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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549

FORM 10-Q


x
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2003


Commission file number 1-71


BORDEN CHEMICAL, INC.


New Jersey
 
13-0511250
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)

180 East Broad Street, Columbus, OH 43215
(Address of principal executive offices)
 
(614) 225-4000
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report.)


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Number of shares of common stock, $0.01 par value, outstanding as of the close of business on November 10, 2003: 200,895,628
 
 
     
 

BORDEN CHEMICAL, INC.

INDEX



 
PAGE
PART I – FINANCIAL INFORMATION
 
 
 
 
 
 
3
4
5
7
8
9
 
 
23
 
 
36
 
 
36
 
 
 
 
PART II – OTHER INFORMATION
 
 
 
37
 
 
37
 
 
37
 
 
37
 
 
37
 
 

 
     
 
 

PART I
   
 
    
 
  
 
    
 
    
 
  
Item 1. Borden Chemical, Inc. Consolidated Financial Statements
   
 
    
 
  
   
 
    
 
  
   
 
    
 
  
AND COMPREHENSIVE INCOME (UNAUDITED)
   
 
    
 
  
BORDEN CHEMICAL, INC.
   
 
    
 
  
 
    
Three months ended September 30,    
(In thousands, except per share data)
   
2003
   
2002
 
 
    
 
    
 
  
Net sales
 
$
358,281
 
$
327,187
 
Cost of goods sold
   
283,891
   
257,333
 
   
 
 
 
    
 
    
 
  
Gross margin
   
74,390
   
69,854
 
   
 
 
 
    
 
    
 
  
Distribution expense
   
16,000
   
15,989
 
Marketing expense
   
10,515
   
10,453
 
General & administrative expense
   
23,817
   
22,389
 
Business realignment (income) expense and impairments
   
(8,806
)
 
2,082
 
Other operating (income) expense
   
(1,559
)
 
1,272
 
   
 
 
 
    
 
    
 
  
Operating income
   
34,423
   
17,669
 
   
 
 
 
    
 
    
 
  
Interest expense
   
11,275
   
11,955
 
Affiliated interest expense
   
133
   
435
 
Other non-operating income
   
(513
)
 
(1,467
)
   
 
 
 
    
 
    
 
  
Income before income tax
   
23,528
   
6,746
 
Income tax expense
   
12,475
   
3,512
 
   
 
 
 
    
 
    
 
  
Net income
 
$
11,053
 
$
3,234
 
   
 
 
 
    
 
    
 
  
Comprehensive Income
 
$
11,456
 
$
(10,708
)
   
 
 
 
    
 
    
 
  
Basic and Diluted Per Share Data
   
 
    
 
  
 
    
 
    
 
  
Net income
 
$
0.06
 
$
0.02
 
   
 
 
 
    
 
    
 
  
 
    
 
    
 
  
Average number of common shares outstanding
   
 
    
 
  
during the period - basic and dilutive
   
200,896
   
201,004
 
 
    
 
    
 
  
See Notes to Consolidated Financial Statements
   
 
    
 
  
 
 
 
  3  
 
 

 
 
AND COMPREHENSIVE INCOME (UNAUDITED)
 
 
BORDEN CHEMICAL, INC.
 
 
 
  
Nine months ended September 30,
(In thousands, except per share data)
 
2003
2002
 
    
 
    
 
  
Net sales
 
$
1,078,332
 
$
932,845
 
Cost of goods sold
   
865,359
   
716,194
 
   
 
 
 
    
 
    
 
  
Gross margin
   
212,973
   
216,651
 
   
 
 
 
    
 
    
 
  
Distribution expense
   
49,385
   
46,105
 
Marketing expense
   
31,674
   
31,995
 
General & administrative expense
   
75,606
   
71,869
 
Business realignment (income) expense and impairments
   
(7,385
)
 
12,142
 
Other operating expense
   
2,107
   
9,793
 
   
 
 
 
    
 
    
 
  
Operating income
   
61,586
   
44,747
 
   
 
 
 
    
 
    
 
  
Interest expense
   
34,114
   
35,922
 
Affiliated interest expense, net of affiliated interest
   
 
    
 
  
income of $ 0 and $455, respectively
   
456
   
1,051
 
Other non-operating expense (income)
   
489
   
(5,327
)
   
 
 
 
    
 
    
 
  
Income before income tax and cumulative effect
   
 
    
 
  
of change in accounting principle
   
26,527
   
13,101
 
Income tax (benefit) expense
   
(1,271
)
 
9,056
 
   
 
 
 
    
 
    
 
  
Income before cumulative effect of change in accounting
   
 
    
 
  
principle
   
27,798
   
4,045
 
 
    
 
    
 
  
Cumulative effect of change in accounting principle
   
-
   
(29,825
)
   
 
 
 
    
 
    
 
  
Net income (loss)
 
$
27,798
 
$
(25,780
)
   
 
 
 
    
 
    
 
  
Comprehensive Income (Loss)
 
$
51,214
 
$
(44,572
)
   
 
 
 
    
 
    
 
  
Basic and Diluted Per Share Data
   
 
    
 
  
 
    
 
    
 
  
Income before cumulative effect of change
   
 
    
 
  
in accounting principle
 
$
0.14
 
$
0.02
 
 
    
 
    
 
  
Cumulative effect of change in accounting principle
   
-
   
(0.15
)
   
 
 
 
    
 
    
 
  
Net income (loss)
 
$
0.14
 
$
(0.13
)
   
 
 
 
    
 
    
 
  
Average number of common shares outstanding
   
 
    
 
  
during the period - basic and dilutive
   
200,898
   
200,307
 

See Notes to Consolidated Financial Statements
 
 
  4  
 
 

 
 
 
 
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
 
BORDEN CHEMICAL, INC.
 
 
 
 
 
(In thousands)
 
 
 
September 30,
December 31,
ASSETS
2003
2002