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 June 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 1-5112
ETHYL CORPORATION
(Exact name of registrant as specified in its charter)
| VIRGINIA |
54-0118820 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 330 SOUTH FOURTH STREET |
||
| RICHMOND, VIRGINIA |
23218-2189 | |
| (Address of principal executive offices) |
(Zip Code) | |
Registrant’s telephone number, including area code—(804) 788-5000
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 check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes x No ¨
Number of shares of common stock, $1 par value, outstanding as of July 31, 2003: 16,750,009.
ETHYL CORPORATION
I N D E X
| Page Number | ||
| PART I. FINANCIAL INFORMATION |
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| ITEM 1. Financial Statements |
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| Consolidated Statements of Income—Three Months and Six Months Ended June 30, 2003 and 2002 |
3 | |
| Consolidated Balance Sheets – June 30, 2003 and December 31, 2002 |
4 | |
| Condensed Consolidated Statements of Cash Flows—Six Months Ended June 30, 2003 and 2002 |
5 | |
| 6-22 | ||
| ITEM 2. Management’s Discussion and Analysis of Results of Operations and Financial Condition |
23-36 | |
| ITEM 3. Quantitative and Qualitative Disclosures About Market Risk |
37 | |
| 37-38 | ||
| PART II. OTHER INFORMATION |
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| 39 | ||
| 39 | ||
| 39-40 | ||
| 41 | ||
2
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
ETHYL CORPORATION AND SUBSIDIARIES
C ONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share amounts)
(Unaudited)
| Three Months Ended June 30 |
Six Months Ended June 30 |
||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
||||||||||||
| Net sales |
$ | 180,574 | $ | 170,943 | $ | 354,040 | $ | 317,119 | |||||||
| Cost of goods sold |
|
136,576 |
|
135,665 |
|
|
273,982 |
|
|
251,783 |
| ||||
| Gross profit |
43,998 | 35,278 | 80,058 | 65,336 | |||||||||||
| TEL marketing agreements services |
7,931 | 4,446 | 10,932 | 10,162 | |||||||||||
| Selling, general, and administrative expenses |
21,904 | 18,978 | 42,492 | 35,108 | |||||||||||
| Research, development, and testing expenses |
15,021 | 13,160 | 28,703 | 25,166 | |||||||||||
| Operating profit |
15,004 | 7,586 | 19,795 | 15,224 | |||||||||||
| Interest and financing expenses |
6,402 | 6,562 | 11,204 | 13,600 | |||||||||||
| Other income (expense), net |
56 | (3,734 | ) | (142 | ) | (4,420 | ) | ||||||||
| Income (loss) from continuing operations before income taxes |
8,658 | (2,710 | ) | 8,449 | (2,796 | ) | |||||||||
| Income tax expense |
2,913 | 374 | 2,841 | 278 | |||||||||||
| Income (loss) from continuing operations |
5,745 | (3,084 | ) | 5,608 | (3,074 | ) | |||||||||
| Discontinued operations |
|||||||||||||||
| Gain on disposal of business (net of tax of $8,391) |
— | — | 14,805 | — | |||||||||||
| Income from operations of discontinued business (net of tax of $365 for second quarter and $877 for six months) |
— | 622 | — | 1,495 | |||||||||||
| Income (loss) before cumulative effect of accounting changes |
5,745 | (2,462 | ) | 20,413 | (1,579 | ) | |||||||||
| Cumulative effect of accounting changes (net of tax of $925 in 2003 and $615 in 2002) |
— | — | 1,624 | (2,505 | ) | ||||||||||
| Net income (loss) |
$ | 5,745 | $ | (2,462 | ) | $ | 22,037 | $ | (4,084 | ) | |||||
| Basic earnings (loss) per share: |
|||||||||||||||
| Earnings (loss) from continuing operations |
$ | 0.34 | $ | (0.18 | ) | $ | 0.33 | $ | (0.18 | ) | |||||
| Discontinued operations (net of tax) |
— | 0.04 | 0.89 | 0.09 | |||||||||||
| Cumulative effect of accounting changes (net of tax) |
— | — | 0.10 | (0.15 | ) | ||||||||||
| Basic earnings (loss) per share |
$ | 0.34 | $ | (0.14 | ) | $ | 1.32 | $ | (0.24 | ) | |||||
| Diluted earnings (loss) per share: |
|||||||||||||||
| Earnings (loss) from continuing operations |
$ | 0.34 | $ | (0.18 | ) | $ | 0.33 | $ | (0.18 | ) | |||||
| Discontinued operations (net of tax) |
— | 0.04 | 0.88 | 0.09 | |||||||||||
| Cumulative effect of accounting changes (net of tax) |
— | — | 0.10 | (0.15 | ) | ||||||||||
| Diluted earnings (loss) per share |
$ | 0.34 | $ | (0.14 | ) | $ | 1.31 | $ | (0.24 | ) | |||||
| Shares used to compute basic earnings (loss) per share |
16,724 | 16,691 | 16,706 | 16,691 | |||||||||||
| Shares used to compute diluted earnings (loss) per share |
16,969 | 16,691 | 16,829 | 16,691 | |||||||||||
See accompanying notes to financial statements.
