<PAGE>
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Page 1 of 16 Pages
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For Transition Period from to
For Quarter Ended June 30, 1995 Commission File Number 1-5112
ETHYL CORPORATION
(Exact name of registrant as specified in its charter)
VIRGINIA 54-0118820
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
330 SOUTH FOURTH STREET
P. O. BOX 2189
RICHMOND, VIRGINIA 23217
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code - (804) 788-5000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
Number of shares of common stock, $1 par value, outstanding as of
July 31, 1995: 118,434,401.
<PAGE>
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ETHYL CORPORATION
I N D E X
Page
Number
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets - June 30, 1995 and December
31, 1994 3 - 4
Consolidated Statements of Income - Three Months and Six
Months Ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994 6
Notes to Financial Statements 7 - 8
ITEM 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 9 - 14
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 15
ITEM 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
2<PAGE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<CAPTION>
June 30
1995 December 31
ASSETS (unaudited) 1994
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 39,113 $ 31,166
Accounts receivable, less allowance for doubtful
accounts (1995 - $2,428; 1994 - $2,395) 182,879 229,477
Inventories:
Finished goods 145,867 118,731
Work-in-process 12,955 9,959
Raw materials 17,746 10,842
Stores, supplies and other 6,789 5,531
----------- -----------
183,357 145,063
Deferred income taxes and prepaid expenses 20,595 25,744
----------- -----------
Total current assets 425,944 431,450
----------- -----------
Property, plant and equipment, at cost 698,182 684,379
Less accumulated depreciation and amortization (266,344) (250,012)
----------- -----------
Net property, plant and equipment 431,838 434,367
----------- -----------
Other assets and deferred charges 148,392 144,856
Goodwill and other intangibles - net of amortization 18,632 19,742
----------- -----------
Total assets $ 1,024,806 $ 1,030,415
=========== ===========
<FN>
See accompanying notes to financial statements.
</TABLE>
3<PAGE>
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<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
<CAPTION>
June 30
1995 December 31
LIABILITIES AND SHAREHOLDERS' EQUITY (unaudited) 1994
--------- ----------
<S> <C> <C>
Current liabilities:
Accounts payable $ 70,329 $ 77,223
Accrued expenses 55,680 73,118
Cash dividends payable 14,804 14,807
Income taxes payable 23,400 17,652
--------- ----------
Total current liabilities 164,213 182,800
--------- ----------
Long-term debt 332,869 349,766
Other noncurrent liabilities 83,102 78,902
Deferred income taxes 39,023 28,010
Shareholders' equity:
Common stock ($1 par value)
Issued - 118,434,401 in 1995 and 1994 118,434 118,434
Additional paid-in capital 2,706 2,706
Foreign currency translation adjustments 7,518 (2,253)
Retained earnings 276,941 272,050
--------- ----------
405,599 390,937
--------- ----------
Total liabilities and shareholders' equity $ 1,024,806 $ 1,030,415
========= ==========
<FN>
See accompanying notes to financial statements.
</TABLE>
4<PAGE>
<PAGE> 5
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands Except Per Share Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30
------------------- ------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 224,530 $ 276,083 $ 458,821 $ 665,165
Cost of goods sold 153,931 168,320 306,043 441,861
-------- -------- -------- --------
Gross profit 70,599 107,763 152,778 223,304
Selling, general and administrative
expenses 23,746 36,643 47,146 85,719
Research, development and testing
expenses 19,226 17,993 38,505 43,472
-------- -------- -------- --------
Operating profit 27,627 53,127 67,127 94,113
Interest and financing expenses 7,753 4,744 14,017 12,766
Other expense (income), net 152 12 (248) (78)
-------- -------- -------- --------
Income before income taxes 19,722 48,371 53,358 81,425
Income taxes 6,716 17,993 18,859 30,783
-------- -------- -------- --------
Net Income 13,006 30,378 34,499 50,642
Preferred stock dividends - (3) - (6)
-------- -------- -------- --------
Net income applicable to common
stock $ 13,006 $ 30,375 $ 34,499 $ 50,636
======== ======== ======== ========
Earnings per share $ .11 $ .26 $ .29 $ .43
======== ======== ======== ========
Shares used to compute earnings per
share 118,443 118,454 118,441 118,458
======== ======== ======== ========
Cash dividends per share of common
stock $ .125 $ .125 $ .25 $ .275
======== ======== ======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
5<PAGE>
<PAGE> 6
<TABLE>
ETHYL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30
--------------------
1995 1994
--------------------
<S> <C> <C>
Cash and cash equivalents at beginning of year $ 31,166 $ 48,201
-------- --------
Cash flows from operating activities:
Net income 34,499 50,642
Adjustments to reconcile net income to cash flows
from operating activities:
Depreciation and amortization 23,625 33,084
Working capital decrease (increase) 14,427 (29,570)
Other, net 2,969 (393)
-------- --------
Cash provided from operating activities 75,520 53,763
-------- --------
Cash flows from investing activities:
Capital expenditures (23,052) (106,827)
Other, net 1,896 (586)
-------- --------
Cash used in investing activities (21,156) (107,413)
-------- --------
Cash flows from financing activities:
Additional long-term debt - 77,900
Repayment of long-term debt (17,000) -
Cash dividends paid (29,613) (32,269)
Cash and cash equivalents of Albemarle spun off
as a dividend on February 28, 1994 - (29,332)
Other, net 196 261
-------- --------
Cash (used in) provided from financing
activities (46,417) 16,560
-------- --------
Increase (decrease) in cash and cash equivalents 7,947 (37,090)
-------- --------
Cash and cash equivalents at end of period $ 39,113 $ 11,111
======== ========
<FN>
See accompanying notes to financial statements.
