UNITED STATES
(Mark One)
| [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
OR
| [ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE | |
| SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from________to________
Commission file number 1-13948
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
| Delaware (State or other jurisdiction of incorporation or organization) |
62-1612879 (I.R.S. Employer Identification No.) |
100 North Point Center East
Suite 600
Alpharetta, Georgia
30022-8246
(Address of principal executive offices)
(Zip Code)
1-800-514-0186
(Registrant’s telephone number, including area code)
No change
(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 [ ].
Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
Yes [X] . No [ ].
As of October 31, 2003, 14,769,968 shares of the Corporation’s common stock, par value $.10 per share, together with preferred stock purchase rights associated therewith, were outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
U.S. $ in millions, except per share amounts
(Unaudited)
| For the three months | For the nine months | |||||||||||||||||
| Ended September 30, | ended September 30, | |||||||||||||||||
| 2003 | 2002 | 2003 | 2002 | |||||||||||||||
Net Sales |
$ | 142.1 | $ | 132.7 | $ | 419.5 | $ | 380.6 | ||||||||||
Cost of products sold |
114.8 | 105.4 | 341.9 | 298.9 | ||||||||||||||
Gross Profit |
27.3 | 27.3 | 77.6 | 81.7 | ||||||||||||||
Selling expense |
5.5 | 4.9 | 16.6 | 14.8 | ||||||||||||||
Research expense |
1.7 | 2.0 | 5.9 | 5.5 | ||||||||||||||
General expense |
4.9 | 5.1 | 17.0 | 16.0 | ||||||||||||||
Operating Profit |
15.2 | 15.3 | 38.1 | 45.4 | ||||||||||||||
Interest expense |
0.3 | 0.8 | 1.6 | 2.9 | ||||||||||||||
Other income (expense), net |
0.5 | 1.0 | (0.2 | ) | 1.9 | |||||||||||||
Income Before Income Taxes and Minority Interest |
15.4 | 15.5 | 36.3 | 44.4 | ||||||||||||||
Provision for income taxes |
3.5 | 5.3 | 8.5 | 15.2 | ||||||||||||||
Income Before Minority Interest |
11.9 | 10.2 | 27.8 | 29.2 | ||||||||||||||
Minority interest in earnings of subsidiaries |
1.4 | 1.5 | 3.7 | 3.6 | ||||||||||||||
Net Income |
$ | 10.5 | $ | 8.7 | $ | 24.1 | $ | 25.6 | ||||||||||
Net Income per Common Share: |
||||||||||||||||||
Basic |
$ | .71 | $ | .58 | $ | 1.63 | $ | 1.72 | ||||||||||
Diluted |
$ | .70 | $ | .57 | $ | 1.60 | $ | 1.68 | ||||||||||
Cash Dividends Declared per Common Share |
$ | .15 | $ | .15 | $ | .45 | $ | .45 | ||||||||||
See Notes to Unaudited Consolidated Financial Statements
2
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
U.S. $ in millions, except per share amounts
(Unaudited)
| September 30, | December 31, | |||||||||
| 2003 | 2002 | |||||||||
ASSETS |
||||||||||
Current Assets |
||||||||||
Cash and cash equivalents |
$ | 7.5 | $ | 15.3 | ||||||
Accounts receivable |
84.5 | 69.4 | ||||||||
Inventories |
78.0 | 74.1 | ||||||||
Current income tax refunds receivable |
0.5 | — | ||||||||
Deferred income tax benefits |
4.8 | 3.7 | ||||||||
Prepaid expenses |
4.5 | 3.8 | ||||||||
Total Current Assets |
179.8 | 166.3 | ||||||||
Gross Property, at cost |
654.2 | 562.9 | ||||||||
Less accumulated depreciation |
284.9 | 255.6 | ||||||||
Net Property |
369.3 | 307.3 | ||||||||
Noncurrent Deferred Income Tax Benefits |
5.1 | 2.6 | ||||||||
Deferred Charges and Other Assets |
18.8 | 15.0 | ||||||||
Total Assets |
$ | 573.0 | $ | 491.2 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||||
Current Liabilities |
||||||||||
Current portion of long-term debt |
$ | 10.9 | $ | 4.0 | ||||||
Other short-term debt |
14.9 | 5.9 | ||||||||
Accounts payable |
53.9 | 45.9 | ||||||||
Accrued expenses |
70.1 | 55.4 | ||||||||
Income taxes payable |
— | 1.2 | ||||||||
Current deferred revenue |
5.3 | 5.6 | ||||||||
Total Current Liabilities |
155.1 | 118.0 | ||||||||
Long-Term Debt |
54.8 | 37.4 | ||||||||
Noncurrent Deferred Income Tax Liabilities |
23.8 | 17.0 | ||||||||
Noncurrent Deferred Revenue |
44.2 | 48.0 | ||||||||
Noncurrent Pension and Other Postretirement Benefits |
42.8 | 47.3 | ||||||||
Other Noncurrent Liabilities |
