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): October 26, 2009

 

 

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 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 October 26, 2009, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the third quarter ended September 30, 2009. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on October 27, 2009, the Company will hold a teleconference for analysts and media to discuss results for the third quarter ended September 30, 2009. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes earnings or per share amounts excluding special items and one time tax items, which are financial measures that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). These items are presented to exclude the impact of certain non-recurring items on the Company’s results. The Company has reported earnings or per share amounts excluding special items and one time tax items because management believes that these financial measures are more reflective of the Company’s operations, provides transparency to investors and enables period-to-period comparability of financial performance. Earnings or per share amounts excluding special items and one time tax items should not be considered as an alternative to earnings or per share amounts determined in accordance with GAAP. The Company has included in the press release reconciliation information for earnings or per share amounts excluding special items and one time tax items, the non-GAAP financial measures, to earnings or per share amounts, as applicable, the most directly comparable financial measures calculated and reported in accordance with GAAP.

The press release attached as Exhibit 99.1 also includes net debt, which is a financial measure that is not required by, or presented in accordance with, GAAP. The Company has presented net debt because management believes that net debt is helpful in analyzing leverage and uses it as a performance measure. Net debt should not be considered as an alternative to total debt determined in accordance with GAAP. The Company has included in the press release a reconciliation of net debt, a non-GAAP financial measure, to total debt, 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 October 26, 2009, 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: October 26, 2009

 

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 October 26, 2009, issued by the Company.
Press Release

Exhibit 99.1

 

LOGO      Contact:
     Sandra Rodriguez                            225.388.7654

Albemarle Reports Third Quarter 2009 Results

 

 

Third quarter highlights:

 

 

Net sales of $515.3 million and earnings of $52.1 million, or 57 cents per share for the quarter.

 

 

Sequential improvement in net sales in all business segments.

 

 

Strong sequential segment income gains in Polymer Additives and Fine Chemicals segments.

 

 

Strong cash generation leading to net debt reduction of approximately $115 million in the quarter.

 

    

Third Quarter Ended

September 30,

  

Nine Months Ended

September 30,

 
In thousands of dollars, except per share amounts    2009    2008    2009     2008  

Net Sales

   $   515,276    $   660,463    $   1,447,166      $   1,949,390   

Operating Profit

   $ 62,925    $ 76,892    $ 122,843      $ 238,496   

Net Income attributable to Albemarle Corporation

   $ 52,131    $ 56,175    $ 116,023      $ 181,091   

Diluted earnings per share

   $ 0.57    $ 0.61    $ 1.26      $ 1.95   

Special item per share

   $ —      $ —      $ (0.09   $ (0.02

Per share amount for one time tax items

   $ —      $ —      $ 0.13      $ —     

Diluted earnings per share excluding special and one time tax items

   $ 0.57    $ 0.61    $ 1.23      $ 1.97   

BATON ROUGE, La., – October 26 – Albemarle Corporation (NYSE: ALB) reported third quarter 2009 earnings of $52.1 million, or 57 cents per share, compared to third quarter 2008 earnings of $56.2 million, or 61 cents per share. The Company reported net sales in the third quarter of 2009 totaling $515.3 million compared to third quarter 2008 net sales of $660.5 million.

Earnings for the first nine months of 2009 were $116.0 million, or $1.26 per share, compared to $181.1 million, or $1.95 per share, for the first nine months of 2008. Excluding the second quarter 2009 special item related to Port de Bouc ($8.2 million after tax) and tax benefits related to prior periods ($11.5 million), earnings for the first nine months of 2009 were $112.7 million, or $1.23 per share. Excluding first quarter 2008 restructuring charges ($2.1 million after tax), earnings for the first nine months of 2008 were $183.2 million, or $1.97 per share. Net sales for the first nine months of 2009 were $1.45 billion compared to $1.95 billion for the first nine months of 2008.

“Volumes continue to improve for many of our products, and we are encouraged by the sequential increase in sales and profitability over the prior two quarters. Our order patterns thus far in the fourth quarter alleviate some of the concern we previously expressed about the sustainability of the recovery going forward; however, we remain cautious in this difficult environment,” said Mark C. Rohr, Chairman and Chief Executive

 

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Officer. “We’re very proud of our strong cash generation and working capital management. We have repaid $113 million of debt in the first nine months and have $260 million of cash and equivalents at September 30, 2009. We continue to focus on cost-saving initiatives and aggressive innovation efforts to drive growth. We’ve demonstrated an ability to deliver high quality results in both good as well as tough times and we continue to drive value for our shareholders.”

