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) January 22, 2013

 

 

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 January 22, 2013, Albemarle Corporation (the “Company”) issued a press release regarding its earnings for the fourth quarter and year ended December 31, 2012. A copy of this release is being furnished as Exhibit 99.1 hereto and incorporated herein by reference. In addition, on January 23, 2013, the Company will hold a teleconference for analysts and media to discuss results for the fourth quarter and year ended December 31, 2012. The teleconference is webcast on the Company’s website at www.albemarle.com.

The press release attached as Exhibit 99.1 includes presentations of net income attributable to Albemarle Corporation (“earnings”), earnings per share and effective income tax rates which exclude special items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding special items, EBITDA margin and EBITDA margin excluding special items. 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 additional useful measurements to review our operations, provide transparency to investors and enable period-to-period comparability of financial performance.

Our presentations of earnings, earnings per share, segment operating profit and effective income tax rates which exclude special items should not be considered as alternatives to earnings, earnings per share, operating profit and effective income tax rates, respectively, as determined in accordance with GAAP. Also, segment income, earnings excluding special items, EBITDA and EBITDA excluding special items should not be considered as alternatives to net income attributable to Albemarle Corporation as determined in accordance with GAAP. Further, EBITDA margin and EBITDA margin excluding special items should not be considered as alternatives to net income attributable to Albemarle Corporation as a percentage of our consolidated net sales as would be determined in accordance with GAAP. The Company has included in the press release certain 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 January 22, 2013, 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: January 22, 2013

 

ALBEMARLE CORPORATION
By:  

/s/ Karen G. Narwold

  Karen G. Narwold
  Senior Vice President, General Counsel and Corporate Secretary


EXHIBIT INDEX

 

Exhibit
Number

  

Exhibit

99.1    Press release, dated January 22, 2013, issued by the Company.
Press release

Exhibit 99.1

 

   Contact:   
LOGO    Lorin Crenshaw    225.388.7322

Albemarle reports fourth quarter and full year 2012 results

 

 

BATON ROUGE, LA – January 22, 2013 –

Fourth quarter 2012 highlights:

 

 

Quarterly earnings of $105.2 million excluding special items, or $1.17 per share.

 

 

Net sales of $688 million and EBITDA margin of 23 percent for the quarter, excluding special items.

 

 

Full year earnings of $436.2 million excluding special items, or $4.85 per share.

 

     Three Months Ended
December 31,
     Year Ended
December 31,
 

In thousands, except per share amounts

   2012      2011      2012      2011  

Net sales

   $ 687,596       $ 707,390       $ 2,745,420       $ 2,869,005   

Segment income

   $ 150,600       $ 165,473       $ 661,156       $ 712,033   

Net income attributable to Albemarle Corporation

   $ 37,726       $ 45,548       $ 311,536       $ 392,114   

Diluted earnings per share

   $ 0.42       $ 0.51       $ 3.47       $ 4.28   

Special items per share

           

Non-operating pension and OPEB adjustments (a)

     0.60         0.63         0.46         0.59   

Restructuring and other special items, net (b)

     0.15         —           0.92         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share excluding special items (d)

   $ 1.17       $ 1.13       $ 4.85       $ 4.88   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

See accompanying notes and reconciliations to the condensed consolidated financial information.

Albemarle Corporation (NYSE: ALB) reported fourth quarter 2012 earnings of $37.7 million, or $0.42 per share, compared to fourth quarter 2011 earnings of $45.5 million, or $0.51 per share. Excluding special items, fourth quarter 2012 earnings were $105.2 million, or $1.17 per share, compared to $101.9 million, or $1.13 per share, for 2011. The Company reported net sales of $687.6 million in the fourth quarter of 2012 compared to net sales of $707.4 million in the fourth quarter of 2011 with lower metals surcharges in the Catalysts segment more than offsetting total company volume growth.

Earnings for the full year 2012 were $311.5 million, or $3.47 per share, compared to $392.1 million, or $4.28 per share, for 2011. Excluding special items, earnings for 2012 were $436.2 million, or $4.85 per share, compared to $446.3 million, or $4.88 per share, for 2011. Net sales for 2012 were $2.7 billion compared to $2.9 billion for 2011 with the majority of the reduction caused by lower metals surcharges in the Catalysts segment.

