BATON ROUGE, La., Oct. 26 /PRNewswire-FirstCall/ -- Third quarter highlights: -- Net sales of $515.3 million and earnings of $52.1 million, or 57 cents per share for the quarter. -- Sequential improvement in net sales in all business segments. -- Strong sequential segment income gains in Polymer Additives and Fine Chemicals segments. -- Strong cash generation leading to net debt reduction of approximately $115 million in the quarter. Third Quarter Ended Nine Months Ended September 30, September 30, ------------- ------------- In thousands of dollars, except per share amounts 2009 2008 2009 2008 ------------------------- ---- ---- ---- ---- Net Sales $515,276 $660,463 $1,447,166 $1,949,390 Operating Profit $62,925 $76,892 $122,843 $238,496 Net Income attributable to Albemarle Corporation $52,131 $56,175 $116,023 $181,091 Diluted earnings per share $0.57 $0.61 $1.26 $1.95 Special item per share $- $- $(0.09) $(0.02) Per share amount for one time tax items $- $- $0.13 $- Diluted earnings per share excluding special and one time tax items $0.57 $0.61 $1.23 $1.97 Albemarle Corporation (NYSE:ALB) reported third quarter 2009 earnings of $52.1 million, or 57 cents per share, compared to third quarter 2008 earnings of $56.2 million, or 61 cents per share. The Company reported net sales in the third quarter of 2009 totaling $515.3 million compared to third quarter 2008 net sales of $660.5 million. (Logo: http://www.newscom.com/cgi-bin/prnh/20050801/ALBEMARLELOGO ) Earnings for the first nine months of 2009 were $116.0 million, or $1.26 per share, compared to $181.1 million, or $1.95 per share, for the first nine months of 2008. Excluding the second quarter 2009 special item related to Port de Bouc ($8.2 million after tax) and tax benefits related to prior periods ($11.5 million), earnings for the first nine months of 2009 were $112.7 million, or $1.23 per share. Excluding first quarter 2008 restructuring charges ($2.1 million after tax), earnings for the first nine months of 2008 were $183.2 million, or $1.97 per share. Net sales for the first nine months of 2009 were $1.45 billion compared to $1.95 billion for the first nine months of 2008. "Volumes continue to improve for many of our products, and we are encouraged by the sequential increase in sales and profitability over the prior two quarters. Our order patterns thus far in the fourth quarter alleviate some of the concern we previously expressed about the sustainability of the recovery going forward; however, we remain cautious in this difficult environment," said Mark C. Rohr, Chairman and Chief Executive Officer. "We're very proud of our strong cash generation and working capital management. We have repaid $113 million of debt in the first nine months and have $260 million of cash and equivalents at September 30, 2009. We continue to focus on cost-saving initiatives and aggressive innovation efforts to drive growth. We've demonstrated an ability to deliver high quality results in both good as well as tough times and we continue to drive value for our shareholders." Quarterly Segment Results Polymer Additives recorded net sales for the third quarter of 2009 of $196.7 million, a 25 percent decrease versus record net sales in the third quarter of 2008. Softness in consumer end-markets contributed to the year-over-year decline; however, demand continues to improve sequentially. Polymer Additives segment income for the third quarter of 2009 was $26.0 million compared to $27.4 million in the third quarter of 2008. Unfavorable year-over-year volume and pricing impacts were partially offset by improvements in raw materials and other operating costs. Higher sales levels and increased utilization rates contributed to the segment's strong sequential segment income improvement of 78 percent over the second quarter of 2009. Catalysts net sales for the third quarter of 2009 were $188.9 million, a decrease of 18 percent versus the third quarter of 2008. This decrease was due primarily to metals impacts on HPC refinery catalysts revenues, currency exchange rates and less favorable product mix in polyolefin catalysts. Catalysts segment income for the third quarter of 2009 was $33.4 million compared to $36.5 million for the third quarter of 2008. This decline was due primarily to lower equity income, unfavorable currency exchange rates and metals impacts on HPC refinery catalysts. Segment income declined $4.3 million sequentially due primarily to polyolefin catalysts product mix and lower equity income. Fine Chemicals net sales for the third quarter of 2009 were $129.6 million, down 22 percent from the third quarter of 2008, but up 25 percent from the second quarter 2009. Segment income for the third quarter of 2009 was $14.2 million compared to $24.7 million in the third quarter of 2008. These declines were primarily attributable to our industrial bromides business. Segment income