Quarterly Segment Results

Polymer Additives recorded net sales for the third quarter of 2009 of $196.7 million, a 25 percent decrease versus record net sales in the third quarter of 2008. Softness in consumer end-markets contributed to the year-over-year decline; however, demand continues to improve sequentially. Polymer Additives segment income for the third quarter of 2009 was $26.0 million compared to $27.4 million in the third quarter of 2008. Unfavorable year-over-year volume and pricing impacts were partially offset by improvements in raw materials and other operating costs. Higher sales levels and increased utilization rates contributed to the segment’s strong sequential segment income improvement of 78 percent over the second quarter of 2009.

Catalysts net sales for the third quarter of 2009 were $188.9 million, a decrease of 18 percent versus the third quarter of 2008. This decrease was due primarily to metals impacts on HPC refinery catalysts revenues, currency exchange rates and less favorable product mix in polyolefin catalysts. Catalysts segment income for the third quarter of 2009 was $33.4 million compared to $36.5 million for the third quarter of 2008. This decline was due primarily to lower equity income, unfavorable currency exchange rates and metals impacts on HPC refinery catalysts. Segment income declined $4.3 million sequentially due primarily to polyolefin catalysts product mix and lower equity income.

Fine Chemicals net sales for the third quarter of 2009 were $129.6 million, down 22 percent from the third quarter of 2008, but up 25 percent from the second quarter 2009. Segment income for the third quarter of 2009 was $14.2 million compared to $24.7 million in the third quarter of 2008. These declines were primarily attributable to our industrial bromides business. Segment income margins improved, however, over 600 basis points from second quarter 2009 due mainly to stronger sales volumes and utilization rates in the bromine franchise.

Cash Flow

In the first nine months of 2009, cash flow from operations funded net repayments of debt of over $113 million, capital expenditures for plant, machinery and equipment of $84 million and dividends to shareholders of $33 million. During the quarter, interest and financing expenses were $6.2 million versus $9.8 million in the third quarter of 2008. This decrease was due primarily to lower average interest rates year over year.

At September 30, 2009, the Company had approximately $260 million in cash and equivalents. In addition, the Company has sufficient capacity to borrow under existing lines of credit and has no significant debt maturities before 2013.

 

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Taxes

Our third quarter 2009 effective income tax rate was 9.7 percent, down from 15.3 percent in the third quarter of 2008. The full year effective tax rate is expected to be 12 percent, excluding special and one time tax items, which is approximately 2.0 percent lower than our previous annual effective tax rate forecast. The tax rate continues to be influenced by the level and mix of income and has benefited from a more favorable mix of income in lower tax jurisdictions.

Outlook

While challenging conditions still persist in some sectors, underlying market fundamentals seem to be improving. Short term, we remain cautious and continue to focus on cash generation until we get more comfortable with the sustainability of improved market conditions. We remain confident that Albemarle is well positioned to manage through the uncertainties of the present market cycle and to capture the expected medium to long-term upside.

Earnings Call

The Company's performance for the third quarter ended September 30, 2009 will be discussed on a conference call at 11:00 AM Eastern Daylight time on October 27, 2009, which can be accessed through Albemarle’s website under Investor Information at www.albemarle.com.

Albemarle Corporation, headquartered in Baton Rouge, Louisiana, 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: 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, 2008 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.

 

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Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

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

 

    

Third Quarter Ended

September 30,

   