As previously announced, in the fourth quarter of 2012 the Company adopted mark-to-market (MTM) accounting relating to its global pension and other postretirement benefit (OPEB) plans. All historical

 

1


consolidated financial information presented herein has been retrospectively adjusted to reflect this change in accounting method. The MTM actuarial loss for 2012, recorded in Corporate and other expense, amounted to $75.8 million ($48.3 million after income taxes, or $0.54 per share) reflecting a lower assumed discount rate partially offset by 2012 pension asset performance.

Commenting on results, Luke Kissam, CEO, stated, “2012 was a difficult year from a macroeconomic standpoint, but we are pleased with the earnings power that we demonstrated in the face of a weak global economy, the negative impact of raw material pricing related to certain metals and lower demand than originally anticipated in many of the markets served by our products, resulting in lower operating rates at many of our production units. At the same time, we were able to exit the phosphorus business, freeze our pension obligations and further strengthen our balance sheet while also investing sufficient capital to permit future growth across our business portfolio.”

Quarterly Segment Results

Catalysts generated net sales of $294.1 million in the fourth quarter of 2012, a 2 percent increase over net sales in the fourth quarter of 2011, due mainly to favorable impacts from higher hydroprocessing and performance catalyst volumes, partially offset by lower metals surcharges in refinery catalysts and foreign currency. Catalysts segment income was $78.8 million in the fourth quarter of 2012, down 6 percent from fourth quarter 2011 results of $84.2 million due primarily to unfavorable impacts from metals cost volatility versus the fourth quarter of 2011, partially offset by favorable sales volumes and higher equity income.

Polymer Solutions reported net sales of $200.1 million in the fourth quarter of 2012, a 4 percent decrease over net sales in the fourth quarter of 2011, due to the year-over-year effects of our phosphorus flame retardants business exit in the second quarter of 2012. Higher sales volumes in our core products were offset by unfavorable pricing, mix and foreign currency impacts. Segment income for Polymer Solutions was $36.3 million in the fourth quarter of 2012, a 3 percent decline from $37.5 million in the fourth quarter of 2011, driven by unfavorable pricing, higher variable input costs including fixed cost absorption and unfavorable foreign currency impacts, partly offset by favorable sales volumes and favorable impacts from our exit of the phosphorus flame retardants business.

Fine Chemistry net sales in the fourth quarter of 2012 were $193.4 million, a 7 percent decrease versus net sales in the fourth quarter of 2011, due mainly to unfavorable pricing, lower volumes (mainly due to the timing of custom services contracts) and unfavorable foreign currency impacts. Segment income for Fine Chemistry was $35.5 million for the fourth quarter of 2012, down 19 percent from fourth quarter 2011 results of $43.8 million, due to unfavorable pricing, higher variable input costs including fixed cost absorption and impacts from higher income attributable to noncontrolling interests, partly offset by favorable sales mix.

 

2


Corporate and Other

Corporate and other expense was $98.7 million for the fourth quarter of 2012. The decrease from the comparable period in 2011 was due primarily to lower personnel-related costs associated with performance-based incentive compensation levels and lower costs from non-operating pension and OPEB items which included a fourth quarter MTM actuarial loss of $86.0 million in 2012 and $92.3 million in 2011.

Interest and financing expenses were $7.7 million for the fourth quarter of 2012 compared to $9.0 million for the fourth quarter of 2011, with this decrease due primarily to increases in interest capitalized on higher average construction project balances outstanding and lower variable-rate borrowings year-over-year.

Our fourth quarter and full year 2012 effective income tax rates were (45.6) percent and 22.0 percent, respectively. The fourth quarter rate was impacted primarily by the MTM actuarial loss. Excluding special items (see notes to the condensed consolidated financial information), our fourth quarter and full year 2012 effective income tax rates were 18.3 percent and 24.5 percent, respectively. Our effective tax rate continues to be influenced by the level and geographic mix of income and benefits from a favorable mix of income in lower tax jurisdictions.

