Virginia
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1-1070
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13-1872319
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(State or Other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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190 Carondelet Plaza, Suite 1530
Clayton, MO
(Address of principal executive offices)
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63105-3443 (Zip Code)
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(314) 480-1400
(Registrant's telephone number, including area code)
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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(d) Exhibit No.
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Exhibit
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99.1
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Press Release announcing first quarter 2011 earnings, dated April 28, 2011.
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Exhibit No.
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Exhibit
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99.1
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Press Release announcing first quarter 2011 earnings, dated April 28, 2011.
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·
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sensitivity to economic, business and market conditions in the United States and overseas, including economic instability or a downturn in the sectors served by us, such as ammunition, housing, vinyls, and pulp and paper, and the migration by United States customers to low-cost foreign locations;
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·
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the cyclical nature of our operating results, particularly declines in average selling prices in the chlor alkali industry and the supply/demand balance for our products, including the impact of excess industry capacity or an imbalance in demand for our chlor alkali products;
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·
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economic and industry downturns that result in diminished product demand and excess manufacturing capacity in any of our segments and that, in many cases, result in lower selling prices and profits;
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·
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costs and other expenditures in excess of those projected for environmental investigation and remediation or other legal proceedings;
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·
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unexpected litigation outcomes;
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·
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new regulations or public policy changes regarding the transportation of hazardous chemicals and the security of chemical manufacturing facilities;
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·
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the occurrence of unexpected manufacturing interruptions and outages, including those occurring as a result of labor disruptions and production hazards;
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·
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changes in legislation or government regulations or policies;
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·
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higher-than-expected raw material and energy, transportation, and/or logistics costs;
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·
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weak industry conditions could affect our ability to comply with the financial maintenance covenants in our senior revolving credit facility and certain tax-exempt bonds;
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·
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the effects of any declines in global equity markets on asset values and any declines in interest rates used to value the liabilities in our pension plan;
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·
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an increase in our indebtedness or higher-than-expected interest rates, affecting our ability to generate sufficient cash flow for debt service; and
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·
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adverse conditions in the credit and capital markets, limiting or preventing our ability to borrow or raise capital.
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Three Months
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||||||||
Ended March 31,
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||||||||
(In millions, except per share amounts)
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2011
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2010
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||||||
Sales
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$ | 436.0 | $ | 362.0 | ||||
Operating Expenses:
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||||||||
Cost of Goods Sold
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359.2 | 312.5 | ||||||
Selling and Administration
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39.5 | 32.1 | ||||||
Restructuring Charge(b)
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0.1 | ― | ||||||
Other Operating Income
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1.4 | 2.3 | ||||||
Operating Income
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38.6 | 19.7 | ||||||
Earnings of Non-consolidated Affiliates
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7.0 | 2.2 | ||||||
Interest Expense
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7.2 | 6.9 | ||||||
Interest Income
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0.2 | 0.2 | ||||||
Other Income(c)
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181.2 | ― | ||||||
Income before Taxes
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219.8 | 15.2 | ||||||
Income Tax Provision
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86.1 | 1.1 | ||||||
Net Income
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$ | 133.7 | $ | 14.1 | ||||
Net Income Per Common Share:
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||||||||
Basic
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$ | 1.68 | $ | 0.18 | ||||
Diluted
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$ | 1.66 | $ | 0.18 | ||||
Dividends Per Common Share
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$ | 0.20 | $ | 0.20 | ||||
Average Common Shares Outstanding - Basic
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79.6 | 78.8 | ||||||
Average Common Shares Outstanding - Diluted
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80.4 | 79.4 |
(a)
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Unaudited.
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(b)
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Restructuring charges for the three months ended March 31, 2011 of $0.1 million included charges associated with the implementation of plans to exit the use of mercury cell technology in the chlor alkali manufacturing process by the end of 2012 and the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS.
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(c)
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Other income for the three months ended March 31, 2011 included a pretax gain of $181.4 million as a result of remeasuring our previously held 50% equity interest in SunBelt. The income tax provision included $76.0 million of deferred tax expense as a result of the remeasurement of the SunBelt investment.
