0000915913-16-000075.txt : 20161214 0000915913-16-000075.hdr.sgml : 20161214 20161214132713 ACCESSION NUMBER: 0000915913-16-000075 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20161214 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20161214 DATE AS OF CHANGE: 20161214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALBEMARLE CORP CENTRAL INDEX KEY: 0000915913 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 541692118 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12658 FILM NUMBER: 162050756 BUSINESS ADDRESS: STREET 1: 4350 CONGRESS STREET STREET 2: SUITE 700 CITY: CHARLOTTE STATE: NC ZIP: 28209 BUSINESS PHONE: 980-299-5700 MAIL ADDRESS: STREET 1: 4350 CONGRESS STREET STREET 2: SUITE 700 CITY: CHARLOTTE STATE: NC ZIP: 28209 FORMER COMPANY: FORMER CONFORMED NAME: ECHEM INC DATE OF NAME CHANGE: 19931208 8-K 1 a1214168-kdocument.htm 8-K Document


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) December 14, 2016
 
_________________________________
ALBEMARLE CORPORATION
(Exact name of Registrant as specified in charter)
_________________________________

Virginia
 
001-12658
 
54-1692118
(State or other jurisdiction
of incorporation)
 
(Commission
file number)
 
(IRS employer
identification no.)
 
 
 
 
 
4350 Congress Street, Suite 700, Charlotte, North Carolina
 
28209
(Address of principal executive offices)
 
(Zip code)
Registrant’s telephone number, including area code
(980) 299-5700
Not applicable
(Former name or former address, if changed since last report)
_________________________________

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 (see General Instruction A.2. below):
¨ 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 2.01.    Completion of Acquisition or Disposition of Assets.

On December 14, 2016, Albemarle Corporation (the "Company") completed the previously announced sale of its Chemetall Surface Treatment business to BASF SE in consideration of approximately $3.2 billion in cash, less estimated purchase price adjustments, pursuant to the terms of the Share Purchase Agreement dated June 17, 2016 among the Company and BASF SE. The pro forma financial information required by Item 9.01(b) of Form 8-K is attached hereto as Exhibit 99.1.

Item 9.01.    Financial Statements and Exhibits.

(b)     Pro Forma Financial Information.

Unaudited pro forma condensed consolidated balance sheet as of September 30, 2016 and unaudited pro forma     consolidated statements of income for the nine months ended September 30, 2016 and year ended December 31, 2015 are filed as Exhibit 99.1 and incorporated by reference herein.

(d) Exhibits.

Exhibit No.
 
Description
99.1
 
Unaudited Pro Forma Condensed Consolidated Financial Statements.











SIGNATURE

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 hereunto duly authorized.

Date: December 14, 2016

ALBEMARLE CORPORATION
By:
/s/ Scott A. Tozier
 
Scott A. Tozier
 
Executive Vice President and Chief Financial Officer



 EX-99.1 2 exhibit9911214168-k.htm EXHIBIT 99.1 Exhibit

EXHIBITS

Exhibit No.
 
Description
99.1
 
Unaudited Pro Forma Condensed Consolidated Financial Statements


1

Exhibit 99.1

Unaudited Pro Forma Condensed Consolidated Financial Statements

The following unaudited pro forma condensed consolidated balance sheet and statements of income are based upon the historical information of Albemarle Corporation (the “Company”), adjusted to reflect the sale of the Chemetall Surface Treatment business. The Chemetall Surface Treatment business was acquired on January 12, 2015 as part of the acquisition of Rockwood Holdings, Inc (“Rockwood”). As a result, the unaudited pro forma consolidated statements of income are presented only for the year ended December 31, 2015 and for the nine months ended September 30, 2016.