margins improved, however, over 600 basis points from second quarter 2009 due mainly to stronger sales volumes and utilization rates in the bromine franchise. Cash Flow In the first nine months of 2009, cash flow from operations funded net repayments of debt of over $113 million, capital expenditures for plant, machinery and equipment of $84 million and dividends to shareholders of $33 million. During the quarter, interest and financing expenses were $6.2 million versus $9.8 million in the third quarter of 2008. This decrease was due primarily to lower average interest rates year over year. At September 30, 2009, the Company had approximately $260 million in cash and equivalents. In addition, the Company has sufficient capacity to borrow under existing lines of credit and has no significant debt maturities before 2013. Taxes Our third quarter 2009 effective income tax rate was 9.7 percent, down from 15.3 percent in the third quarter of 2008. The full year effective tax rate is expected to be 12 percent, excluding special and one time tax items, which is approximately 2.0 percent lower than our previous annual effective tax rate forecast. The tax rate continues to be influenced by the level and mix of income and has benefited from a more favorable mix of income in lower tax jurisdictions. Outlook While challenging conditions still persist in some sectors, underlying market fundamentals seem to be improving. Short term, we remain cautious and continue to focus on cash generation until we get more comfortable with the sustainability of improved market conditions. We remain confident that Albemarle is well positioned to manage through the uncertainties of the present market cycle and to capture the expected medium to long-term upside. Earnings Call The Company's performance for the third quarter ended September 30, 2009 will be discussed on a conference call at 11:00 AM Eastern Daylight time on October 27, 2009, which can be accessed through Albemarle's website under Investor Information at http://www.albemarle.com/. Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading global developer, manufacturer and marketer of highly-engineered specialty chemicals for consumer electronics; petroleum and petrochemical processing; transportation and industrial products; pharmaceuticals; agricultural products; construction and packaging materials. The Company operates in three business segments, Polymer Additives, Catalysts and Fine Chemicals and serves customers in approximately 100 countries. Forward-Looking Statements Some of the information presented in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe our expectations as reflected are based on reasonable assumptions within the bounds of our knowledge of our business and operations, there can be no assurance that actual results will not differ materially. Factors that could cause actual results to differ from expectations include, without limitation: deterioration in economic and business conditions; future financial and operating performance of our major customers and industries served by us; the inability to pass through increases in costs and expenses for raw materials and energy; competition from other manufacturers; changes in demand for our products; the gain or loss of significant customers; fluctuations in foreign currencies; and increased government regulation of our operations or our products. Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found under "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the period ended December 31, 2008 and in our other public filings with the Securities and Exchange Commission. Readers are urged to review and consider carefully the disclosures we make in our filings with the Securities and Exchange Commission. Albemarle Corporation and Subsidiaries Consolidated Statements of Income (In Thousands of Dollars, Except Share and Per Share Amounts) (Unaudited) Third Quarter Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 ---- ---- ---- ---- Net sales $515,276 $660,463 $1,447,166 $1,949,390 Cost of goods sold 381,197 506,280 1,112,763 1,464,815 ------------------ ------- ------- --------- --------- Gross profit 134,079 154,183 334,403 484,575 Selling, general and administrative expenses 56,171 59,899 153,086 191,016 Research and development expenses 14,983 17,392 46,081 51,785 Port de Bouc charges - - 12,393(a) - Restructuring charges - - - 3,278(b) --------------------- --- --- --- ----- Operating profit 62,925 76,892 122,843 238,496 Interest and financing expenses (6,199) (9,815) (18,561) (28,472) Other income (expenses), net 343 (2,718) 488 2,066 ---------------- --- ------ --- ----- Income before income taxes and equity in net income of unconsolidated investments 57,069 64,359 104,770 212,090 Income tax (expense) benefit (5,549) (9,878) 1,675(c) (39,406) -------------------- ----- ------ ----- ------- Income before