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Three Months
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||||||||
Ended March 31,
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||||||||
(In millions)
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2011
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2010
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||||||
Sales:
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||||||||
Chlor Alkali Products
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$ | 299.4 | $ | 230.6 | ||||
Winchester
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136.6 | 131.4 | ||||||
Total Sales
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$ | 436.0 | $ | 362.0 | ||||
Income before Taxes:
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||||||||
Chlor Alkali Products(b)
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$ | 45.2 | $ | 10.6 | ||||
Winchester
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12.5 | 19.5 | ||||||
Corporate/Other:
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||||||||
Pension Income(c)
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6.7 | 4.7 | ||||||
Environmental (Expense) Income(d)
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(1.5 | ) | 2.0 | |||||
Other Corporate and Unallocated Costs
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(18.6 | ) | (17.2 | ) | ||||
Restructuring Charge(e)
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(0.1 | ) | ― | |||||
Other Operating Income
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1.4 | 2.3 | ||||||
Interest Expense
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(7.2 | ) | (6.9 | ) | ||||
Interest Income
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0.2 | 0.2 | ||||||
Other Income(f)
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181.2 | ― | ||||||
Income before Taxes
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$ | 219.8 | $ | 15.2 |
(a)
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Unaudited.
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(b)
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Earnings of non-consolidated affiliates are included in the Chlor Alkali Products segment results consistent with management's monitoring of the operating segments. The earnings from non-consolidated affiliates were $7.0 million and $2.2 million for the three months ended March 31, 2011 and 2010, respectively. On February 28, 2011, we acquired the remaining 50% interest in SunBelt. Since the date of acquisition, SunBelt's results are not included in earnings of non-consolidated affiliates but are consolidated in our financial statements.
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(c)
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The service cost and the amortization of prior service cost components of pension expense related to the employees of the operating segments are allocated to the operating segments based on their respective estimated census data. All other components of pension costs are included in Corporate/Other and include items such as the expected return on plan assets, interest cost and recognized actuarial gains and losses. Pension income for the three months ended March 31, 2010 included a charge of $1.3 million associated with an agreement to withdraw our Henderson, NV chlor alkali hourly workforce from a multi-employer defined benefit pension plan.
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(d)
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Environmental (expense) income for the three months ended March 31, 2011 and 2010 included $0.5 million and $2.6 million, respectively, of recoveries from third parties for costs incurred and expensed in prior periods.
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(e)
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Restructuring charges for the three months ended March 31, 2011 of $0.1 million included accretion of employee severance and related benefit costs associated with the implementation of plans to exit the use of mercury cell technology in the chlor alkali manufacturing process by the end of 2012 and the relocation of our Winchester centerfire ammunition manufacturing operations from East Alton, IL to Oxford, MS.
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(f)
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Other income for the three months ended March 31, 2011 included a pretax gain of $181.4 million as a result of remeasuring our previously held 50% equity interest in SunBelt. The income tax provision included a $76.0 million discrete deferred tax expense as a result of the remeasurement of the SunBelt investment.
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March 31,
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December 31,
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March 31,
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||||||||||
(In millions, except per share data)
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2011
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2010
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2010
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|||||||||
Assets:
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||||||||||||
Cash & Cash Equivalents
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$ | 280.4 | $ | 458.6 | $ | 411.0 | ||||||
Accounts Receivable, Net
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256.7 | 186.9 | 197.1 | |||||||||
Income Taxes Receivable
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5.5 | 6.1 | 19.3 | |||||||||
Inventories
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179.7 | 155.6 | 156.4 | |||||||||
Current Deferred Income Taxes
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46.3 | 46.0 | 50.1 | |||||||||
Other Current Assets
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28.8 | 29.6 | 22.3 | |||||||||
Total Current Assets
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797.4 | 882.8 | 856.2 | |||||||||
Property, Plant and Equipment
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||||||||||||
(Less Accumulated Depreciation of $1,089.8, $1,068.1 and $1,017.5)
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763.2 | 675.0 | 688.5 | |||||||||
Prepaid Pension Costs
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26.9 | 16.3 | 14.5 | |||||||||
Restricted Cash
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99.1 | 102.0 | ― | |||||||||
Other Assets
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76.5 | 72.3 | 71.8 | |||||||||
Goodwill
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628.2 | 300.3 | 300.3 | |||||||||
