Date: Thu, 20 Nov 1997 20:28:19 GMT Server: NCSA/1.5.1 Last-modified: Mon, 17 Feb 1997 14:22:40 GMT Content-type: text/html Content-length: 38435
Fourth Quarter | Year | |||||
1996 | 1995 | Percent Change |
1996 | 1995 | Percent Change |
|
Net sales | $ 965 | $ 915 | 5 | $3,982 | $3,884 | 3 |
Net earnings | 75 | 67 | 12 | 363 | 292 | 24 |
Net earnings per common share | $1.16 | $ .98 | 18 | $ 5.45 | $ 4.22 | 29 |
During the last three months of the year unit volume grew at double-digit rates, and earnings per share increased 18 percent. In short, ongoing profitable growth continues to be the story at Rohm and Haas.
Our performance for the year can best be summed up by recounting some of the milestones that marked our success:
As 1997 begins, we look forward to another good year for Rohm and Haas. We will keep a watchful eye on raw material costs and world economies, but we are convinced that we have the right building blocks for persistent success a fine business portfolio, strong geographic reach and outstanding people.
J. Lawrence Wilson
Chairman
February 12, 1997
Earnings in the fourth quarter of 1996 were $75 million, 12% higher than last years exceptionally strong results. Earnings per common share were $1.16, compared to $.98 in 1995. Sales increased 5% to $965 million, due to 14% higher volume, offset by 3% lower selling prices and a lower-priced product mix. Sales growth was also impacted by 2% weaker currencies in Europe and an 11% weaker Japanese yen. Earnings benefited from higher volume, 3% lower raw material prices, smooth plant operations and a lower effective tax rate. Regional results were exceptional in Latin America, where the company was able to take advantage of improved economic conditions. The 1996 results included a net after-tax charge of $.09 per common share for plant writedowns and restructuring charges, net of a gain on the sale of land.
Polymers, Resins and Monomers (PRM) earnings of $48 million increased 7% compared to the prior year. Sales grew 13% and volume rose 19%, excluding the reclassification of the Petroleum Chemicals business to PRM from Performance Chemicals due to the RohMax joint venture. All regions and businesses contributed to the volume growth. About $20 million of the sales growth was due to incremental acrylic monomer sales resulting from production difficulties at a competitor. Earnings benefited from increased volume and lower raw material prices. Lower selling prices and a $7 million after-tax charge for a plant writedown in the U.S. and restructuring costs in Japan reduced earnings in the quarter.
Performance Chemicals reported earnings of $18 million, up $3 million from last years earnings. Sales and volume increased 1%. Volume declined for Shipley in North America due to a slowdown in the electronics industry. Ion Exchange Resins had strong volume growth in Latin America. The earnings improvement is due to reduced losses for Ion Exchange Resins compared to last years fourth quarter, reflecting higher volume and reduced operating costs.
Plastics recorded earnings of $13 million, down $1 million from the 1995 period. Sales increased 6%, due to 14% higher volume, offset by lower selling prices and weaker currencies in Europe and Japan. Volume growth resulted from a double-digit increase in shipments of additives used in PVC applications in all regions and volume gains in North America for AtoHaas Americas. Earnings declined due to losses from AtoHaas Europe, reflecting weak market conditions compared to last years fourth quarter. Plastics earnings were also impacted negatively by after-tax charges totaling $6 million for the writedown of a plant in the U.S. and restructuring AtoHaas Europes operations.
Agricultural Chemicals earnings of $19 million were $8 million higher than the prior-year period. Sales jumped 8% as a result of 8% higher volume and a higher-priced product mix, offset by weaker currencies in Europe and Japan. The volume gains were due to a significant increase of shipments of Dithane in all regions except North America. Earnings benefited from higher volume, lower raw material prices and a $6 million after-tax gain from the sale of land in Japan, previously used for agricultural research.
The companys gross profit margin for the fourth quarter was 33%, compared to 36% last year. Volume growth, 3% percent lower raw material prices and smooth plant operations improved margins, but 3% lower selling prices and charges to writedown a plant in the U.S. and restructure operations in Japan resulted in an overall decrease in the gross profit margin for the quarter.
