believes that these financial measures provide transparency to investors and enable period-to-period comparability of financial performance. Segment operating profit and segment income should not be considered as an alternative to operating profit or net income attributable to Albemarle Corporation as determined in accordance with GAAP.

See below for a reconciliation of segment operating profit and segment income, the non-GAAP financial measures, to operating profit and net income attributable to Albemarle Corporation, the most directly comparable financial measures calculated and reported in accordance with GAAP.

 

     Second Quarter Ended
June 30,
    Six Months Ended
June 30,
 
     2010     2009     2010     2009  

Total segment operating profit

   $ 124,355      $ 53,350      $ 224,281      $ 81,831   

Corporate & other *

     (17,720     (9,966     (34,424     (9,520

Restructuring and other charges

     —          —          (6,958     —     

Port de Bouc charges

     —          (12,393     —          (12,393
                                

GAAP Operating profit

   $ 106,635      $ 30,991      $ 182,899      $ 59,918   
                                

Total segment income

   $ 130,800      $ 57,536      $ 239,441      $ 90,225   

Corporate & other

     (18,005     (9,587     (34,754     (8,947

Restructuring and other charges

     —          —          (6,958     —     

Port de Bouc charges

     —          (12,393     —          (12,393

Interest and financing expenses

     (5,984     (6,088     (11,920     (12,362

Other (expense) income, net

     (729     1,276        281        145   

Income tax (expense) benefit

     (24,331     7,749        (41,031     7,224   
                                

GAAP Net income attributable to Albemarle Corporation

   $ 81,751      $ 38,493      $ 145,059      $ 63,892   
                                

 

* Includes corporate non-controlling interest and equity adjustments of $285 and $(379) for the three-month periods ended June 30, 2010 and 2009, respectively, and $330 and $(573) for the six-month periods ended June 30, 2010 and 2009, respectively.

 

10