Edgar Filing: ENGELHARD CORP

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))

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.

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

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.

EXHIBIT (99.1)

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.

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.

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

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

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.

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

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