Interest expense increased $2 million due to lower capitalization of interest cost as part of construction in progress. Affiliate losses were $3 million, compared to a $1 million loss in the fourth quarter of 1995. This was due to AtoHaas Europe who reported higher operating losses and also recorded a $4 million after-tax charge for restructuring costs in the current-year quarter. Other income, net, was $10 million, up from zero in 1995, due to a gain on the sale of land in Japan. The effective tax rate for the quarter was 29%, down from 34% last year due to U.S. tax credits and non-taxable currency gains.
At the end of the quarter, cash and cash equivalents totaled $11 million, down $32 million from the 1995 year-end balance. The debt-to-equity ratio, calculated without the reduction to stockholders equity for the ESOP transaction, was 38% at the end of 1996, compared with 36% at year-end 1995. Total debt increased $11 million since the end of 1995. The increase in the debt-to-equity ratio was mainly due to the reduction in equity resulting from the companys stock repurchase program. During the year, the company purchased 4.4 million shares of its common stock at a cost of $302 million.
Fixed asset additions in 1996 totaled $334 million and included expenditures for new emulsion facilities in Thailand, Indonesia and Houston, Texas, and capacity expansion for acrylic acid and butyl acrylate ester at Houston, Texas.
The companys strong performance in 1996 resulted in a return on common stockholders equity (ROE) of 20% and a return on net assets (RONA) of 10%.
Polymers, Resins and Monomers | Performance Chemicals | Plastics | Agricultural Chemicals | Total | ||||||
1996 | 1995 | 1996 | 1995 | 1996 | 1995 | 1996 | 1995 | 1996 | 1995 | |
North America | $304 | $282 | $ 70 | $ 68 | $ 96 | $ 93 | $ 30 | $ 26 | $500 | $469 |
Europe | 85 | 86 | 49 | 51 | 62 | 58 | 32 | 34 | 228 | 229 |
Asia-Pacific | 60 | 53 | 56 | 58 | 12 | 10 | 35 | 33 | 163 | 154 |
Latin America | 29 | 27 | 8 | 5 | 6 | 5 | 31 | 26 | 74 | 63 |
Total | $478 | $448 | $183 | $182 | $176 | $166 | $128 | $119 | $965 | $915 |
Polymers, Resins and Monomers | Performance Chemicals | Plastics | Agricultural Chemicals | Total | ||||||
1996 | 1995 | 1996 | 1995 | 1996 | 1995 | 1996 | 1995 | 1996 | 1995 | |
North America | $1,317 | $1,277 | $288 | $272 | $378 | $384 | $139 | $141 | $2,122 | $2,074 |
Europe | 378 | 369 | 207 | 204 | 252 | 238 | 169 | 165 | 1,006 | 976 |
Asia-Pacific | 221 | 205 | 226 | 245 | 44 | 47 | 101 | 100 | 592 | 597 |
Latin America | 107 | 102 | 23 | 19 | 27 | 24 | 105 | 92 | 262 | 237 |
Total | $2,023 | $1,953 | $744 | $740 | $701 | $693 | $514 | $498 | $3,982 | $3,884 |
* Sales have been restated for 1995 and the first 6 months of 1996 to move Petroleum Chemicals results from Performance Chemicals to Polymers, Resins and Monomers.
Business Group | Percent Change |
Customer Location | Percent Change |
---|---|---|---|
Polymers, Resins and Monomers* | 15 | North America | 15 |
Performance Chemicals | 1 | Europe* | 8 |
Plastics | 14 | Asia-Pacific | 21 |
Agricultural Chemicals | 8 | Latin America | 7 |
Worldwide | 14 | Worldwide | 14 |
Business Group | Percent Change |
Customer Location | Percent Change |
---|---|---|---|
Polymers, Resins and Monomers* | 6 | North America | 4 |
Performance Chemicals | | Europe* | 6 |
Plastics | 6 | Asia-Pacific | 12 |
Agricultural Chemicals | 7 | Latin America | 6 |
Worldwide | 6 | Worldwide | 6 |
* Polymers, Resins and Monomers volume would have increased 19% for the quarter and 8% for the year and Europe would have increased 13% for the quarter and 9% for the year, excluding the impact of the Petroleum Chemicals business, now accounted for through the RohMax joint venture.
