Engelhard Corp HTML 8K 2nd Qtr 2005
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
 
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 26, 2005
 
 
 
ENGELHARD CORPORATION
(Exact name of registrant as specified in its charter)
 
Delaware
1-8142
22-1586002
(State or other jurisdiction of incorporation)
 
(Commission File Number)
(I.R.S. Employer Identification No.)
101 Wood Avenue, Iselin, New Jersey
08830
(Address of principal executive offices)
(Zip Code)

 
Registrant’s telephone number, including area code (732) 205-5000

 

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
[   ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[   ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[   ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[   ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

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Item 2.02 Results of Operations and Financial Condition.
 
On July 26, 2005, Engelhard Corporation (the “Company”) issued a press release announcing its earnings for its second quarter of fiscal year 2005. A copy of the release is furnished herewith as Exhibit 99.1.
 
The information furnished under this Item 2.02, including Exhibit 99.1, shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and will not be incorporated by reference into any registration statement filed under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
 

2


SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
     
ENGELHARD CORPORATION
 
     
(Registrant)
 
         
         
         
Date:
 July 26, 2005
       /s/ Michael A. Sperduto  
     
Michael A. Sperduto
 
     
Vice President and
 
     
Chief Financial Officer
 
 

 
3


EXHIBIT INDEX
 
Exhibit No.
Description
99.1
Press Release, dated July 26, 2005 relating to Engelhard Corporation’s earnings release for the second quarter of 2005.
 

 
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EXHIBIT (99.1)
 
Engelhard Logo
 
                  News
Contact
Ted Lowen
(Media)
732-205-6360
 
Gavin Bell
(Investor Relations)
732-205-6313
Ref. #C1418
 
Engelhard Corporation
101 Wood Avenue
P.O. Box 770
Iselin, NJ 08830-0770

For immediate release

ENGELHARD REPORTS SECOND-QUARTER RESULTS


ISELIN, NJ, July 26, 2005 - Engelhard Corporation (NYSE: EC) today reported net earnings for the second quarter ended June 30 of $58 million, or 47 cents per share, which included a special charge of five cents per share resulting from the decision to discontinue manufacturing operations at one facility. The Company reported net earnings of $68 million, or 54 cents per share, for the same period in 2004, which included a benefit of six cents per share resulting from an agreement with the U.S. Internal Revenue Service with respect to the Company’s tax returns for 1998 through 2000.

Second-quarter revenues were $1.1 billion, approximately even with the prior-year period.

“Improved pricing coupled with our hallmark focus on productivity delivered growth in our technology segments,” said Barry W. Perry, chairman and chief executive officer. “A balanced approach of driving growth and managing the business mix across our enterprise enabled us to deliver ongoing earnings results in line with expectations.”

Second-Quarter Operating Results
 
Operating earnings from Environmental Technologies were $28 million including the $10.4 million special charge. Excluding the special charge operating earnings increased 17% in the quarter to $38 million. Revenues rose 12% to $251 million. The increase in earnings resulted from growth in emission-control technologies for certain mobile-source markets and improved productivity, offset by unfavorable volume and mix in light-duty vehicles.

Revenues from Process Technologies increased 8% to $173 million. Operating earnings grew 1% to $23 million, driven primarily by continued demand for technologies for petroleum refining.

Revenues from Appearance and Performance Technologies increased 1% to $187 million. Operating earnings of $20 million were down 14% versus the prior year as the positive impact of recent acquisitions in cosmetics and personal care was more than offset by the continuing negative impact of higher natural gas prices and general labor strikes affecting the paper industry in Finland and Canada.

Operating earnings from Materials Services were $6 million, an increase of $3 million versus a year ago. Revenues were $480 million, compared with $525 million in last year’s second quarter.

Earnings from equity investments were $7 million in the second quarter as the company’s Asian joint ventures continued to deliver solid performance.
 
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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 30 of Engelhard’s 2004 Form 10-K, dated March 11, 2005.



