NEWMARKET CORP - FORM 8-K - EX-99.1

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8-K - FORM 8-K - NEWMARKET CORP	d565046d8k.htm

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following unaudited pro forma condensed consolidated financial statements for NewMarket Corporation have been prepared to reflect the sale by Foundry Park I, LLC (Foundry Park) of certain real property in July 2013, as disclosed in Item 2.01 of this Form 8-K. The results of operation and financial position of Foundry Park, which comprised our real estate development segment, have been included in certain of our prior filings with the Securities and Exchange Commission (SEC).

The following pro forma condensed consolidated financial statements are based upon the historical consolidated financial statements included in our Form 10-K for the year ended December 31, 2012, filed with the SEC on February 15, 2013, and Form 10-Q for the quarter ended March 31, 2013, filed on April 29, 2013. The unaudited pro forma consolidated statements of income, which have been prepared for the three months ended March 31, 2013 and 2012 and for the years ended December 31, 2012, 2011, and 2010, give effect to the sale as if it had occurred at the beginning of each of the periods presented. The unaudited pro forma consolidated balance sheet has been prepared as of March 31, 2013 and gives effect to the sale as if it had occurred on that date. We prepared the unaudited pro forma adjustments based on the terms of the sale transaction and the financial position and results of operations of the real estate development segment for the periods presented.

The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of actual or future financial position or results of operation that would have occurred or will occur as a result of the sale. These pro forma consolidated financial statements are based upon, and should be read in conjunction with, the historical consolidated financial statements of NewMarket Corporation, including the related notes to the financial statements.

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Balance Sheet

(In thousands, unaudited)


	March 31, 2013
	As Reported			Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	64,013		$	140,056	(a)	$	204,069
Trade and other accounts receivable, net		331,155			0			331,155
Inventories		321,339			0			321,339
Deferred income taxes		7,451			0			7,451
Prepaid expenses and other current assets		34,256			2,500	(a)		36,756

Total current assets		758,214			142,556			900,770


Property, plant, and equipment, at cost		1,078,658			(108,532	)		970,126
Less accumulated depreciation and amortization		718,064			(12,378	)		705,686

Net property, plant, and equipment		360,594			(96,154	) (b)		264,440


Prepaid pension cost		12,800			0			12,800
Deferred income taxes		53,960			1,979	(b)		55,939
Other assets and deferred charges		67,443			(8,085	) (b)		59,358
Intangibles (net of amortization) and goodwill		28,378			0			28,378

Total assets	$	1,281,389		$	40,296		$	1,321,685


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	115,675		$	0		$	115,675
Accrued expenses		65,549			0			65,549
Dividends payable		10,282			0			10,282
Book overdraft		5,149			0			5,149
Long-term debt, current portion		5,193			0			5,193
Income taxes payable		25,294			17,144	(c)		42,438

Total current liabilities		227,142			17,144			244,286


Long-term debt		425,422			0			425,422
Other noncurrent liabilities		210,256			(666	) (b)		209,590

Total liabilities		862,820			16,478			879,298


Shareholders’ equity:
Common stock and paid in capital		0			0			0
Accumulated other comprehensive loss		(127,381	)		3,960	(d)		(123,421	)
Retained earnings		545,950			19,858	(e)		565,808

		418,569			23,818			442,387

Total liabilities and shareholders’ equity	$	1,281,389		$	40,296		$	1,321,685

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income

(In thousands, except per-share amounts, unaudited)


	Three Months Ended March 31, 2013
	As Reported		Adjustments (f)			Pro Forma

Revenue:
Net sales - product	$	559,750	$	0		$	559,750
Rental revenue		2,858		(2,858	)		0

		562,608		(2,858	)		559,750


Costs:
Cost of goods sold - product		391,343		0			391,343
Cost of rental		1,068		(1,068	)		0

		392,411		(1,068	)		391,343


Gross profit		170,197		(1,790	)		168,407

Selling, general, and administrative expenses		40,941		0			40,941
Research, development, and testing expenses		31,021		0			31,021


Operating profit		98,235		(1,790	)		96,445

Interest and financing expenses, net		5,109		(327	)		4,782
Other income, net		747		0			747


Income from continuing operations before income tax expense		93,873		(1,463	)		92,410
Income tax expense		26,038		(569	)		25,469


Income from continuing operations	$	67,835	$	(894	)	$	66,941


Earnings per share - basic and diluted	$	5.07				$	5.00

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income

(In thousands, except per-share amounts, unaudited)


	Three Months Ended March 31, 2012
	As Reported		Adjustments (f)			Pro Forma

Revenue:
Net sales - product	$	559,821	$	0		$	559,821
Rental revenue		2,858		(2,858	)		0

		562,679		(2,858	)		559,821


Costs:
Cost of goods sold - product		392,075		0			392,075
Cost of rental		1,068		(1,068	)		0

		393,143		(1,068	)		392,075


Gross profit		169,536		(1,790	)		167,746

Selling, general, and administrative expenses		36,908		(1	)		36,907
Research, development, and testing expenses		27,895		0			27,895


Operating profit		104,733		(1,789	)		102,944

Interest and financing expenses, net		4,482		(1,135	)		3,347
Loss on early extinguishment of debt		3,221		0			3,221
Other income, net		1,773		0			1,773