Cash Flow

Our cash flow from operations was approximately $489 million for the full year 2012, and we had $478 million in cash and cash equivalents at December 31, 2012. During 2012, cash on hand and cash provided by operations funded capital expenditures for plant, machinery and equipment of approximately $281 million (which includes approximately $78.0 million in capital expenditures associated with our Jordanian joint venture), long-term debt repayments of $63.8 million, dividends to shareholders of $69.1 million, repurchases of $63.6 million of our common stock, advances to joint ventures of $25.0 million and pension and OPEB contributions of $21.6 million.

Earnings Call

The Company’s performance for the fourth quarter and the year ended December 31, 2012 will be discussed on a conference call at 9:00 AM Eastern Standard time on January 23, 2013. The call can be accessed by dialing 800-638-4930 (International Dial In # 617-614-3944), and entering conference ID 29909204. The Company’s earnings presentation and supporting material can be accessed through Albemarle’s website under Investors at www.albemarle.com.

 

3


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. Albemarle is committed to global sustainability and is advancing its eco-practices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry, and employs more than 4,000 people worldwide and serves customers in approximately 100 countries. Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, Regulation G reconciliations, SEC filings and other information regarding the Company, its businesses and markets served.

Forward-Looking Statements

Some of the information presented in this press release and the conference call and discussions that follow, including, without limitation, statements with respect to product development, changes in productivity, market trends, price, volume and mix changes, expected growth and earnings, input costs, surcharges, tax rates, stock repurchases, dividends, economic trends, outlook and all other information relating to matters that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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: changes in economic and business conditions; changes in financial and operating performance of our major customers and industries and markets served by us; the timing of orders received from customers; the gain or loss of significant customers; competition from other manufacturers; changes in the demand for our products; limitations or prohibitions on the manufacture and sale of our products; availability of raw materials; changes in the cost of raw materials and energy and in our ability to pass through increases; acquisitions and divestitures, and changes in performance of acquired companies; fluctuations in foreign currencies; changes in laws and government regulation impacting our operations or our products; the occurrence of claims or litigation; the occurrence of natural disasters; the inability to maintain current levels of product or premises liability insurance or the denial of such coverage; political unrest, including terrorism or hostilities; political instability affecting our manufacturing operations or joint ventures; changes in accounting standards; the inability to achieve results from our global manufacturing cost reduction initiatives as well as our ongoing continuous improvement and rationalization programs; changes in the jurisdictional mix of our earnings; changes in monetary policies or inflation or interest rates, which may impact our ability to raise capital or increase our cost of funds, the performance of our pension fund investments and our pension expense and funding obligations; volatility and substantial uncertainties in the debt and equity markets; technology or intellectual property infringement and other innovation risks; decisions we may make in the future; and the other factors detailed from time to time in the reports we file with the SEC, including those described under “Risk Factors” in our Annual Report on Form 10-K and our 2012 Quarterly Reports on Form 10-Q.

 

4


Albemarle Corporation and Subsidiaries

Consolidated Statements of Income

(In Thousands Except Per Share Amounts) (Unaudited)

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  

Net sales

   $ 687,596      $ 707,390      $ 2,745,420      $ 2,869,005   

Cost of goods sold

     495,619        500,580        1,835,425        1,914,058   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     191,977        206,810        909,995        954,947   

Selling, general and administrative expenses (c)

     124,084        137,026        313,227        360,070   

Research and development expenses

     19,128        18,987        78,919        77,083   

Restructuring and other charges, net (b)

     16,982        —          111,685        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating profit

     31,783        50,797        406,164        517,794   

Interest and financing expenses

     (7,666     (8,998     (32,800     (37,574

Other (expenses) income, net

     (335     (177     1,229        357   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

     23,782        41,622        374,593        480,577   

Income tax (benefit) expense (b)

     (10,849     (1,791     82,533        104,134   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before equity in net income of unconsolidated investments

     34,631        43,413        292,060        376,443   

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

     8,834        6,636        38,067        43,754   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     43,465        50,049        330,127        420,197   

Net income attributable to noncontrolling interests

     (5,739     (4,501     (18,591     (28,083
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 37,726      $ 45,548      $ 311,536      $ 392,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.42      $ 0.51      $ 3.49      $ 4.33   

Diluted earnings per share

   $ 0.42      $ 0.51      $ 3.47      $ 4.28   

Weighted-average common shares outstanding – basic

     89,018        88,805        89,189        90,522   

Weighted-average common shares outstanding – diluted

     89,660        89,819        89,884        91,522   

See accompanying notes to the condensed consolidated financial information.