equity in net income of unconsolidated investments 51,520 54,481 106,445 172,684 Equity in net income of unconsolidated investments (net of tax) 5,809 6,281 17,962 21,975 -------------------- ----- ----- ------ ------ Net income 57,329 60,762(d) 124,407 194,659(d) Net income attributable to noncontrolling interests (5,198) (4,587)(d) (8,384) (13,568)(d) --------------- ------ ------ ------ ------- Net income attributable to Albemarle Corporation $52,131 $56,175(d) $116,023 $181,091(d) ---------------- ------- ------- -------- -------- Basic earnings per share $0.57 $0.61(e) $1.27 $1.97(e) Diluted earnings per share $0.57 $0.61(e) $1.26 $1.95(e) Weighted-average common shares outstanding - Basic 91,588 91,395(e) 91,481 91,846(e) Weighted-average common shares outstanding - Diluted 92,174 92,463(e) 91,955 92,977(e) ---------------------- ------ ------ ------ ------ See accompanying notes to the condensed consolidated financial information. Albemarle Corporation and Subsidiaries Condensed Consolidated Balance Sheets (In Thousands of Dollars) (Unaudited) September 30, December 31, 2009 2008 ---- ---- ASSETS Cash and cash equivalents $260,434 $253,303 Other current assets 742,319 925,620 ------- ------- Total current assets 1,002,753 1,178,923 --------- --------- Property, plant and equipment 2,416,735 2,322,996 Less accumulated depreciation and amortization 1,374,405 1,310,648 --------- --------- Net property, plant and equipment 1,042,330 1,012,348 Other assets and intangibles 735,065 681,446 ------- ------- Total assets $2,780,148 $2,872,717 ========== ========== LIABILITIES & EQUITY Current portion of long-term debt $27,721 $26,202 Other current liabilities 314,151 412,165 ------- ------- Total current liabilities 341,872 438,367 ------- ------- Long-term debt 793,098 906,062 Other noncurrent liabilities 320,328 336,967 Deferred income taxes 80,578 74,838 Albemarle Corporation shareholders' equity (d) 1,197,063 1,065,771 Noncontrolling interests (d) 47,209 50,712 ------ ------ Total liabilities & equity $2,780,148 $2,872,717 ========== ========== See accompanying notes to the condensed consolidated financial information. Albemarle Corporation and Subsidiaries Selected Consolidated Cash Flows Data (In Thousands of Dollars) (Unaudited) Nine Months Ended September 30, ------------- 2009 2008 ---- ---- Cash and cash equivalents at beginning of year $253,303 $130,551 Cash and cash equivalents at end of period $260,434 $207,211 Sources of cash and cash equivalents: Net income (d) 124,407 194,659 Proceeds from borrowings 20,269 285,303 Proceeds from exercise of stock options 4,083 3,931 Uses of cash and cash equivalents: Capital expenditures (83,610) (63,467) Purchases of common stock - (163,502) Repayments of long-term debt (133,332) (42,605) Dividends paid to shareholders (33,306) (31,394) Dividends paid to noncontrolling interests (8,911) (11,836) Non-cash items: Depreciation and amortization 74,539 81,555 See accompanying notes to the condensed consolidated financial information. Albemarle Corporation and Subsidiaries Consolidated Summary of Segment Results (In Thousands of Dollars) (Unaudited) Third Quarter Ended Nine Months Ended September 30, September 30, ------------ ------------ 2009 2008 2009 2008 ---- ---- ---- ---- Net sales: Polymer Additives $196,716 $261,746 $492,636 $766,844 Catalysts 188,911 231,562 600,101 716,045 Fine Chemicals 129,649 167,155 354,429 466,501 ------- ------- ------- ------- Total net sales $515,276 $660,463 $1,447,166 $1,949,390 ======== ======== ========== ========== Segment operating profit: Polymer Additives $27,243 $28,705 $31,562 $86,337 Catalysts 28,845 30,941 90,314 112,617 Fine Chemicals 16,482 26,830 32,525 77,983 ------ ------ ------ ------ Subtotal $72,570 $86,476 $154,401 $276,937 ======= ======= ======== ======== Equity in net income (loss) of unconsolidated investments: Polymer Additives $1,293 $777 $1,563 $3,454 Catalysts 4,543 5,544 16,480 18,598 Fine Chemicals - - - - Corporate & other (27) (40) (81) (77) --- --- --- --- Total equity in net income of unconsolidated investments $5,809 $6,281 $17,962 $21,975 ====== ====== ======= ======= Net (income) loss attributable to noncontrolling interests: Polymer Additives $(2,490) $(2,078) $(4,145) $(6,183) Catalysts - - - - Fine Chemicals (2,244) (2,146) (4,402) (7,304) Corporate & other (464) (363) 163 (81) ---- ---- --- --- Total net income attributable to noncontrolling interests $(5,198) $(4,587) $(8,384) $(13,568) ======= ======= ======= ======== Segment income: Polymer Additives $26,046 $27,404 $28,980 $83,608 Catalysts 33,388 36,485 106,794 131,215 Fine Chemicals 14,238 24,684 28,123 70,679 ------ ------ ------ ------ Total segment income 73,672 88,573 163,897 285,502 Corporate & other (10,136) (9,987) (19,083) (35,321) Port de Bouc charges (a) - - (12,393) - Restructuring charges (b) - - - (3,278) Interest and financing