International Specialty Holdings Announces Second Quarter 2004 Results
03 August 2004 - 10:00PM
PR Newswire (US)
International Specialty Holdings Announces Second Quarter 2004
Results WAYNE, N.J., Aug. 3 /PRNewswire-FirstCall/ -- International
Specialty Holdings Inc. (the "Company"), a wholly-owned subsidiary
of International Specialty Products Inc. ("ISP"), reported today
second quarter 2004 net income of $6.9 million compared with net
income of $16.7 million in the second quarter of 2003. The lower
results for the second quarter of 2004 were attributable to
investment losses partially offset by significantly higher
operating income. Operating income for the second quarter of 2004
was $45.4 million, an increase of 22% compared with $37.1 million
in the second quarter of 2003. The higher operating income includes
improved results in the Company's Specialty Chemicals and Mineral
Products business segments, partially offset by losses in the
Industrial Chemicals segment. Operating income for the Specialty
Chemicals segment improved 23% to $41.6 million compared with $33.7
million last year. The improved results were primarily attributable
to the personal care and performance chemicals product lines,
mainly due to higher unit volumes. Operating income in the second
quarter of 2004 was also favorably impacted by the weaker U.S.
dollar and by the contribution to income from the three specialty
chemical niche acquisitions made during the first quarter of 2004.
The Industrial Chemicals segment recorded an operating loss of $1.8
million in the second quarter of 2004 compared with an operating
loss of $1.4 million in last year's second quarter. The results
were attributable to the adverse impact of the stronger Euro on
European-based manufacturing costs, partially offset by an improved
product mix and manufacturing efficiencies. Operating income for
the Mineral Products business segment was $5.6 million in the
second quarter of 2004 compared with $4.7 million in last year's
second quarter. The 19% improvement from last year's second quarter
was due to higher unit volumes, partially offset by increased
operating expenses. Net sales for the second quarter of 2004 of
$261.7 million represented the highest second quarter sales in the
Company's history and were 14% higher than sales of $229.5 million
in the same period last year. The increase in sales resulted
primarily from higher unit volumes in all business segments and
from the contribution to Specialty Chemicals sales from the three
acquisitions made during the first quarter of 2004. The favorable
impact of the weaker U.S. dollar, primarily in Europe, also
benefited sales. Interest expense for the second quarter of 2004
was $18.7 million compared with $19.1 million in the second quarter
of 2003. Investment losses in the second quarter of 2004 were $13.4
million compared with investment income of $6.0 million in the same
period last year. The investment loss in the second quarter of 2004
includes a $5.5 million other than temporary impairment charge
related to an available-for-sale equity security held in the
Company's investment portfolio. Other expense, net, for the quarter
was $2.8 million compared with other income, net, of $1.3 million
in the second quarter of 2003, with the higher expense due
primarily to unfavorable foreign exchange. FIRST HALF RESULTS For
the first half of 2004, the Company recorded net income of $35.7
million compared with net income of $38.3 million in the first half
of 2003. The improved results for the first half of 2004 were
attributable to record high operating income, partially offset by
lower investment income. First half 2003 results included a $1.0
million after-tax charge for the cumulative effect of a change in
accounting principle from the adoption of Statement of Financial
Accounting Standards No. 143, "Accounting for Asset Retirement
Obligations." Results for the first half of 2004 set Company
records for net sales and operating income. Operating income for
the first half of 2004 was $94.4 million compared with $71.8
million in the first half of 2003, which included a charge of $1.5
million for stock option payments related to ISP's going private
transaction. Excluding such charge, operating income increased 29%
to $94.4 million from $73.3 million in the first half of 2003 (see
attached reconciliation of non-GAAP financial measures). The higher
operating income was attributable to significantly higher results
in the Company's Specialty Chemicals business segment and lower
losses in the Industrial Chemicals segment, partially offset by
lower results in the Mineral Products segment. On a comparable
basis, excluding the aforementioned charge in last year's first
half, operating income for the Specialty Chemicals segment improved
29% to $87.8 million compared with $68.0 million last year. The
improved results were primarily attributable to the personal care,
performance chemicals, pharmaceutical and beverage product lines,
mainly due to higher unit volumes partially offset by higher
manufacturing costs. Operating income in the first half of 2004 was
also favorably impacted by the weaker U.S. dollar and by the
contribution to income from the three acquisitions made during the
first quarter of 2004. The Industrial Chemicals segment recorded an
operating loss of $1.6 million in the first half of 2004 compared
with an operating loss of $4.1 million in last year's first half.
The lower operating losses were attributable to an improved product
mix and manufacturing efficiencies, partially offset by the adverse
impact of the stronger Euro on European-based manufacturing costs.
Operating income for the Mineral Products business segment was $8.1
million in the first half of 2004 compared with $8.7 million in the
same period last year. The decline from last year's first half was
primarily due to higher operating and manufacturing expenses,
largely offset by the favorable impact of higher unit volumes.
Record net sales for the first half of 2004 were $528.6 million
compared with $462.1 million in the same period last year. The 14%
increase in sales resulted primarily from higher unit volumes in
all business segments and from the contribution to Specialty
Chemicals sales from the three acquisitions made during the first
quarter of 2004. The favorable impact of the weaker U.S. dollar,
primarily in Europe, also benefited sales. Interest expense for the
first half of 2004 was $38.5 million compared with $39.0 million in
the first half of 2003. Investment income in the first half of 2004
was $2.9 million compared with $26.9 million in the same period
last year. Investment income in the first half of 2004 includes a
$5.5 million other than temporary impairment charge related to an
available-for-sale equity security held in the Company's investment
portfolio. Other expense, net, for the first half of 2004 was $4.7
million compared with $0.1 million in the first half of 2003, with
the higher expense due primarily to unfavorable foreign exchange.