 

5


Albemarle Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In Thousands) (Unaudited)

 

     December 31,
2012
     December 31,
2011
 

ASSETS

     

Cash and cash equivalents

   $ 477,696       $ 469,416   

Other current assets

     929,617         886,204   
  

 

 

    

 

 

 

Total current assets

     1,407,313         1,355,620   
  

 

 

    

 

 

 

Property, plant and equipment

     2,867,083         2,619,428   

Less accumulated depreciation and amortization

     1,570,512         1,489,948   
  

 

 

    

 

 

 

Net property, plant and equipment

     1,296,571         1,129,480   

Other assets and intangibles

     733,407         718,724   
  

 

 

    

 

 

 

Total assets

   $ 3,437,291       $ 3,203,824   
  

 

 

    

 

 

 

LIABILITIES AND EQUITY

     

Current portion of long-term debt

   $ 12,700       $ 14,416   

Other current liabilities

     372,309         386,762   
  

 

 

    

 

 

 

Total current liabilities

     385,009         401,178   
  

 

 

    

 

 

 

Long-term debt

     686,588         749,257   

Other noncurrent liabilities

     370,318         296,659   

Deferred income taxes

     63,368         77,903   

Albemarle Corporation shareholders’ equity

     1,833,598         1,591,277   

Noncontrolling interests

     98,410         87,550   
  

 

 

    

 

 

 

Total liabilities & equity

   $ 3,437,291       $ 3,203,824   
  

 

 

    

 

 

 

See accompanying notes to the condensed consolidated financial information.

 

6


Albemarle Corporation and Subsidiaries

Selected Consolidated Cash Flow Data

(In Thousands) (Unaudited)

 

     Year Ended
December 31,
 
     2012     2011  

Cash and cash equivalents at beginning of year

   $ 469,416      $ 529,650   

Cash and cash equivalents at end of year

   $ 477,696      $ 469,416   

Sources of cash and cash equivalents:

    

Net income

   $ 330,127      $ 420,197   

Proceeds from borrowings

     —          9,415   

Proceeds from exercise of stock options

     21,148        2,230   

Uses of cash and cash equivalents:

    

Capital expenditures

     (280,873     (190,574

Repurchases of common stock

     (63,575     (178,132

Repayments of long-term debt

     (63,811     (109,591

Dividends paid to shareholders

     (69,113     (57,759

Pension and postretirement contributions

     (21,610     (59,773

Investments in equity and other corporate investments

     —          (10,868

Long-term advances to joint ventures

     (24,959     —     

Non-cash and other items:

    

Depreciation and amortization

     99,020        96,753   

Restructuring and other charges (b)

     111,685        —     

Pension and postretirement expense

     77,442        97,207   

Equity in net income of unconsolidated investments

     (38,067     (43,754

See accompanying notes to the condensed consolidated financial information.

 

7


Albemarle Corporation and Subsidiaries

Consolidated Summary of Segment Results

(In Thousands) (Unaudited)

 

     Three Months Ended
December 31,
    Year Ended
December 31,
 
     2012     2011     2012     2011  

Net sales:

        

Polymer Solutions

   $ 200,093      $ 209,318      $ 892,232      $ 1,001,922   

Catalysts

     294,081        289,524        1,067,948        1,116,863   

Fine Chemistry

     193,422        208,548        785,240        750,220   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net sales

   $ 687,596      $ 707,390      $ 2,745,420      $ 2,869,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment operating profit:

        

Polymer Solutions

   $ 35,778      $ 36,860      $ 198,426      $ 243,396   

Catalysts

     71,440        78,750        260,544        290,065   

Fine Chemistry

     40,287        47,670        182,690        162,726   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment operating profit

     147,505        163,280        641,660        696,187   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net income of unconsolidated investments:

        

Polymer Solutions

     1,459        1,200        6,416        7,696   

Catalysts

     7,375        5,463        31,651        36,259   

Fine Chemistry

     —          —          —          —     

Corporate & other

     —          (27     —          (201
  

 

 

   

 

 

   

 

 

   

 

 

 

Total equity in net income of unconsolidated investments

     8,834        6,636        38,067        43,754   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net (income) loss attributable to noncontrolling interests:

        

Polymer Solutions

     (966     (603     (2,221     (9,803

Catalysts

     —          —          —          —     

Fine Chemistry

     (4,773     (3,867     (16,350     (18,306

Corporate & other

     —          (31     (20     26   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total net income attributable to noncontrolling interests

     (5,739     (4,501     (18,591     (28,083
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment income:

        

Polymer Solutions

     36,271        37,457        202,621        241,289   

Catalysts

     78,815        84,213        292,195        326,324   

Fine Chemistry

     35,514        43,803        166,340        144,420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment income

     150,600        165,473        661,156        712,033   

Corporate & other (a)

     (98,740     (112,541     (123,831     (178,568

Restructuring and other charges, net (b)

     (16,982     —          (111,685     —     

Interest and financing expenses

     (7,666     (8,998     (32,800     (37,574

Other (expenses) income, net

     (335     (177     1,229        357   

Income tax benefit (expense) (b)

     10,849        1,791        (82,533     (104,134
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 37,726      $ 45,548      $ 311,536      $ 392,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to the condensed consolidated financial information.

 

8


Notes to the Condensed Consolidated Financial Information

 

(a) Non-operating pension and OPEB items, consisting of MTM actuarial gains/losses as well as interest costs and expected return on assets, are included in Corporate & other as follows:

 

   

For the three months ended December 31, 2012 and 2011, net charges amounting to $84.2 million ($53.6 million after income taxes, or $0.60 per share) and $89.1 million ($56.3 million after income taxes, or $0.63 per share), respectively. The MTM actuarial loss was $86.0 million ($54.8 million after income taxes, or $0.61 per share) and $92.3 million ($58.4 million after income taxes, or $0.65 per share) for the three months ended December 31, 2012 and 2011, respectively.

 

   

For the years ended December 31, 2012 and 2011, net charges amounting to $65.3 million ($41.7 million after income taxes, or $0.46 per share) and $85.8 million ($54.2 million after income taxes, or $0.59 per share), respectively. The MTM actuarial loss was $75.8 million ($48.3 million after income taxes, or $0.54 per share) and $98.6 million ($62.3 million after income taxes, or $0.68 per share) for the years ended December 31, 2012 and 2011, respectively.

 

(b) Restructuring and other special items consisted of the following:

Three months ended December 31, 2012 —

 

   

A one-time employer contribution to the Company’s defined contribution plan of $10.1 million ($6.4 million after income taxes, or $0.07 per share) and a net curtailment gain of $4.5 million ($2.9 million after income taxes, or $0.03 per share), both in connection with various amendments to certain of our U.S. pension and defined contribution plans.

 

   

Net charges of $11.4 million ($6.8 million after income taxes, or $0.08 per share) in connection with various restructuring-related activities across the Company including certain planned reductions in force, changes in product sourcing and other items.

 

   

Discrete net tax expense items of $3.5 million, or $0.03 per share, relating to tax planning and other tax matters.

Year ended December 31, 2012 —

 

   

A one-time employer contribution to the Company’s defined contribution plan of $10.1 million ($6.4 million after income taxes, or $0.07 per share) and a net curtailment gain of $4.5 million ($2.9 million after income taxes, or $0.03 per share), both in connection with various amendments to certain of our U.S. pension and defined contribution plans.

 

   

Net charges amounting to $100.8 million ($76.1 million after income taxes, or $0.85 per share) in connection with our exit of the phosphorus flame retardants business, and other charges amounting to $5.3 million ($4.3 million after income taxes, or $0.04 per share) relating to changes in product sourcing and other items.

 

   

Discrete net tax benefit items of $1.0 million, or $0.01 per share, related principally to tax planning and the release of various tax reserves.

 

(c) The year ended December 31, 2012 includes a gain of $8.1 million ($5.1 million after tax, or $0.06 per share) resulting from proceeds received in connection with the settlement of litigation (net of related legal fees). The year ended December 31, 2012 also includes an $8 million charitable contribution ($5.1 million after tax, or $0.06 per share) to the Albemarle Foundation.

 

(d) Totals may not add due to rounding.