Income from continuing operations before income tax expense		98,803		(654	)		98,149
Income tax expense		32,256		(254	)		32,002


Income from continuing operations	$	66,547	$	(400	)	$	66,147


Earnings per share - basic and diluted	$	4.96				$	4.93

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income

(In thousands, except per-share amounts, unaudited)


	Year Ended December 31, 2012
	As Reported		Adjustments (f)			Pro Forma

Revenue:
Net sales - product	$	2,211,878	$	0		$	2,211,878
Rental revenue		11,431		(11,431	)		0

		2,223,309		(11,431	)		2,211,878


Costs:
Cost of goods sold - product		1,581,393		0			1,581,393
Cost of rental		4,386		(4,386	)		0

		1,585,779		(4,386	)		1,581,393


Gross profit		637,530		(7,045	)		630,485

Selling, general, and administrative expenses		154,209		(2	)		154,207
Research, development, and testing expenses		117,845		0			117,845


Operating profit		365,476		(7,043	)		358,433

Interest and financing expenses, net		10,815		(2,380	)		8,435
Loss on early extinguishment of debt		9,932		(840	)		9,092
Other expense, net		3,338		0			3,338


Income from continuing operations before income tax expense		341,391		(3,823	)		337,568
Income tax expense		101,798		(1,502	)		100,296


Income from continuing operations	$	239,593	$	(2,321	)	$	237,272


Earnings per share - basic and diluted	$	17.85				$	17.68

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income

(In thousands, except per-share amounts, unaudited)


	Year Ended December 31, 2011
	As Reported		Adjustments (f)			Pro Forma
Revenue:
Net sales - product	$	2,138,127	$	0		$	2,138,127
Rental revenue		11,431		(11,431	)		0

		2,149,558		(11,431	)		2,138,127


Costs:
Cost of goods sold - product		1,586,145		0			1,586,145
Cost of rental		4,386		(4,386	)		0

		1,590,531		(4,386	)		1,586,145


Gross profit		559,027		(7,045	)		551,982

Selling, general, and administrative expenses		151,602		(3	)		151,599
Research, development, and testing expenses		105,496		0			105,496
Gain on legal settlement, net		38,656		0			38,656

Operating profit		340,585		(7,042	)		333,543

Interest and financing expenses, net		18,820		(4,669	)		14,151
Other expense, net		18,048		0			18,048


Income from continuing operations before income tax expense		303,717		(2,373	)		301,344
Income tax expense		96,810		(923	)		95,887


Income from continuing operations	$	206,907	$	(1,450	)	$	205,457


Basic earnings per share	$	15.10				$	14.99


Diluted earnings per share	$	15.09				$	14.98

NewMarket Corporation and Subsidiaries

Pro Forma Condensed Consolidated Statement of Income

(In thousands, except per-share amounts, unaudited)


	Year Ended December 31, 2010
	As Reported		Adjustments (f)			Pro Forma
Revenue:
Net sales - product	$	1,786,076	$	0		$	1,786,076
Rental revenue		11,316		(11,316	)		0

		1,797,392		(11,316	)		1,786,076


Costs:
Cost of goods sold - product		1,277,505		0			1,277,505
Cost of rental		4,428		(4,428	)		0

		1,281,933		(4,428	)		1,277,505


Gross profit		515,459		(6,888	)		508,571

Selling, general, and administrative expenses		136,967		(3	)		136,964
Research, development, and testing expenses		91,188		0			91,188


Operating profit		287,304		(6,885	)		280,419

Interest and financing expenses, net		17,261		(4,593	)		12,668
Other expense, net		10,047		0			10,047


Income from continuing operations before income tax expense		259,996		(2,292	)		257,704
Income tax expense		82,871		(914	)		81,957


Income from continuing operations	$	177,125	$	(1,378	)	$	175,747


Basic earnings per share	$	12.12				$	12.02


Diluted earnings per share	$	12.09				$	12.00

Notes:

To record cash proceeds from the sale of certain real property (the sale) owned by Foundry Park I (Foundry Park), net of legal fees, broker’s commissions, and other closing costs totaling $1.0 million. Pursuant to the terms of the Purchase and Sale Agreement, $2.5 million of the cash proceeds will be held in escrow for 12 months from the closing date and are reflected in “Prepaid expenses and other current assets.”

b.	To eliminate the net book value of the property, plant, and equipment, as well as to eliminate other assets and liabilities of Foundry Park.

c.	To record estimated taxes payable on the gain on the sale. The effective tax rate on the gain on the sale differs from the statutory tax rate due to differences in the book basis and tax basis of certain assets and liabilities of Foundry Park.

d.	To reclassify into earnings the accumulated unrealized loss, net of tax, related to the construction loan interest rate swap and mortgage loan interest rate swap. Refer to Note 16 of the Notes to Consolidated Financial Statements included in NewMarket Corporation’s 2012 Form 10-K.

e.	To record the estimated gain on the sale as if the sale had occurred on March 31, 2013.

f.	To eliminate the historical revenue and expenses for Foundry Park, as if the sale had occurred at the beginning of each of the periods presented.

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