BW20030729002092 20030729T144247Z UTC
( BW)(ENGELHARD-CORPORATION)(EGH) Interim Results
Business Editors
UK REGULATORY NEWS
ISELIN, N.J.--(BUSINESS WIRE)--July 29, 2003--
Engelhard Corporation (NYSE: EC) today reported net earnings for
the second quarter ended June 30 of $54.0 million, or 43 cents per
share on a diluted basis, compared with $60.1 million, or 46 cents per
share, for the same period a year ago.
The current quarter included an after-tax charge of four cents per
share related to a previously projected provision for the remaining
lease cost of certain minerals-storage facilities no longer needed
because of productivity initiatives. The prior year's quarter included
an after-tax benefit of five cents per share stemming from insurance
settlements and two charges amounting to four cents per share related
to costs associated with manufacturing consolidations and the write
down of an investment.
Second quarter sales were $929 million compared with $982 million
a year ago reflecting continued lower volumes and prices of platinum
group metals, which are passed through to customers.
"Market acceptance of new technology growth platforms coupled with
our company-wide focus on productivity enabled us to post another
quarter of solid operating results without the benefit of significant
economic recovery," said Barry W. Perry, chairman and chief executive
officer.
Mr. Perry said he still expects the company to post modest
earnings growth this year supported by the growth platforms and
productivity focus, plus benefits from strong cash flow.
"We continue to be encouraged by the results our strategic focus
has delivered in overcoming the harsh realities of today's
marketplace," Mr. Perry said.
Second-Quarter Operating Results
Operating earnings from Environmental Technologies increased 13%
to $31.5 million including the impact of a $3.1 million charge in the
year-ago quarter. Sales rose 23% to $209 million. Excluding the
charge, earnings increased 1% reflecting solid demand from mobile
environmental markets. Higher pass-through cost of substrates sold to
those markets plus the favorable effects of foreign exchange accounted
for more than three-quarters of the sales increase.
Operating earnings from Process Technologies rose 7% to $24.6
million, while sales rose 3% to $140 million. Strong volumes of new
petroleum refining catalyst and performance-enhancing additive
technologies, plus solid results from polyolefin catalysts, more than
offset the impact of higher energy costs.
Operating earnings from Appearance and Performance Technologies,
including the impact of the current-quarter charge of $7.8 million,
decreased 25% to $18.6 million. Sales rose 3% to $175 million.
Excluding the charge, earnings increased 7% resulting from higher
demand for colors and special effects. The latter benefited from
strong market acceptance of new effect technologies. Combined with
productivity efforts, these favorable results more than offset higher
energy costs and weakness in certain performance minerals markets.
Operating earnings from Materials Services declined 89% to $3.0
million compared with the year-ago quarter which included an $11.0
million gain from an insurance settlement. Sales were off 20% to $394
million. Reduced industrial demand for platinum group metals and lower
results from recycling services continue to impact the segment.
Engelhard Corporation is a surface and materials science company
that develops technologies to improve customers' products and
processes. A Fortune 500 company, Engelhard is a world-leading
provider of technologies for environmental, process, appearance and
performance applications. For more information, visit Engelhard on the
Internet at www.engelhard.com.