 

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Additional Information

It should be noted that Net income attributable to Albemarle Corporation (“earnings”), earnings per share and effective income tax rates which exclude special items, as well as presentations of segment operating profit, segment income, EBITDA, EBITDA excluding special items, EBITDA margin and EBITDA margin excluding special items 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 additional useful measurements to review 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 Investors section of our website at www.albemarle.com, under “Non-GAAP Reconciliations” under “Financials.” Also, see attached 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, as well as for a supplemental reconciliation of our GAAP Net income attributable to Albemarle Corporation to EBITDA and EBITDA excluding special items.

 

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ALBEMARLE CORPORATION AND SUBSIDIARIES

Non-GAAP Reconciliation

(In Thousands)

(Unaudited)

Our segment information includes measures we refer to as “segment operating profit,” “segment income,” “EBITDA” and “EBITDA excluding special items,” which are financial measures that are not required by, or presented in accordance with, GAAP. The Company has reported segment operating profit, segment income, EBITDA and EBITDA excluding special items because management believes that these financial measures provide transparency to investors and enable period-to-period comparability of financial performance. Segment operating profit, segment income, EBITDA and EBITDA excluding special items should not be considered as alternatives 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, respectively, the most directly comparable financial measures calculated and reported in accordance with GAAP.

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  

Total segment operating profit

   $ 147,505      $ 163,280      $ 641,660      $ 696,187   

Corporate & other *

     (98,740     (112,483     (123,811     (178,393

Restructuring and other charges, net

     (16,982     —          (111,685     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Operating profit

   $ 31,783      $ 50,797      $ 406,164      $ 517,794   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total segment income

   $ 150,600      $ 165,473      $ 661,156      $ 712,033   

Corporate & other

     (98,740     (112,541     (123,831     (178,568

Restructuring and other charges, net

     (16,982     —          (111,685     —     

Interest and financing expenses

     (7,666     (8,998     (32,800     (37,574

Other (expenses) income, net

     (335     (177     1,229        357   

Income tax benefit (expense)

     10,849        1,791        (82,533     (104,134
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Net income attributable to Albemarle Corporation

   $ 37,726      $ 45,548      $ 311,536      $ 392,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

* Excludes corporate equity income and noncontrolling interest adjustments of $(58) for the three-month period ended December 31, 2011, and $(20) and $(175) for the years ended December 31, 2012 and 2011, respectively.

 

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See below for a reconciliation of net income attributable to Albemarle Corporation excluding special items, EBITDA and EBITDA excluding special items, the non-GAAP financial measures, to net income attributable to Albemarle Corporation, the most directly comparable financial measure calculated and reported in accordance with GAAP. EBITDA is defined as Net income attributable to Albemarle Corporation before interest and financing expenses, income taxes, depreciation and amortization. EBITDA excluding special items is defined as EBITDA before the special items as listed below.

 

     Three Months Ended     Year Ended  
     December 31,     December 31,  
     2012     2011     2012     2011  

Net income attributable to Albemarle Corporation

   $ 37,726      $ 45,548      $ 311,536      $ 392,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

Add back:

        

Non-operating pension and OPEB adjustments (net of tax)

     53,649        56,331        41,729        54,231   

Restructuring and other charges, net (net of tax)

     10,333        —          83,923        —     

Discrete tax items, net

     3,504        —          (986     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation excluding special items

   $ 105,212      $ 101,879      $ 436,202      $ 446,345   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to Albemarle Corporation

   $ 37,726      $ 45,548      $ 311,536      $ 392,114   
  

 

 

   

 

 

   

 

 

   

 

 

 

Add back:

        

Interest and financing expenses

     7,666        8,998        32,800        37,574   

Income tax (benefit) expense

     (10,849     (1,791     82,533        104,134   

Depreciation and amortization

     24,592        24,827        99,020        96,753   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     59,135        77,582        525,889        630,575   

Non-operating pension and OPEB adjustments

     84,220        89,083        65,316        85,765   

Restructuring and other charges, net

     16,982        —          111,685        —     
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA excluding special items

   $ 160,337      $ 166,665      $ 702,890      $ 716,340   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net sales

   $ 687,596      $ 707,390      $ 2,745,420      $ 2,869,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Margin

     8.6     11.0     19.2     22.0
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA Margin excluding special items

     23.3     23.6     25.6     25.0
  

 

 

   

 

 

   

 

 

   

 

 

 

 

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