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ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Thousands, except per-share data)
(Unaudited)
 

   
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
   
2005
 
2004
 
2005
 
2004
 
Net sales
 
$
1,106,025
 
$
1,107,775
 
$
2,132,695
 
$
2,147,807
 
Cost of sales
   
920,176
   
938,034
   
1,778,352
   
1,818,710
 
    Gross profit
   
185,849
   
169,741
   
354,343
   
329,097
 
Selling, administrative and other expenses
   
105,702
   
96,594
   
204,770
   
191,443
 
Special charge
   
10,362
   
   
10,362
   
 
    Operating earnings
   
69,785
   
73,147
   
139,211
   
137,654
 
Equity in earnings of affiliates
   
7,432
   
8,364
   
15,542
   
13,303
 
Gain on investment
   
61
   
   
180
   
 
Interest expense, net
   
(6,546
)
 
(4,563
)
 
(11,326
)
 
(9,469
)
    Earnings before income taxes
   
70,732
   
76,948
   
143,607
   
141,488
 
Income tax expense
   
12,835
   
8,953
   
27,757
   
23,152
 
    Net earnings
 
$
57,897
 
$
67,995
 
$
115,850
 
$
118,336
 
                           
Earnings per share - basic 
 
$
0.48
 
$
0.55
 
$
0.96
 
$
0.96
 
                           
Earnings per share - diluted
 
$
0.47
 
$
0.54
 
$
0.94
 
$
0.94
 
Cash dividends paid per share
 
$
0.12
 
$
0.11
 
$
0.24
 
$
0.22
 
Average number of shares outstanding - basic
   
120,191
   
123,650
   
120,943
   
123,904
 
Average number of shares outstanding - diluted
   
122,276
   
126,040
   
123,064
   
126,202
 
Actual number of shares outstanding at end of period
   
120,112
   
124,289
   
120,112
   
124,289
 


 

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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
June 30,
 
Six Months Ended
June 30,
 
Pro forma information (in thousands, except per-share data)
 
2005
 
2004
 
2005
 
2004
 
Net earnings - as reported
 
$
57,897
 
$
67,995
 
$
115,850
 
$
118,336
 
Net earnings - pro forma
   
57,102
   
67,193
   
112,777
   
114,714
 
Diluted earnings per share - as reported
   
0.47
   
0.54
   
0.94
   
0.94
 
Diluted earnings per share - pro forma
   
0.47
   
0.53
   
0.92
   
0.91
 


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ENGELHARD CORPORATION
BUSINESS SEGMENT INFORMATION
(Thousands)
(Unaudited)
 
   
Three Months Ended
June 30,
     
Six Months Ended
June 30,
     
   
2005
 
2004
 
Change
 
2005
 
2004
 
Change
 
Net Sales
                                     
Environmental Technologies
 
$
250,534
 
$
224,209
 
 12
%
 
$
491,895
 
$
462,646
 
 6
%
 
Process Technologies
   
172,559
   
159,214
 
 8
%
 
 
320,540
   
291,434
 
 10
%
 
Appearance and Performance Technologies
   
186,594
   
185,238
 
1
%
 
 
360,469
   
351,531
 
 3
%
 
Technology segments
   
609,687
   
568,661
 
7
%
 
 
1,172,904
   
1,105,611
 
 6
%
 
Materials Services
   
480,202
   
525,153
   
-9
%
 
 
930,683
   
1,016,252
 
 -8
%
 
All Other
   
16,136
   
13,961
   
16
%
 
 
29,108
   
25,944
 
12
%
 
Total net sales
 
$
1,106,025
 
$
1,107,775
     
$
2,132,695
 
$
2,147,807
 
 -1
%
 
                                 
 
Operating Earnings
                                 
Environmental Technologies
 
$
28,034
(a)
$
32,755
 
 -14
%
 
$
64,534
(a)
$
69,744
 
 -7
%
 
Process Technologies
   
23,306
   
23,066
 
 1
%
 
 
42,363
   
39,362
 
 8
%
 
Appearance and Performance Technologies 
   
20,484
   
23,806
 
-14
%
 
 
38,548
   
38,857
 
 -1
%
 
Technology segments
   
71,824
   
79,627
 
-10
%
 
 
145,445
   
147,963
 
-2 
%
 
Materials Services
   
5,891
   
2,754
 
 114
%
 
 
10,284
   
6,122
 
 68
%
 
All Other
   
(7,930
)
 