The unaudited pro forma condensed consolidated balance sheet reflects the sale of the Chemetall Surface Treatment business as if it occurred on September 30, 2016, while the unaudited pro forma consolidated statements of income give effect to the sale as if it occurred on January 1, 2015. The pro forma adjustments, described in the related notes, are based upon available information and certain assumptions that the Company’s management believe are reasonable. There are no pro forma adjustments for the period of January 1, 2015 to January 12, 2015 as the Chemetall Surface Treatment business was not owned by the Company and its results are already excluded from the historical financial statements for that period. As of the close of the second quarter of 2016, the Chemetall Surface Treatment business met the criteria, and was accounted, for as discontinued operations. Therefore, the historical consolidated statement of income for the nine months ended September 30, 2016 already reflected the Chemetall Surface Treatment business as discontinued operations.

The unaudited pro forma condensed consolidated financial statements are provided for informational purposes only and are not necessarily indicative of what the actual results of operations or financial position of the Company would have been if the sale had been completed on the dates indicated above, nor are they indicative of future financial results. The unaudited pro forma condensed consolidated financial statements and the related notes should be read in conjunction with the Company’s audited financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 and the Company’s Quarterly Report on Form 10-Q for the nine months ended September 30, 2016.

The unaudited pro forma information reflects the repayment of all borrowings, and accrued and unpaid interest, under the Company’s term loan facility and the 3.00% Senior notes due 2019, as well as partial repayments to the 1.875% Senior notes due 2021, the 4.15% Senior notes due 2024, the 4.50% Senior notes due 2020 and the commercial paper notes. The Company has elected to assume that the remaining cash proceeds will be used for general corporate purposes, which may include investing in growth of the remaining businesses and returning capital to shareholders. In accordance with Securities and Exchange Commission (“SEC”) guidance, we have assumed no interest income on the remaining cash proceeds.


2

ALBEMARLE CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
(Unaudited)
 
 
September 30, 2016
 
Albemarle Corporation Historical
 
Pro Forma Adjustments
 
Pro Forma
Assets
 
 
 
 
 
Current assets:
 
 
 
 
 
Cash and cash equivalents
$
233,599

 
$
969,314

(a)
$
1,202,913

Trade accounts receivable, less allowance for doubtful accounts ($14,078)
441,266

 
—

 
441,266

Other accounts receivable
50,250

 
—

 
50,250

Inventories
504,984

 
—

 
504,984

Other current assets
72,027

 
—

 
72,027

Assets held for sale
255,577

 
(255,577
)
(b)
—

Total current assets
1,557,703

 
713,737

 
2,271,440

Property, plant and equipment, at cost
3,890,254

 
—

 
3,890,254

Less accumulated depreciation and amortization
1,545,287

 
—

 
1,545,287

Net property, plant and equipment
2,344,967

 
—

 
2,344,967

Investments
468,765

 
—

 
468,765

Noncurrent assets held for sale
2,975,016

 
(2,975,016
)
(b)
—

Other assets
185,943

 
—

 
185,943

Goodwill
1,484,182

 
—

 
1,484,182

Other intangibles, net of amortization
380,368

 
—

 
380,368

Total assets
$
9,396,944

 
$
(2,261,279
)
 
$
7,135,665

Liabilities And Equity
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accounts payable
$
241,511

 
$
—

 
$
241,511

Accrued expenses
240,652

 
(2,683
)
(c)
237,969

Current portion of long-term debt
400,892

 
(50,000
)
(d)
350,892

Dividends payable
34,077

 
—

 
34,077

Liabilities held for sale
135,735

 
(135,735
)
(b)
—

Income taxes payable
23,967

 
—

 
23,967

Total current liabilities
1,076,834

 
(188,418
)
 
888,416

Long-term debt
3,048,440

 
(1,610,860
)
(d)
1,437,580

Postretirement benefits
49,157

 
—

 
49,157

Pension benefits
292,853

 
—

 
292,853

Noncurrent liabilities held for sale
466,687

 
(466,687
)
(b)
—

Other noncurrent liabilities
228,270

 
—

 
228,270

Deferred income taxes
783,270

 
(411,304
)
(e)
371,966

Equity:
 
 
 
 
 
Albemarle Corporation shareholders’ equity:
 