expenses (6,199) (9,815) (18,561) (28,472) Other income (expenses), net 343 (2,718) 488 2,066 Income tax (expense) Benefit (c) (5,549) (9,878) 1,675 (39,406) ------- ------- ----- -------- Net income attributable to Albemarle Corporation (d) $52,131 $56,175 $116,023 $181,091 ======= ======= ======== ======== See accompanying notes to the condensed consolidated financial information. Notes to the Condensed Consolidated Financial Information (a) The nine-month period ended September 30, 2009 included charges amounting to $12.4 million ($8.2 million after income taxes, or 9 cents per share) that related to the costs of a final contract settlement arising from our 2008 disposition of the Port de Bouc, France facility. (b) The nine-month period ended September 30, 2008 included charges amounting to $3.3 million ($2.1 million after income taxes, or 2 cents per share) that related to severance costs in conjunction with personnel reductions at the Company's former Richmond, Virginia headquarters and its Singapore sales office. (c) The nine-month period ended September 30, 2009 included a $9.2 million (10 cents per share) one time benefit due mainly to a tax issue settlement for the years 2005 through 2007 with the U.S. Internal Revenue Service, a $4.2 million benefit associated with the Port de Bouc charge described in footnote (a), and a non-recurring net benefit of $2.5 million (3 cents per share) resulting from adjustments related to prior periods. (d) As adjusted due to the adoption of new accounting guidance which requires retroactive application for the presentation of noncontrolling interests on the balance sheet and statements of income. (e) As adjusted due to the adoption of new accounting guidance associated with share-based payment transactions considered to be participating securities. Basic earnings per share decreased one cent for the three-month period ended September 30, 2008 as a result of an increase in our basic weighted-average common shares outstanding of approximately 321,000 shares. Diluted weighted-average common shares outstanding increased by approximately 198,000 shares for the three-month period ended September 30, 2008. Basic earnings per share decreased one cent for the nine-month period ended September 30, 2008 as a result of an increase in our basic weighted-average common shares outstanding of approximately 311,000 shares. Diluted weighted-average common shares outstanding increased by approximately 203,000 shares for the nine-month period ended September 30, 2008. Additional Information It should be noted that earnings or per share amounts excluding special items and one time tax items is a financial measure that is not required by, or presented in accordance with, accounting principles generally accepted in the United States, or GAAP. It is presented here to exclude the impact of certain non-recurring items on our results. We believe this measure is more reflective of our operations, provides transparency to investors and enables period-to-period comparability of financial performance. Net debt is a supplemental financial measure that is not required by, or presented in accordance with GAAP. We believe net debt is helpful in analyzing leverage and as a performance measure. We define net debt as total debt plus the portion of outstanding joint venture indebtedness guaranteed by us (or less the portion of outstanding joint venture indebtedness consolidated but not guaranteed by us), less cash and cash equivalents. Set forth below is a reconciliation of net debt, a non-GAAP financial measure, to total debt, the most directly comparable financial measure calculated and reported in accordance with GAAP, as of September 30, 2009, June 30, 2009 and December 31, 2008. A description of other non-GAAP financial measures that we use to evaluate our operations and financial performance, and reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and reported in accordance with GAAP, can be found in the Investor Information section of our website at http://www.albemarle.com/, under "Non-GAAP Reconciliations" under "Investor Relations." ALBEMARLE CORPORATION AND SUBSIDIARIES Net Debt Reconciliation (In Thousands of Dollars) (Unaudited) Third Quarter Second Quarter Year Ended Ended Ended September 30, June 30, December 31, 2009 2009 2008 Total debt $820,819 $847,327 $932,264 JV debt consolidated by the Company but guaranteed by others (27,272) (27,182) (29,064) Less: Cash and cash equivalents (260,434) (172,476) (253,303) Net Debt $533,113 $647,669 $649,897 See accompanying notes to the condensed consolidated financial information. http://www.newscom.com/cgi-bin/prnh/20050801/ALBEMARLELOGO http://photoarchive.ap.org/ DATASOURCE: Albemarle Corporation CONTACT: Sandra Rodriquez of Albemarle Corporation, +1-225-388-7654 Web Site: http://www.albemarle.com/

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