Nine Months Ended

September 30,

 
      2009     2008            2009            2008         

Net sales

   $ 515,276      $ 660,463        $ 1,447,166        $ 1,949,390     

Cost of goods sold

     381,197        506,280              1,112,763              1,464,815         

Gross profit

     134,079        154,183          334,403          484,575     

Selling, general and administrative expenses

     56,171        59,899          153,086          191,016     

Research and development expenses

     14,983        17,392          46,081          51,785     

Port de Bouc charges

     —          —            12,393      (a     —       

Restructuring charges

     —          —                —                3,278      (b

Operating profit

     62,925        76,892          122,843          238,496     

Interest and financing expenses

     (6,199     (9,815       (18,561       (28,472  

Other income (expenses), net

     343        (2,718           488              2,066         

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

     57,069        64,359          104,770          212,090     

Income tax (expense) benefit

     (5,549     (9,878           1,675      (c     (39,406      

Income before equity in net income of unconsolidated investments

     51,520        54,481          106,445          172,684     

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

     5,809        6,281              17,962              21,975         

Net income

     57,329        60,762      (d     124,407          194,659      (d

Net income attributable to noncontrolling interests

     (5,198     (4,587 )     (d     (8,384           (13,568   (d

Net income attributable to Albemarle Corporation

   $ 52,131      $ 56,175      (d   $ 116,023            $ 181,091      (d

Basic earnings per share

   $ 0.57      $ 0.61      (e   $ 1.27        $ 1.97      (e

Diluted earnings per share

   $ 0.57      $ 0.61      (e   $ 1.26        $ 1.95      (e

Weighted-average common shares outstanding – Basic

     91,588        91,395      (e     91,481          91,846      (e

Weighted-average common shares outstanding – Diluted

     92,174        92,463      (e     91,955              92,977      (e

See accompanying notes to the condensed consolidated financial information.

 

4


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands of Dollars) (Unaudited)

 

     September 30,
2009
   December 31,
2008

ASSETS

     

Cash and cash equivalents

   $ 260,434    $ 253,303

Other current assets

     742,319      925,620
             

Total current assets

     1,002,753      1,178,923
             

Property, plant and equipment

     2,416,735      2,322,996

Less accumulated depreciation and amortization

     1,374,405      1,310,648
             

Net property, plant and equipment

     1,042,330      1,012,348

Other assets and intangibles

     735,065      681,446
             

Total assets

   $ 2,780,148    $ 2,872,717
             

LIABILITIES & EQUITY

     

Current portion of long-term debt

   $ 27,721    $ 26,202

Other current liabilities

     314,151      412,165
             

Total current liabilities

     341,872      438,367
             

Long-term debt

     793,098      906,062

Other noncurrent liabilities

     320,328      336,967

Deferred income taxes

     80,578      74,838

Albemarle Corporation shareholders’ equity (d)

     1,197,063      1,065,771

Noncontrolling interests (d)

     47,209      50,712
             

Total liabilities & equity

   $ 2,780,148    $ 2,872,717
             

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flows Data

(In Thousands of Dollars) (Unaudited)

 

     Nine Months Ended
September 30,
 
     2009     2008  

Cash and cash equivalents at beginning of year

   $ 253,303      $ 130,551   

Cash and cash equivalents at end of period

   $ 260,434      $ 207,211   

Sources of cash and cash equivalents:

    

Net income (d)

     124,407        194,659   

Proceeds from borrowings

     20,269        285,303   

Proceeds from exercise of stock options

     4,083        3,931   

Uses of cash and cash equivalents:

    

Capital expenditures

     (83,610     (63,467

Purchases of common stock

     —          (163,502

Repayments of long-term debt

     (133,332     (42,605

Dividends paid to shareholders

     (33,306     (31,394

Dividends paid to noncontrolling interests

     (8,911     (11,836

Non-cash items:

    

Depreciation and amortization

     74,539        81,555   

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands of Dollars) (Unaudited)

 

     Third Quarter Ended
September 30,
    Nine Months Ended
September 30,
 
     2009     2008     2009     2008  

Net sales:

        

Polymer Additives

   $ 196,716      $ 261,746      $ 492,636      $ 766,844   

Catalysts

     188,911        231,562        600,101        716,045   

Fine Chemicals

     129,649        167,155        354,429        466,501   
                                

Total net sales

   $ 515,276      $ 660,463      $ 1,447,166      $ 1,949,390   
                                

Segment operating profit:

        

Polymer Additives

   $ 27,243      $ 28,705      $ 31,562      $ 86,337   

Catalysts

     28,845        30,941        90,314        112,617   

Fine Chemicals

     16,482        26,830        32,525        77,983   
                                

Subtotal

   $ 72,570      $ 86,476      $ 154,401      $ 276,937   
                                

Equity in net income (loss) of unconsolidated investments:

        

Polymer Additives

   $ 1,293      $ 777      $ 1,563      $ 3,454   

Catalysts

     4,543        5,544        16,480        18,598   

Fine Chemicals

     —          —          —          —     

Corporate & other

     (27     (40     (81     (77
                                

Total equity in net income of unconsolidated investments

   $ 5,809      $ 6,281      $ 17,962      $ 21,975   
                                

Net (income) loss attributable to noncontrolling interests:

        

Polymer Additives

   $ (2,490   $ (2,078   $ (4,145   $ (6,183

Catalysts

     —          —          —          —     

Fine Chemicals

     (2,244     (2,146     (4,402     (7,304

Corporate & other

     (464     (363     163        (81
                                

Total net income attributable to noncontrolling interests

   $ (5,198   $ (4,587   $ (8,384   $ (13,568
                                

Segment income:

        

Polymer Additives

   $ 26,046      $ 27,404      $ 28,980      $ 83,608   

Catalysts

     33,388        36,485        106,794        131,215   

Fine Chemicals

     14,238        24,684        28,123        70,679   
                                

Total segment income

     73,672        88,573        163,897        285,502   

Corporate & other

     (10,136     (9,987     (19,083     (35,321

Port de Bouc charges (a)

     —          —          (12,393     —     

Restructuring charges (b)

     —          —          —          (3,278

Interest and financing expenses

     (6,199     (9,815     (18,561     (28,472

Other income (expenses), net

     343        (2,718     488        2,066   

Income tax (expense) benefit (c)

     (5,549     (9,878     1,675        (39,406
                                

Net income attributable to Albemarle Corporation (d)

   $ 52,131      $ 56,175      $ 116,023      $ 181,091   
                                

See accompanying notes to the condensed consolidated financial information.

 

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Notes to the Condensed Consolidated Financial Information

 

(a) The nine-month period ended September 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.
(b) The nine-month period ended September 30, 2008 included charges amounting to $3.3 million ($2.1 million after income taxes, or 2 cents per share) that related to severance costs in conjunction with personnel reductions at the Company’s former Richmond, Virginia headquarters and its Singapore sales office.
(c) The nine-month period ended September 30, 2009 included a $9.2 million (10 cents per share) one time benefit due mainly to a tax issue settlement for the years 2005 through 2007 with the U.S. Internal Revenue Service, a $4.2 million benefit associated with the Port de Bouc charge described in footnote (a), and a non-recurring net benefit of $2.5 million (3 cents per share) resulting from adjustments related to prior periods.
(d) As adjusted due to the adoption of new accounting guidance which requires retroactive application for the presentation of noncontrolling interests on the balance sheet and statements of income.
(e) As adjusted due to the adoption of new accounting guidance associated with share-based payment transactions considered to be participating securities. Basic earnings per share decreased one cent for the three-month period ended September 30, 2008 as a result of an increase in our basic weighted-average common shares outstanding of approximately 321,000 shares. Diluted weighted-average common shares outstanding increased by approximately 198,000 shares for the three-month period ended September 30, 2008. Basic earnings per share decreased one cent for the nine-month period ended September 30, 2008 as a result of an increase in our basic weighted-average common shares outstanding of approximately 311,000 shares. Diluted weighted-average common shares outstanding increased by approximately 203,000 shares for the nine-month period ended September 30, 2008.

Additional Information

It should be noted that earnings or per share amounts excluding special items and one time tax 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.

Net debt is a supplemental financial measure that is not required by, or presented in accordance with GAAP. We believe net debt is helpful in analyzing leverage and as a performance measure. We define net debt as total debt plus the portion of outstanding joint venture indebtedness guaranteed by us (or less the portion of outstanding joint venture indebtedness consolidated but not guaranteed by us), less cash and cash equivalents. Set forth below is a reconciliation of net debt, a non-GAAP financial measure, to total debt, the most directly comparable financial measure calculated and reported in accordance with GAAP, as of September 30, 2009, June 30, 2009 and December 31, 2008.

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.”

 

8


ALBEMARLE CORPORATION AND SUBSIDIARIES

Net Debt Reconciliation

(In Thousands of Dollars)

(Unaudited)

 

     Third Quarter
Ended
    September 30, 2009    
    Second Quarter
Ended
    June 30, 2009    
    Year
Ended
    December 31, 2008    
 

Total debt

   $ 820,819      $ 847,327      $ 932,264   

JV debt consolidated by the Company but guaranteed by others

     (27,272     (27,182     (29,064

Less: Cash and cash equivalents

     (260,434     (172,476     (253,303
                        

Net Debt

   $ 533,113      $ 647,669      $ 649,897   
                        

See accompanying notes to the condensed consolidated financial information.

 

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