 
 
 
 
Common stock, $.01 par value, issued and outstanding – 112,466
1,124

 
—

 
1,124

Additional paid-in capital
2,078,169

 
—

 
2,078,169

Accumulated other comprehensive loss
(334,431
)
 
—

 
(334,431
)
Retained earnings
1,554,160

 
415,990

(f)
1,970,150

Total Albemarle Corporation shareholders’ equity
3,299,022

 
415,990

 
3,715,012

Noncontrolling interests
152,411

 
—

 
152,411

Total equity
3,451,433

 
415,990

 
3,867,423

Total liabilities and equity
$
9,396,944

 
$
(2,261,279
)
 
$
7,135,665

See accompanying Notes to the Pro Forma Condensed Consolidated Financial Statements.

3

ALBEMARLE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
 
Nine Months Ended 
September 30, 2016
 
Albemarle Corporation Historical
 
Pro Forma Adjustments
 
Pro Forma
Net sales
$
1,980,548

 
$
—

 
$
1,980,548

Cost of goods sold
1,250,938

 
—

 
1,250,938

Gross profit
729,610

 
—

 
729,610

Selling, general and administrative expenses
254,988

 
—

 
254,988

Research and development expenses
61,384

 
—

 
61,384

Gain on sales of businesses, net
(122,298
)
 
—

 
(122,298
)
Acquisition and integration related costs
44,337

 
—

 
44,337

Operating profit
491,199

 
—

 
491,199

Interest and financing expenses
(46,860
)
 
3,442

(g)(i)
(43,418
)
Other income, net
740

 
—

 
740

Income from continuing operations before income taxes and equity in net income of unconsolidated investments
445,079

 
3,442

 
448,521

Income tax expense
61,535

 
1,205

(h)(i)
62,740

Income from continuing operations before equity in net income of unconsolidated investments
383,544

 
2,237

 
385,781

Equity in net income of unconsolidated investments (net of tax)
44,790

 
—

 
44,790

Net income from continuing operations
428,334

 
2,237

 
430,571

Net income from continuing operations attributable to noncontrolling interests
(28,906
)
 
—

 
(28,906
)
Net income from continuing operations attributable to Albemarle Corporation
$
399,428

 
$
2,237

 
$
401,665

 
 
 
 
 
 
Basic earnings per share
$
3.56

 


 
$
3.58

Diluted earnings per share
$
3.53

 


 
$
3.55

 
 
 
 
 
 
Weighted-average common shares outstanding – basic
112,343

 
 
 
112,343

Weighted-average common shares outstanding – diluted
113,131

 
 
 
113,131

See accompanying Notes to the Pro Forma Condensed Consolidated Financial Statements.








4

ALBEMARLE CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Share Amounts)
(Unaudited)
 
 
Year Ended 
December 31, 2015
 
Albemarle Corporation Historical
 
Pro Forma Adjustments
 
Pro Forma
Net sales
$
3,651,335

 
$
(824,906
)
(i)
$
2,826,429

Cost of goods sold
2,454,463

 
(488,267
)
(i)
1,966,196

Gross profit
1,196,872

 
(336,639
)
 
860,233

Selling, general and administrative expenses
512,274

 
(211,834
)
(i)
300,440

Research and development expenses
102,871

 
(13,684
)
(i)
89,187

Restructuring and other, net
(6,804
)
 
—

 
(6,804
)
Acquisition and integration related costs
146,096

 
(13,797
)
(i)
132,299

Operating profit
442,435

 
(97,324
)
 
345,111

Interest and financing expenses
(132,722
)
 
30,685

(g)(i)
(102,037
)
Other income, net
48,474

 
(1,190
)
(i)
47,284

Income from continuing operations before income taxes and equity in net income of unconsolidated investments
358,187

 
(67,829
)
 
290,358

Income tax expense
29,122

 
(23,740
)
(h)(i)
5,382

Income from continuing operations before equity in net income of unconsolidated investments
329,065

