SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): February 17, 1998
BETZDEARBORN INC.
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(Exact Name of Registrant as Specified in Charter)
Pennsylvania 0-2085 23-1503731
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
4636 Somerton Road, Trevose, PA 19053
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Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (215) 355-3300
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<PAGE>
Item 5: Other Events
The Company made the following press release of its 1997 year-end results on
February 3, 1998. As noted in the table containing the "Consolidated Statements
of Operations", the Company has restated earnings per share and average number
of common share amounts to comply with Statement of Financial Accounting
Standards No. 128, "Earnings Per Share". The restated amounts for all prior
periods are not materially different from those amounts previously reported by
the Company.
[BetzDearborn Logo]
News release
Contact: W. T. Drury, Jr. R. J. Palangio
Assistant Vice President Manager of Public Relations
Investor Relations (215) 953-2417
(215) 953-2355
BETZDEARBORN INC. REPORTS RECORD SALES
Diluted EPS At $0.77 Exclusive Of Certain Charges
Trevose, PA, February 3, 1998 - BetzDearborn Inc. (NYSE, BTL), a global company
which produces and markets specialty chemical treatment programs for water,
wastewater and industrial process systems, today reported that fourth quarter
net sales were up in excess of 3% from $323.2 million to a record $334.2
million.
Excluding restructuring and integration costs and the cumulative effect of an
accounting change, net earnings for the quarter were $25.7 million compared to
$21.8 million for the same period last year, an increase of 18%. Diluted
earnings per share, excluding the above items, were $0.77 compared to $0.68 in
1996, an increase of 13%.
<PAGE>
On November 20, 1997, the Emerging Issues Task Force of the Financial Accounting
Standards Board issued a consensus ruling which required that certain business
process reengineering costs previously capitalized must now be expensed as
incurred. As a part of this ruling, any previously capitalized costs of this
nature must be written off as a cumulative effect type adjustment in the quarter
containing November 20, 1997. This resulted in an after-tax charge of $6.0
million or $0.19 per share. Diluted earnings per share for the quarter, as
reported, were $0.59 versus $0.34 for the same period last year.
Sales for the full year 1997 increased 25% from $1,037.0 million to a record
$1,294.8 million. Excluding integration and restructuring costs and the
cumulative charge due to the accounting change, net earnings were also a record,
increasing 21% from $84.4 million to $102.2 million. Diluted earnings per share
exclusive of these same items increased 17% from $2.66 in 1996 to a record $3.11
in 1997. Diluted earnings per share for the year, as reported, were $2.61 versus
$2.01 last year.
For the quarter, the strong dollar reduced non-U.S. sales by approximately $14
million. Without this effect, consolidated sales would have been up
approximately 8%.
Commenting on results for 1997, William R. Cook, Chairman, President and Chief
Executive Officer of BetzDearborn, said "We are extremely pleased with the
Company's performance not only in the fourth quarter, but for the entire year of
1997. We endured some significant integration distractions during the first half
of the year, and foreign currency movements have had a significant negative
impact on sales and earnings throughout the year. Despite these difficulties, we
were able to achieve solid improvement in sales momentum throughout the year and
to post record earnings. This is an outstanding accomplishment and is
attributable to the hard work and dedication of all our employees."
"In the fourth quarter, our three global process chemical business units again
had a combined increase in the mid teens on a local currency basis, led by our
Hydrocarbon Process Group with an increase of over 20%, and our Paper Process
Group with an increase in the mid teens. Our global Water Management Group had
an improved performance in the fourth quarter with a local currency increase in
the mid single-digit range."
"On a regional basis, sales in the Asia Pacific region were up in the upper
single digit range in U.S. dollars and over 20% in local currencies. European
sales were up in the mid-single digit range in U.S. dollars and mid-teen range
in local currencies. In Latin America, sales were up in the mid-teen range in
U.S. dollars and upper-teen range in local currencies and in North America sales
were up in the low single-digit range in U.S. dollars and mid-single digit range
in local currencies."