(9,234
)
 -14
%
 
 
(16,518
)
 
(16,431
)
 1
%
 
Total operating earnings
   
69,785
   
73,147
 
 -5
%
 
 
139,211
   
137,654
 
 1
%
 
Equity in earnings of affiliates
   
7,432
   
8,364
 
 -11
%
 
 
15,542
   
13,303
 
 17
%
 
Gain on Investment
   
61
   
   
 
 
180
   
     
Interest expense, net
   
(6,546
)
 
(4,563
)
 43
%
 
 
(11,326
)
 
(9,469
)
 20
%
 
Earnings before income taxes
   
70,732
   
76,948
 
-8
%
 
 
143,607
   
141,488
 
 1
%
 
Income tax expense
   
12,835
   
8,953
 
 43
%
 
 
27,757
   
23,152
 
 20
%
 
Net earnings
 
$
57,897
 
$
67,995
 
-15
%
 
$
115,850
 
$
118,336
 
 -2
%
 

 

 
(a) Includes special charges of $10.4MM related to the Carteret manufacturing facility closure.
 

9



ENGELHARD CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Thousands)
(Unaudited)
 

 
   
June 30,
2005
 
December 31,
2004
 
Cash
 
$
28,261
 
$
126,229
 
Receivables, net
   
480,549
   
410,382
 
Committed metal positions
   
488,496
   
457,570
 
Inventories
   
490,761
   
459,637
 
Other current assets
   
122,309
   
135,631
 
Total current assets
   
1,610,376
   
1,589,449
 
Investments
   
197,346
   
179,160
 
Property, plant and equipment, net
   
896,760
   
911,029
 
Goodwill
   
384,506
   
330,798
 
Other intangible and noncurrent assets
   
154,987
   
168,156
 
Total assets
 
$
3,243,975
 
$
3,178,592
 
Short-term borrowings
 
$
38,490
 
$
12,025
 
Accounts payable
   
337,594
   
375,890
 
Hedged metal obligations
   
401,873
   
292,880
 
Other current liabilities
   
267,198
   
248,872
 
Total current liabilities
   
1,045,155
   
929,667
 
Long-term debt
   
496,025
   
513,680
 
Other noncurrent liabilities
   
305,805
   
320,933
 
Shareholders’ equity
   
1,396,990
   
1,414,312
 
Total liabilities and shareholders’ equity
 
$
3,243,975
 
$
3,178,592
 


10


ENGELHARD CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands)
(Unaudited)
 

 
   
Six Months Ended
June 30,
 
   
2005
 
2004
 
Cash flows from operating activities
             
    Net earnings
 
$
115,850
 
$
118,336
 
    Adjustments to reconcile net earnings to net cash provided by operating activities:
             
        Depreciation and depletion
   
62,914
   
62,113
 
        Amortization of intangible assets
   
2,416
   
1,845
 
        Equity results, net of dividends
   
(6,659
)
 
(3,356
)
        Net change in assets and liabilities:
             
            Materials Services related
   
3,815
   
21,173
 
            All other
   
(38,387
)
 
(30,502
)
                Net cash provided by operating activities
   
139,949
   
169,609
 
               
Cash flows from investing activities
             
    Capital expenditures
   
(53,599
)
 
(44,591
)
    Proceeds from investments
   
   
1,988
 
    Acquisitions and other investments
   
(93,828
)
 
(6,240
)
                Net cash used in investing activities
   
(147,427
)
 
(48,843
)
               
Cash flows from financing activities
             
    Increase (decrease) in short-term borrowings
   
5,948
   
(58,574
)
    Proceeds from issuance of long-term debt
   
66
   
51,136
 
    Purchase of treasury stock
   
(82,895
)
 
(51,123
)
    Cash from exercise of stock options
   
6,275
   
19,200
 
    Dividends paid
   
(29,056
)
 
(27,335
)
                Net cash used in financing activities
   
(99,662
)
 
(66,696
)
               
Effect of exchange rate changes on cash
   
9,172
   
(1,361
)
                Net (decrease) increase in cash
   
(97,968
)
 
52,709
 
Cash at beginning of year
   
126,229
   
87,889
 
                Cash at end of period
 
$
28,261
 
$
140,598
 



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