Quarter Ended December 31, |
Year Ended December 31, |
|||
1996 | 1995* | 1996 | 1995* | |
Business Group | (Millions of dollars) | |||
Polymers, Resins and Monomers | $ 48 | $ 45 | $228 | $185 |
Performance Chemicals | 18 | 15 | 82 | 69 |
Plastics | 13 | 14 | 54 | 67 |
Agricultural Chemicals | 19 | 11 | 61 | 55 |
Corporate | (23) | (18) | (62) | (84) |
Total | $ 75 | $ 67 | $363 | $292 |
Customer Location | ||||
North America | $ 54 | $ 47 | $235 | $199 |
Europe | 15 | 16 | 96 | 102 |
Asia-Pacific | 20 | 19 | 62 | 58 |
Latin America | 9 | 3 | 32 | 17 |
Corporate | (23) | (18) | (62) | (84) |
Total | $ 75 | $ 67 | $363 | $292 |
Corporate includes non-operating items such as interest income and expense, corporate governance costs and the operations of certain developing businesses.
* 1995 amounts have been restated for the following items:
Effective July 1, 1996, the results of the Petroleum Chemicals business, previously fully consolidated, are now included in equity in affiliates through the RohMax joint venture.
$/Share (after-tax) | ||
Gross Profit | Fourth Quarter |
Twelve Months |
Selling prices | $(.24) | $(.33) |
Raw material prices | .07 | .75 |
Physical volume and product mix | .28 | .73 |
Plant writedown and restructuring charges | (.12) | (.12) |
Other manufacturing costs | | (.31) |
Currency effect on gross profit | (.04) | (.12) |
Increase (decrease) in gross profit | (.05) | .60 |
Other Causes | ||
Selling, administrative and research expenses* | .02 | (.08) |
Share of affiliate earnings (losses), excluding restructuring costs | .03 | (.20) |
Asset dispositions and affiliate restructuring costs | .03 | .03 |
Certain waste disposal site cleanup costs | | .25 |
Retroactive tax credit on sales outside the U.S. | | .15 |
Reduction in outstanding shares of common stock | .06 | .18 |
Other | .09 | .30 |
Increase from other causes | .23 | .63 |
Increase in per-share earnings | $ .18 | $1.23 |
*The amounts shown are on a U.S. dollar basis and include the impact of currency movements as compared to the prior-year period.
Rohm and Haas Company and Subsidiaries
Statements of Consolidated Earnings (Subject to Year-end Audit)
Quarter Ended December 31, |
Year Ended December 31, |
|||
1996 | 1995 | 1996 | 1995 | |
Current Earnings | (Millions of dollars, except per-share amounts) | |||
Net sales | $ 965 | $ 915 | $ 3,982 | $ 3,884 |
Cost of goods sold | 643 | 588 | 2,587 | 2,551 |
Gross profit | 322 | 327 | 1,395 | 1,333 |
Selling and administrative expense | 165 | 161 | 631 | 616 |
Research and development expense | 49 | 55 | 187 | 194 |
Interest expense | 10 | 8 | 39 | 39 |
Share of affiliate net earnings (losses) | (3) | (1) | (12) | 5 |
Other expense (income), net | (10) | | (4) | 48 |
Earnings before income taxes | 105 | 102 | 530 | 441 |
Income taxes | 30 | 35 | 167 | 149 |
Net earnings | $ 75 | $ 67 | $ 363 | $ 292 |
Less preferred stock dividends | 1 | 1 | 7 | 7 |
Net earnings applicable to
common shareholders |
$ 74 | $ 66 | $ 356 | $ 285 |
Per Common Share: | ||||
Net earnings | $ 1.16 | $ .98 | $ 5.45 | $ 4.22 |
Common dividends | $ .45 | $ .41 | $ 1.72 | $ 1.56 |
Average number of common
shares outstanding (000s) |
63,633 | 67,319 | 65,374 | 67,522 |
See notes to consolidated financial statements.