 
(44,089
)
 
284,976

Equity in net income of unconsolidated investments (net of tax)
30,999

 
(3,021
)
(i)
27,978

Net income from continuing operations
360,064

 
(47,110
)
 
312,954

Net income from continuing operations attributable to noncontrolling interests
(25,158
)
 
94

(i)
(25,064
)
Net income from continuing operations attributable to Albemarle Corporation
$
334,906

 
$
(47,016
)
 
$
287,890

 
 
 
 
 
 
Basic earnings per share
$
3.01

 


 
$
2.59

Diluted earnings per share
$
3.00

 


 
$
2.58

 
 
 
 
 
 
Weighted-average common shares outstanding – basic
111,182

 


 
111,182

Weighted-average common shares outstanding – diluted
111,556

 


 
111,556

See accompanying Notes to the Pro Forma Condensed Consolidated Financial Statements.


5

ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited)

NOTE 1—Pro Forma Assumptions and Adjustments:

Adjustments to the Pro Forma Condensed Consolidated Balance Sheet

(a)
Cash and cash equivalents is adjusted as follows (in thousands):
Gross proceeds
$
3,200,000

Estimated purchase price adjustments
(156,883
)
Net proceeds
$
3,043,117

Less:
 
Repayment of debt principal
(1,669,000
)
Debt repayment fees
(54,000
)
Accrued interest on debt repayment
(2,683
)
Estimated tax payments
(303,120
)
Estimated fees and expenses associated with the sale
(45,000
)
 
$
969,314

The net proceeds represent proceeds of $3.2 billion reduced by certain purchase price adjustments as defined in the purchase agreement, such as the Chemetall Surface Treatment business net pension liability, indebtedness, working capital and other adjustments. The purchase price adjustments do not reflect an adjustment for the cash balances of the Chemetall Surface Treatment business that will be included in the sale, as there would be no net effect on the Albemarle pro forma cash and cash equivalents balance. The Company has elected to assume that the remaining cash proceeds will be used for general corporate purposes. In accordance with SEC guidance, we have assumed no interest income on the remaining cash proceeds.

(b)
Represents the elimination of the assets and liabilities of the Chemetall Surface Treatment business.

(c)
Represents accrued interest paid in connection with the full repayment of the term loan facilities and 3.00% Senior notes.

(d)
Long-term debt is reduced as follows (in thousands):
Term loan facilities
$
869,000

1.875% Senior notes
200,000

3.00% Senior notes
250,000

4.15% Senior notes
150,000

4.50% Senior notes
150,000

Commercial paper notes
50,000

Unamortized discounts
(2,343
)
Unamortized debt issuance costs
(5,797
)
 
$
1,660,860


(e)
Represents a discrete tax liability of $381.5 million due to a change in the Company’s position with respect to book and tax basis differences related to a U.S. entity being sold, as well as a discrete tax liability of $29.8 million related to a change in the Company’s position with respect to reinvestment of foreign undistributed earnings. Upon completion of the sale of the Chemetall Surface Treatment business, this deferred tax liability with respect to the difference between book and tax basis will be released and the actual cash taxes on the gain on sale will be recorded.

(f)
Represents the estimated after tax net gain on sale, as well as the reversal of the discrete tax liability noted above. The effects of the gain were not reflected in the pro forma statements of income as the adjustments are nonrecurring in nature.


6

ALBEMARLE CORPORATION AND SUBSIDIARIES
Notes to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited)

Adjustments to the Pro Forma Consolidated Statements of Income

(g)
The pro forma interest expense assumes the pro forma debt repayments described above. The pro forma adjustment for nine months ended September 30, 2016 represents the difference in the interest expense of the pro forma debt repayments described above and the interest expense allocated to discontinued operations in the historical consolidated statements of income.

(h)
The income tax impact has been calculated using the statutory rate of 35%.

(i)
Represents the elimination of the revenue, cost of goods sold, income and expenses of the Chemetall Surface Treatment business.


7