<PAGE>
"Gross margin for the quarter was up slightly from last year but down slightly
compared to the third quarter of 1997. This reduction versus the third quarter
is due primarily to some product mix changes and the impact of the strong dollar
on raw material pricing in regions outside the U.S. 1998 will be a year of
continued opportunity for growth, but will also offer some significant
challenges. The turmoil in the Asia Pacific market and its potential impact on
the economies of other regions of the world presents risks to all companies
operating in the region. However in the long term, we believe the Asia Pacific
market, although currently only a small percentage of our existing sales base,
offers excellent opportunity for growth. During the current turmoil, we will
balance the need to minimize any short-term negative impact with the need to
optimize our long-term growth prospects in the region. Despite the economic
uncertainties in some of our markets, we are encouraged about 1998 because of
factors which are under our control, such as greater sales time availability of
our sales force, the continued roll-out of World Class Technology and the
ongoing focus on new technology development which had a significant impact on
our improved performance during the year. We believe more than ever that, during
these times of economic uncertainty, our customers will benefit from our strong
technical service and world class technology as we help them continue to reduce
their operating costs and meet their environmental objectives."
BetzDearborn Inc. is the world's preeminent supplier of water and industrial
process treatments, and was created in June, 1996 with the union of Betz
Laboratories, Inc. and Grace Dearborn, the water treatment division of W. R.
Grace & Co. The Company's services are used in a variety of industrial and
commercial applications, with particular emphasis on the chemical, petroleum
refining, paper, food processing, automotive, steel, and power industries. On an
annualized basis, the Company has sales of approximately $1.3 billion and has a
global workforce of over 6,200 employees.
Statements contained in this release, including statements relating to the
Company's expectations for anticipated growth in the future, are "forward
looking statements", as such term is defined in the Private Securities
Litigation Act of 1995. Actual results could differ materially from the
Company's statements in this release regarding its anticipated performance, due
to various factors such as foreign currency fluctuations, costs or disruptions
associated with the implementation of business process reengineering,
information technology transformation projects, and Year 2000 issues and the
impact on growth from economic and market conditions, especially as exists in
the Asia Pacific region.
<PAGE>
BETZDEARBORN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
December 31, December 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 334.2 $ 323.2 $ 1,294.8 $ 1,037.0
Operating costs and expenses:
Cost of products sold 134.8 131.2 518.7 409.3
Selling, research and administration 148.4 148.1 570.6 472.0
Integration/restructuring (0.1) 15.5 15.6 30.0
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283.1 294.8 1,104.9 911.3
OPERATING EARNINGS 51.1 28.4 189.9 125.7
Other income (expense):
Investment and other income (0.7) 0.6 (1.5) (0.3)
Interest expense (10.5) (12.0) (45.5) (25.7)
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(11.2) (11.4) (47.0) (26.0)
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EARNINGS BEFORE INCOME TAXES
AND CUMULATIVE EFFECT OF
ACCOUNTING CHANGE 39.9 17.0 142.9 99.7
Income taxes 14.1 5.6 50.7 35.4
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EARNINGS BEFORE CUMULATIVE
EFFECT OF ACCOUNTING CHANGE 25.8 11.4 92.2 64.3
Cumulative effect of accounting change, net of tax (6.0) -- (6.0) --
--------- ----------- ----------- -----------
NET EARNINGS $ 19.8 $ 11.4 $ 86.2 $ 64.3
========= =========== =========== ===========
Basic earnings per Common Share:
Before cumulative effect of accounting change $ .84 $ .36 $ 3.02 $ 2.13
Accounting change (.21) -- (.21) --
--------- ----------- ----------- -----------
Basic earnings per Common Share $ .63 $ .36 $ 2.81 $ 2.13
========= =========== =========== ===========
Diluted earnings per Common Share:
Before cumulative effect of accounting change $ .78 $ .34 $ 2.80 $ 2.01
Accounting change (.19) -- (.19) --
--------- ----------- ----------- -----------
Diluted earnings per Common Share $ .59 $ .34 $ 2.61 $ 2.01
========= =========== =========== ===========
Average number of Common Shares:
Basic 29.1 27.8 28.7 27.7
========= =========== =========== ===========
Diluted 32.3 31.1 32.0 30.7
========= =========== =========== ===========
</TABLE>
All earnings per share and average number of common shares amounts prior to the
fourth quarter 1997 have been restated to comply with Statement of Financial
Accounting Standards No. 128, Earnings per Share.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behlaf by the
undersigned hereunto duly authorized.
Date: February 17, 1998 BetzDearborn Inc.
By: /s/ William R. Cook
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Name: William R. Cook
Chairman, President and
Chief Executive Officer