At the end of the second quarter of 2004, the total debt for the
Company was $886.1 million and cash and marketable securities were
$383.5 million. The Company's wholly-owned operating subsidiary,
ISP Chemco Inc., had total debt of $688.1 million and cash and cash
equivalents of $25.2 million as of the end of the second quarter of
2004. Capital expenditures and acquisitions for the second quarter
and first half of 2004 were $18.0 million and $58.3 million,
respectively, and depreciation and amortization expense was $16.5
million and $32.3 million, respectively. International Specialty
Holdings Inc. is a leading multinational manufacturer of specialty
chemicals and mineral products. This press release contains
"forward looking statements" within the meaning of the federal
securities laws with respect to the Company's financial results and
future operations and, as such, concerns matters that are not
historical facts. These statements are subject to risks and
uncertainties that could cause actual results to differ materially
from those expressed in such statements. Important factors that
could cause such differences are discussed in the Company's filings
with the U.S. Securities and Exchange Commission and are
incorporated herein by reference. INTERNATIONAL SPECIALTY HOLDINGS
INC. SALES AND EARNINGS DATA (Unaudited) (Millions) Second Quarter
Six Months 2004 2003 2004 2003 Net sales $261.7 $229.5 $528.6
$462.1 Cost of products sold (166.8) (147.2) (335.6) (299.8)
Selling, general and administrative (49.1) (45.0) (98.1) (88.7)
Other operating charges -- -- -- (1.5) Amortization of intangible
assets (0.4) (0.2) (0.5) (0.3) Operating income 45.4 37.1 94.4 71.8
Interest expense (18.7) (19.1) (38.5) (39.0) Investment income
(loss) (13.4) 6.0 2.9 26.9 Other income (expense), net (2.8) 1.3
(4.7) (0.1) Income before income taxes and cumulative effect of
change in accounting principle 10.5 25.3 54.1 59.6 Income taxes
(3.6) (8.6) (18.4) (20.3) Income before cumulative effect of change
in accounting principle 6.9 16.7 35.7 39.3 Cumulative effect of
change in accounting principle, net of income tax benefit of $0.6
-- -- -- (1.0) Net income $6.9 $16.7 $35.7 $38.3 INTERNATIONAL
SPECIALTY HOLDINGS INC. SALES AND EARNINGS DATA (Unaudited) -
(Continued) (Millions) Second Quarter Six Months 2004 2003 2004
2003 Supplemental Business Segment Information: Net sales:
Specialty Chemicals $178.1 $159.0 $364.3 $316.9 Industrial
Chemicals 49.1 44.4 97.8 93.5 Mineral Products 34.5 26.1 66.5 51.7
Net sales $261.7 $229.5 $528.6 $462.1 Operating income: Specialty
Chemicals $41.6 $33.7 $87.8 $66.9 Industrial Chemicals (1.8) (1.4)
(1.6) (4.1) Mineral Products 5.6 4.7 8.1 8.7 Total segment
operating income 45.4 37.0 94.3 71.5 Unallocated corporate office
-- 0.1 0.1 0.3 Operating income $45.4 $37.1 $94.4 $71.8
Depreciation and amortization of intangible assets $16.5 $15.1
$32.3 $30.1 Capital expenditures and acquisitions $18.0 $23.4 $58.3
$33.0 INTERNATIONAL SPECIALTY HOLDINGS INC. SALES AND EARNINGS DATA
(Unaudited) - (Continued) (Millions) Six Months 2004 2003
Reconciliation of non-GAAP financial measures (1): Operating income
per GAAP $94.4 $71.8 Non-GAAP adjustments: Add: Other operating
charges(2) -- 1.5 Operating income, as adjusted $94.4 $73.3
Supplemental Business Segment Information: Operating income:
Operating income per GAAP-Specialty Chemicals $87.8 $66.9 Non-GAAP
adjustments -- 1.1 Operating income-Specialty Chemicals as adjusted
$87.8 $68.0 Operating loss per GAAP-Industrial Chemicals $(1.6)
$(4.1) Non-GAAP adjustments -- 0.2 Operating loss-Industrial
Chemicals as adjusted $(1.6) $(3.9) Operating income per
GAAP-Mineral Products $8.1 $8.7 Non-GAAP adjustments -- 0.2
Operating income-Mineral Products as adjusted $8.1 $8.9 Total
segment operating income as adjusted $94.3 $73.0 Unallocated
corporate office per GAAP 0.1 0.3 Operating income, as adjusted
$94.4 $73.3 (1) As used herein, "GAAP" refers to U.S. generally
accepted accounting principles. We use non-GAAP financial measures
to eliminate the effect of certain other operating gains and
charges on reported operating income. Management believes that
these financial measures are useful to bondholders and financial
institutions because such measures exclude transactions that are
unusual due to their nature or infrequency and therefore allow
bondholders and financial institutions to more readily compare the
Company's performance from period to period. Management uses this
information in monitoring and evaluating the Company's performance
and the performance of individual business segments. (2) Non-GAAP
adjustments for the first six months of 2003 represent an other
operating charge of $1.5 million for stock option payments related
to ISP's going private transaction. DATASOURCE: International
Specialty Products Inc. CONTACT: Kenneth M. McHugh, Vice President
and Controller of International Specialty Products Inc.,
+1-973-872-4200 Web site: http://www.ispcorp.com/
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