Rohm and Haas Company and Subsidiaries
Statements of Consolidated Cash Flows (Subject to Year-end Audit)
Year Ended December 31, |
||||
1996 | 1995 | |||
Cash Flows from Operating Activities | (Millions of dollars) | |||
Net earnings | $ 363 | $ 292 | ||
Adjustments to reconcile net earnings
to cash provided by operating activities: |
||||
Depreciation | 262 | 242 | ||
Deferred income taxes | 37 | 27 | ||
Accounts receivable | (37) | (77) | ||
Inventories | 11 | (25) | ||
Accounts payable | 5 | 26 | ||
Income taxes payable | (1) | (3) | ||
Gain on sale of facilities | (10) | | ||
Provision for plant writedown and
restructuring charges |
19 | | ||
Other working capital changes, net | 1 | (25) | ||
Other, net | 56 | 56 | ||
Net cash provided by operating activities | 706 | 513 | ||
Cash Flows from Investing Activities | ||||
Additions to land, buildings and equipment | (334) | (417) | ||
Long-term investments and joint ventures | (7) | | ||
Proceeds from the sale of facilities and investments | 11 | 49 | ||
Net cash used by investing activities | (330) | (368) | ||
Cash Flows from Financing Activities | ||||
Purchase of treasury shares | (302) | (29) | ||
Proceeds from issuance of long-term debt | 1 | 32 | ||
Repayments of long-term debt | (43) | (126) | ||
Net change in short-term borrowings | 68 | 2 | ||
Payment of dividends | (116) | (109) | ||
Other, net | (16) | 2 | ||
Net cash used by financing activities | (408) | (228) | ||
Effect of exchange rate changes on cash | | (1) | ||
Net decrease in cash and cash equivalents | $ (32) | $ (84) |
See notes to consolidated financial statements.
Rohm and Haas Company and Subsidiaries
Consolidated Balance Sheets (Subject to Year-end Audit)
December 31,
1996 |
December 31,
1995 |
|
---|---|---|
Assets | (Millions of dollars) | |
Current assets: | ||
Cash and cash equivalents | $ 111 | $ 43 |
Receivables, net | 841 | 756 |
Inventories (note d) | 483 | 504 |
Prepaid expenses and other assets | 121 | 118 |
Total current assets | 1,456 | 1,421 |
Land, buildings and equipment | 4,327 | 4,158 |
Less accumulated depreciation | 2,261 | 2,110 |
Net land, buildings and equipment | 2,066 | 2,048 |
Other assets | 411 | 447 |
$3,933 | $3,916 | |
Liabilities and Stockholders Equity | ||
Current liabilities: | ||
Notes payable | $ 145 | $ 90 |
Accounts payable and accrued liabilities | 669 | 666 |
Accrued income taxes | 72 | 72 |
Total current liabilities | 886 | 828 |
Long-term debt | 562 | 606 |
Other liabilities | 757 | 701 |
Stockholders equity: | ||
$2.75 Cumulative convertible preferred stock (note e) | 131 | 133 |
Common stock: shares issued 78,652,380 | 197 | 197 |
Additional paid-in capital | 143 | 150 |
Retained earnings | 2,036 | 1,789 |
2,507 | 2,269 | |
Less: Treasury stock (note f) | 629 | 344 |
Less: ESOP shares | 145 | 151 |
Other equity adjustments | (5) | 7 |
Total stockholders equity | 1,728 | 1,781 |
$3,933 | $3,916 |
See notes to consolidated financial statements.
December 31,
1996 |
December 31,
1995 |
|
---|---|---|
Finished products and work in process | $375 | $377 |
Raw materials and supplies | 108 | 127 |
Total inventories | $483 | $504 |
Dithane is a trademark of Rohm and Haas Company.