15.3 | 12.6 | ||||||||
Minority Interest |
7.9 | 13.4 | ||||||||
Contingencies (See Notes 5 and 6) |
||||||||||
Stockholders’ Equity |
||||||||||
Preferred Stock -$.10 par value - 10,000,000 shares authorized, none issued |
— | — | ||||||||
Common Stock -$.10 par value - 100,000,000 shares authorized,
16,078,733 shares issued at both September 30, 2003 and December 31, 2002
(14,769,317 and 14,947,318 shares outstanding at September 30, 2003 and
December 31, 2002, respectively) |
l.6 | 1.6 | ||||||||
Additional paid-in capital |
61.3 | 61.1 | ||||||||
Common stock in treasury, at cost – 1,309,416 and 1,131,415 shares at September 30, 2003
and December 31, 2002, respectively |
(22.5 | ) | (18.2 | ) | ||||||
Retained earnings |
232.0 | 214.6 | ||||||||
Unearned compensation on restricted stock |
(0.8 | ) | (0.5 | ) | ||||||
Accumulated other comprehensive loss, net of tax |
(42.5 | ) | (61.1 | ) | ||||||
Total Stockholders’ Equity |
229.1 | 197.5 | ||||||||
Total Liabilities and Stockholders’ Equity |
$ | 573.0 | $ | 491.2 | ||||||
See Notes to Unaudited Consolidated Financial Statements
3
SCHWEITZER-MAUDUIT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
U.S. $ in millions, except per share amounts
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||||||
| Common Stock Issued | Additional | Treasury Stock | Other | |||||||||||||||||||||||||||||||||
| Paid-In | Retained | Unearned | Comprehensive | |||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Earnings | Compensation | Income (Loss) | Total | ||||||||||||||||||||||||||||
Balance, December 31, 2001 |
16,078,733 | $ | 1.6 | $ | 60.6 | 1,242,749 | $ | (19.8 | ) | $ | 190.9 | $ | (0.5 | ) | $ | (53.3 | ) | $ | 179.5 | |||||||||||||||||
Net income for the nine months
ended September 30, 2002 |
25.6 | 25.6 | ||||||||||||||||||||||||||||||||||
Change in unrealized fair value
of derivative instruments |
0.5 | 0.5 | ||||||||||||||||||||||||||||||||||
Adjustments to unrealized foreign
currency translation |
(5.8 | ) | (5.8 | ) | ||||||||||||||||||||||||||||||||
Comprehensive income |
20.3 | |||||||||||||||||||||||||||||||||||
Dividends declared ($0.45 per share) |
(6.7 | ) | (6.7 | ) | ||||||||||||||||||||||||||||||||
Restricted stock issuances |
(10,000 | ) | 0.2 | (0.2 | ) | — | ||||||||||||||||||||||||||||||
Amortization of unearned compensation |
0.2 | 0.2 | ||||||||||||||||||||||||||||||||||
Stock issued to directors as compensation |
(1,947 | ) | — | — | ||||||||||||||||||||||||||||||||
Issuance of shares for options exercised |
— | — | 0.3 | (91,600 | ) | 1.5 | — | — | — | 1.8 | ||||||||||||||||||||||||||
Balance, September 30, 2002 |
16,078,733 | 1.6 | 60.9 | 1,139,202 | (18.1 | ) | 209.8 | (0.5 | ) | (58.6 | ) | 195.1 | ||||||||||||||||||||||||
Net income for the three months
ended December 31, 2002 |
7.0 | 7.0 | ||||||||||||||||||||||||||||||||||
Adjustments to minimum
pension liability |
(11.8 | ) | (11.8 | ) | ||||||||||||||||||||||||||||||||
Change in unrealized fair value
of derivative instruments |
0.1 | 0.1 | ||||||||||||||||||||||||||||||||||
Adjustments to unrealized foreign
currency translation |
9.2 | 9.2 | ||||||||||||||||||||||||||||||||||
Comprehensive income |
4.5 | |||||||||||||||||||||||||||||||||||
Dividends declared ($0.15 per share) |
(2.2 | ) | (2.2 | ) | ||||||||||||||||||||||||||||||||
Purchases of treasury stock |
21,900 | (0.5 | ) | (0.5 | ) | |||||||||||||||||||||||||||||||
Stock issued to directors as compensation |
(783 | ) | — | — | ||||||||||||||||||||||||||||||||
Tax benefit of options exercised |
0.2 | 0.2 | ||||||||||||||||||||||||||||||||||
Issuance of shares for options exercised |
— | — | — | (28,904 | ) | 0.4 | — | — | — | 0.4 | ||||||||||||||||||||||||||
Balance, December 31, 2002 |
16,078,733 | 1.6 | 61.1 | 1,131,415 | (18.2 | ) | 214.6 | (0.5 | ) | (61.1 | ) | 197.5 | ||||||||||||||||||||||||
Net income for the nine months
ended September 30, 2003 |
24.1 | 24.1 | ||||||||||||||||||||||||||||||||||
Adjustments to unrealized foreign
currency translation |
18.6 | 18.6 | ||||||||||||||||||||||||||||||||||