Forward-looking statements: This document contains forward-looking
statements in management's comments. There are a number of factors
that could cause Engelhard's actual results to vary materially from
those projected in the forward-looking statements. For a more thorough
discussion of these factors, please refer to page 26 of Engelhard's
2002 Form 10-K, dated March 25, 2003.
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per
share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
2003 2002 2003 2002
--------- --------- ----------- -----------
Net sales $929,358 $982,314 $1,759,797 $1,984,135
Cost of sales 766,461 805,158 1,447,339 1,646,287
--------- --------- ----------- -----------
Gross profit 162,897 177,156 312,458 337,848
Selling, administrative
and other expenses 88,400 95,800 180,569 183,411
Special charge/(credit),
net 7,802 (7,862) (11,978) (7,862)
--------- --------- ----------- -----------
Operating earnings 66,695 89,218 143,867 162,299
Equity in earnings of
affiliates 7,539 4,408 13,177 8,070
Loss on investments - (6,659) - (6,659)
Interest expense, net (4,753) (6,868) (10,310) (13,788)
--------- --------- ----------- -----------
Earnings before
income taxes 69,481 80,099 146,734 149,922
Income tax expense 15,447 20,024 33,764 37,480
--------- --------- ----------- -----------
Net earnings before
cumulative effect of a
change in accounting
principle,
net of tax 54,034 60,075 112,970 112,442
Cumulative effect of
a change in
accounting
principle, net of
tax of $1,390 - - (2,269) -
--------- --------- ----------- -----------
Net earnings $54,034 $60,075 $110,701 $112,442
========= ========= =========== ===========
Earnings per share -
basic:
Earnings before
cumulative effect
of a change in
accounting
principle $0.43 $0.47 $0.90 $0.87
Cumulative effect of
a change in
accounting
principle, net of
tax - - (0.02) -
--------- --------- ----------- -----------
Earnings per share -
basic $0.43 $0.47 $0.88 $0.87
========= ========= =========== ===========
Earnings per share -
diluted:
Earnings before
cumulative effect
of a change in
accounting
principle $0.43 $0.46 $0.89 $0.85
Cumulative effect of
a change in
accounting
principle, net of
tax - - (0.02) -
--------- --------- ----------- -----------
Earnings per share -
diluted $0.43 $0.46 $0.87 $0.85
========= ========= =========== ===========
Cash dividends paid per
share $0.10 $0.10 $0.20 $0.20
========= ========= =========== ===========
Average number of shares
outstanding - basic 125,261 128,707 126,067 128,750
========= ========= =========== ===========
Average number of shares
outstanding - diluted 127,078 131,673 127,566 131,544
========= ========= =========== ===========
Actual number of shares
outstanding at end of
period 125,296 129,180 125,296 129,180
========= ========= =========== ===========
Had compensation cost for Engelhard's stock option plans been
determined based on the fair value at grant date consistent with the
provisions of Statement of Financial Accounting Standards ("SFAS") No.
123, "Accounting for Stock-Based Compensation," as amended by SFAS No.
148, "Accounting for Stock-Based Compensation - Transition and
Disclosure," (assuming SFAS No. 123 was adopted on its effective date
of October 1995), Engelhard would have reported net earnings and
diluted earnings per share as follows:
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -----------------------
Pro forma information (in
millions, except per
share data) 2003 2002 2003 2002
------------------------- --------- --------- ----------- -----------
Net earnings - as
reported $54.0 $60.1 $110.7 $112.4
Net earnings - pro forma 52.6 58.5 107.9 109.3
Diluted earnings per
share - as reported 0.43 0.46 0.87 0.85
Diluted earnings per
share - pro forma 0.41 0.44 0.85 0.83
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
June 30, December 31,
2003 2002
----------- -----------
Cash $95,979 $48,246
Receivables, net 346,687 380,270
Committed metal positions 328,565 615,441
Inventories 439,407 427,162
Other current assets 88,927 94,922
----------- -----------
Total current assets 1,299,565 1,566,041
Investments 137,413 136,804
Property, plant and equipment, net 855,347 860,475
Goodwill 272,685 272,353
Other intangible and noncurrent assets 191,426 185,041
----------- -----------
Total assets $2,756,436 $3,020,714
=========== ===========
Short-term borrowings $130,114 $348,749
Accounts payable 210,257 225,045
Hedged metal obligations 304,064 537,243
Other current liabilities 268,548 275,250
----------- -----------
Total current liabilities 912,983 1,386,287
Long-term debt 398,969 247,805
Other noncurrent liabilities 309,637 309,455
Shareholders' equity 1,134,847 1,077,167
----------- -----------
Total liabilities and shareholders'
equity $2,756,436 $3,020,714
=========== ===========
ENGELHARD CORPORATION
BUSINESS SEGMENT INFORMATION
(Thousands)
(Unaudited)
Three Months Ended
June 30,
--------------------------
2003 2002 Change
----------- ------------ -------
Net Sales
Environmental Technologies $ 209,153 $ 170,564 23%
Process Technologies 139,833 136,407 3%
Appearance and Performance
Technologies 175,190 170,632 3%
----------- ------------ ----------
Technology segments 524,176 477,603 10%
Materials Services 394,485 495,564 -20%
All other 10,697 9,147 17%