Total Assets
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$ | 2,391.3 | $ | 2,048.7 | $ | 1,931.3 | ||||||
Liabilities and Shareholders' Equity:
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||||||||||||
Current Installments of Long-Term Debt
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$ | 89.3 | $ | 77.8 | $ | ― | ||||||
Accounts Payable
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118.5 | 115.5 | 121.1 | |||||||||
Accrued Liabilities
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220.0 | 197.7 | 192.4 | |||||||||
Total Current Liabilities
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427.8 | 391.0 | 313.5 | |||||||||
Long-Term Debt
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491.9 | 418.2 | 397.1 | |||||||||
Accrued Pension Liability
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58.4 | 58.6 | 55.7 | |||||||||
Deferred Income Taxes
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107.7 | 23.5 | 26.6 | |||||||||
Other Liabilities
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355.6 | 327.1 | 316.4 | |||||||||
Total Liabilities
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1,441.4 | 1,218.4 | 1,109.3 | |||||||||
Commitments and Contingencies
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||||||||||||
Shareholders' Equity:
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||||||||||||
Common Stock, Par Value $1 Per Share, Authorized 120.0 Shares:
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||||||||||||
Issued and Outstanding 79.7 Shares (79.6 and 78.9 in 2010)
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79.7 | 79.6 | 78.9 | |||||||||
Additional Paid-In Capital
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843.0 | 842.3 | 826.8 | |||||||||
Accumulated Other Comprehensive Loss
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(260.8 | ) | (261.8 | ) | (250.7 | ) | ||||||
Retained Earnings
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288.0 | 170.2 | 167.0 | |||||||||
Total Shareholders' Equity
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949.9 | 830.3 | 822.0 | |||||||||
Total Liabilities and Shareholders' Equity
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$ | 2,391.3 | $ | 2,048.7 | $ | 1,931.3 |
(a)
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Unaudited.
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Three Months
Ended March 31,
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||||||||
(In millions)
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2011
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2010
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||||||
Operating Activities:
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||||||||
Net Income
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$ | 133.7 | $ | 14.1 | ||||
Gain on Remeasurement of Investment in SunBelt
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(181.4 | ) | ― | |||||
Earnings of Non-consolidated Affiliates
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(7.0 | ) | (2.2 | ) | ||||
Gains on Disposition of Property, Plant and Equipment
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(1.0 | ) | (2.0 | ) | ||||
Stock-Based Compensation
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1.4 | 1.5 | ||||||
Depreciation and Amortization
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23.2 | 21.6 | ||||||
Deferred Income Taxes
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84.5 | 2.5 | ||||||
Qualified Pension Plan Contributions
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(0.2 | ) | (2.4 | ) | ||||
Qualified Pension Plan Income
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(6.6 | ) | (6.0 | ) | ||||
Common Stock Issued Under Employee Benefit Plans
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― | 0.3 | ||||||
Changes in:
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||||||||
Receivables
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(52.6 | ) | (13.8 | ) | ||||
Income Taxes Receivable
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0.2 | 0.1 | ||||||
Inventories
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(20.1 | ) | (32.6 | ) | ||||
Other Current Assets
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(2.1 | ) | (4.4 | ) | ||||
Accounts Payable and Accrued Liabilities
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3.4 | 8.8 | ||||||
Other Assets
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(0.6 | ) | (0.1 | ) | ||||
Other Noncurrent Liabilities
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0.5 | 0.4 | ||||||
Other Operating Activities
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(2.3 | ) | (0.2 | ) | ||||
Net Operating Activities
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(27.0 | ) | (14.4 | ) | ||||
Investing Activities:
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||||||||
Capital Expenditures
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(25.6 | ) | (21.4 | ) | ||||
Business Acquired in Purchase Transaction, Net of Cash Acquired
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(123.4 | ) | ― | |||||
Proceeds from Disposition of Property, Plant and Equipment
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1.8 | 2.5 | ||||||
Distributions from (Advances to) Affiliated Companies, Net
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7.4 | (0.2 | ) | |||||
Restricted Cash Activity
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2.9 | ― | ||||||
Other Investing Activities
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1.3 | (0.4 | ) | |||||
Net Investing Activities
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(135.6 | ) | (19.5 | ) | ||||
Financing Activities:
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||||||||
Issuance of Common Stock
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― | 2.2 | ||||||
Stock Options Exercised
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0.3 | ― | ||||||
Dividends Paid
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(15.9 | ) | (15.8 | ) | ||||
Net Financing Activities
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(15.6 | ) | (13.6 | ) | ||||
Net Decrease in Cash and Cash Equivalents
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(178.2 | ) | (47.5 | ) | ||||
Cash and Cash Equivalents, Beginning of Year
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458.6 | 458.5 | ||||||
Cash and Cash Equivalents, End of Period
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$ | 280.4 | $ | 411.0 |
(a)
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Unaudited.
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