3
ETHYL CORPORATION AND SUBSIDIARIES
(In thousands)
| June 30 | December 31 | |||||||
| 2003 |
2002 |
|||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 26,856 | $ | 15,478 | ||||
| Restricted cash |
408 | 683 | ||||||
| Trade and other accounts receivable, less allowance for doubtful accounts ($2,058—2003; $911—2002) |
126,170 | 124,430 | ||||||
| Receivable—TEL marketing agreements services |
7,591 | 7,418 | ||||||
| Inventories: |
||||||||
| Finished goods and work-in-process |
102,093 | 87,542 | ||||||
| Raw materials |
12,784 | 8,604 | ||||||
| Stores, supplies and other |
8,303 | 7,900 | ||||||
| 123,180 | 104,046 | |||||||
| Prepaid expenses |
7,551 | 2,232 | ||||||
| Deferred income taxes |
12,044 | 14,339 | ||||||
| Assets of discontinued operations |
— | 4,323 | ||||||
| Total current assets |
303,800 | 272,949 | ||||||
| Property, plant and equipment, at cost |
744,685 | 746,237 | ||||||
| Less accumulated depreciation and amortization |
564,939 | 547,518 | ||||||
| Net property, plant and equipment |
179,746 | 198,719 | ||||||
| Prepaid pension cost |
24,755 | 24,995 | ||||||
| Deferred income taxes |
9,541 | 9,494 | ||||||
| Other assets and deferred charges |
82,708 | 80,756 | ||||||
| Intangibles, net of amortization |
66,777 | 69,338 | ||||||
| Total assets |
$ | 667,327 | $ | 656,251 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 53,429 | $ | 44,130 | ||||
| Accrued expenses |
39,739 | 38,778 | ||||||
| Long-term debt, current portion |
9,517 | 40,537 | ||||||
| Income taxes payable |
13,147 | 6,288 | ||||||
| Total current liabilities |
115,832 | 129,733 | ||||||
| Long-term debt |
246,276 | 249,530 | ||||||
| Other noncurrent liabilities |
125,107 | 123,910 | ||||||
| Commitments and contingencies (Note 4) |
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| Shareholders’ equity |
||||||||
| Common stock ($1 par value) |
||||||||
| Issued—16,734,009 in 2003 and 16,689,009 in 2002 |
16,734 | 16,689 | ||||||
| Additional paid-in capital |
66,916 | 66,766 | ||||||
| Accumulated other comprehensive loss |
(24,492 | ) | (29,294 | ) | ||||
| Retained earnings |
120,954 | 98,917 | ||||||
| 180,112 | 153,078 | |||||||
| Total liabilities and shareholders’ equity |
$ | 667,327 | $ | 656,251 | ||||
See accompanying notes to financial statements.
4
ETHYL CORPORATION AND SUBSIDIARIES
C ONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
| Six Months Ended June 30 |
||||||||
| 2003 |
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