----------- ------------ ----------
Total net sales $ 929,358 $ 982,314 -5%
=========== ============ ==========
Operating Earnings
Environmental Technologies $ 31,489 $ 27,983 (B) 13%
Process Technologies 24,571 22,972 7%
Appearance and Performance
Technologies 18,613 (A) 24,720 -25%
----------- ------------ ----------
Technology segments 74,673 75,675 -1%
Materials Services 3,031 27,245 (C) -89%
All other (11,009) (13,702) 20%
----------- ------------ ----------
Total operating earnings 66,695 89,218 -25%
Equity in earnings of affiliates 7,539 4,408 71%
Loss on investments - (6,659) -
Interest expense, net (4,753) (6,868) -31%
----------- ------------ ----------
Earnings before income
taxes 69,481 80,099 -13%
Income tax expense 15,447 20,024 -23%
----------- ------------ ---------
Net earnings before cumulative
effect of a change in accounting
principle, net of tax 54,034 60,075 -10%
Cumulative effect of a change in
accounting principle, net of tax
of $1,390 - - -
----------- ------------ -----------
Net earnings $ 54,034 $ 60,075 -10%
=========== ============ ===========
Six Months Ended
June 30,
--------------------------
2003 2002 Change
-------------- ----------- -------
Net Sales
Environmental Technologies $ 422,693 $ 335,005 26%
Process Technologies 258,353 251,852 3%
Appearance and Performance
Technologies 334,386 323,002 4%
----------- -----------
Technology segments 1,015,432 909,859 12%
Materials Services 723,442 1,056,293 -32%
All other 20,923 17,983 16%
----------- -----------
Total net sales $1,759,797 $1,984,135 -11%
=========== ===========
Operating Earnings
Environmental Technologies $ 56,066 (D) $ 67,644 (B) -17%
Process Technologies 38,091 (E) 40,041 -5%
Appearance and Performance
Technologies 37,196 (A) 39,851 -7%
----------- -----------
Technology segments 131,353 147,536 -11%
Materials Services 7,484 37,423 (C) -80%
All other 5,030 (F) (22,660) 122%
----------- -----------
Total operating earnings 143,867 162,299 -11%
Equity in earnings of
affiliates 13,177 8,070 63%
Loss on investments - (6,659) -
Interest expense, net (10,310) (13,788) -25%
----------- ----------- -----------
Earnings before income
taxes 146,734 149,922 -2%
Income tax expense 33,764 37,480 -10%
----------- ----------- -----------
Net earnings before cumulative
effect of a change in
accounting principle, net
of tax 112,970 112,442 -
Cumulative effect of a
change in accounting
principle, net of tax
of $1,390 (2,269) - -
----------- ----------- -----------
Net earnings $ 110,701 $ 112,442 -2%
=========== =========== ===========
(A) Includes a charge of $7.8 million ($4.8 million after tax or $0.04
per share) in 2003 related to lease commitments for idle facilities.
(B) Includes a restructuring charge of $3.1 million ($1.9 million
after tax or $0.01 per share) in 2002.
(C) Includes an insurance settlement gain of $11.0 million ($6.8
million after tax or $0.05 per share) in 2002.
(D) Includes a restructuring charge of $5.3 million ($3.5 million
after tax or $0.03 per share) in 2003.
(E) Includes a restructuring charge of $2.6 million ($1.6 million
after tax or $0.01 per share) in 2003.
(F) Includes a royalty settlement gain of $28.4 million ($17.6 million
after tax or $0.14 per share) and a Corporate restructuring charge of
$0.8 million ($0.5 million after tax or less than $0.01 per share) in
2003.
Note: All of the above per-share amounts are presented as diluted
earnings per share.
ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
Six Months Ended
June 30,
-------------------
2003 2002
--------- ---------
Cash flows from operating activities
Net earnings $110,701 $112,442
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and depletion 61,775 52,632
Amortization of intangible assets 1,649 1,515
Loss on investments - 6,659
Equity results, net of dividends (4,200) (4,317)
Net change in assets and liabilities:
Materials Services related 267,789 7,706
All other 880 (6,449)
--------- ---------
Net cash provided by operating
activities 438,594 170,188
--------- ---------
Cash flows from investing activities
Capital expenditures (39,934) (46,196)
Proceeds from investments 7,063 -
Acquisitions and other investments - (2,400)
--------- ---------
Net cash used in investing
activities (32,871) (48,596)
--------- ---------
Cash flows from financing activities
Decrease in short-term borrowings (218,563) (20,008)
Decrease in hedged metal obligations (209,601) (11,708)
Repayment of long-term debt (184) (153)
Proceeds from issuance of long-term debt 147,842 -
Purchase of treasury stock (74,714) (90,545)
Cash from exercise of stock options 11,011 45,335
Dividends paid (25,280) (25,914)
--------- ---------
Net cash used in financing
activities (369,489) (102,993)
Effect of exchange rate changes on cash 11,499 5,382
--------- ---------
Net increase in cash 47,733 23,981
Cash at beginning of year 48,246 33,034
--------- ---------
Cash at end of period $95,979 $57,015
========= =========
Short Name: Engelhard Corp
Category Code: IR
Sequence Number: 00007721
Time of Receipt (offset from UTC): 20030729T152100+0100
--30--ac/uk*
CONTACT: Engelhard Corporation
KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
INDUSTRY KEYWORD:
SOURCE: Engelhard Corp
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