</TABLE>
6<PAGE>
<PAGE> 7
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(In Thousands Except Per-Share Amounts)
(Unaudited)
1. In the opinion of management, the accompanying consolidated
financial statements of Ethyl Corporation and Subsidiaries (the
"Company") contain all adjustments necessary to present fairly,
in all material respects, the Company's consolidated financial
position as of June 30, 1995, the consolidated results of
operations for the three and six-month periods ended June 30,
1995 and 1994 and the consolidated cash flows for the six-month
periods ended June 30, 1995 and 1994. All adjustments are of a
normal, recurring nature. Certain reclassifications have been
made to prior year information to conform to the current
presentation. These financial statements should be read in
conjunction with the consolidated financial statements and notes
thereto included in the December 31, 1994, Annual Report. The
December 31, 1994, consolidated balance sheet data was derived
from audited financial statements but does not include all
disclosures required by generally accepted accounting
principles. The results of operations for the six-month period
ended June 30, 1995, are not necessarily indicative of the
results to be expected for the full year.
2. At the close of business on February 28, 1994, the Company
completed the distribution to its common shareholders of all of
the outstanding shares of its wholly owned subsidiary, Albemarle
Corporation ("Albemarle"), a Virginia corporation. Following
the distribution, Albemarle owned, directly or indirectly, the
olefins and derivatives, bromine chemicals and specialty
chemical businesses formerly owned directly or indirectly by the
Company. The distribution was made in the form of a tax-free
spin-off to shareholders of record at the close of business on
February 28, 1994. One share of Albemarle common stock was
distributed to Ethyl common shareholders for every two shares of
Ethyl common stock held. The operating results and cash flows
of the predecessor businesses to what is now Albemarle are
included in the Consolidated Statement of Income and the
Condensed Consolidated Statement of Cash Flows for the first two
months in 1994.
The following non-cash supplemental information is provided
regarding the accounts of Albemarle spun off as a stock dividend,
which aggregated $404,100 (including cash and cash equivalents of
$29,332) on February 28, 1994:
Working capital, net of cash and cash equivalents $174,847
Net property, plant and equipment 663,505
Other assets and deferred charges 49,480
Goodwill and other intangibles 33,132
Long-term debt (384,924)
Other non-current liabilities (40,996)
Deferred income taxes (120,276)
-------
Non-cash portion of businesses spun off $374,768
=======
<TABLE>
3. Long-term debt consists of the following:
<CAPTION>
June 30 December 31
1995 1994
--------- -----------
<S> <C> <C>
Variable-rate bank loans (average effective
interest rates were 6.6% for the six-month
period ended June 30, 1995 and 4.5% for
the year 1994) $100,000 $117,000
9.8% Notes due 1998 200,000 200,000
8.6% to 8.86% Medium-Term Notes due through
2001 33,750 33,750
------- -------
Total long-term debt 333,750 350,750
Less unamortized discount (881) (984)
------- -------
Net long-term debt $332,869 $349,766
======= =======
</TABLE>
7<PAGE>
<PAGE> 8
ETHYL CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(In Thousands Except Per-Share Amounts)
(Unaudited)
4. The Company is providing the following pro forma information to enable
the reader to obtain a meaningful understanding of the Company's results
of operations. The pro forma statement of income presented is for
informational purposes only to illustrate the estimated effects of the
distribution of Albemarle as if it had occurred on January 1, 1994.
<TABLE>
Statements of Income
(In thousands except earnings per share)
<CAPTION>
Six Months Ended June 30
-------------------------------------
1994
-------------------------------------
Historical Adjustments(i) Pro Forma
-------------------------------------
<C> <C> <C>
Net sales $ 665,165 $ (155,064) $ 510,101
Cost of goods sold 441,861 (119,086) 322,775
------- -------- -------
Gross profit 223,304 (35,978) 187,326
Selling, general and administrative expense 85,719 (14,471) 71,248
Research, development and testing expense 43,472 (8,662) 34,810
------- -------- -------
Operating profit 94,113 (12,845) 81,268
Interest and financing expenses 12,766 (2,873)(ii) 9,893
Other (income) expense, net (78) 543 465
------- -------- -------
Income before income taxes 81,425 (10,515) 70,910
Income taxes 30,783 (4,239)(iii) 26,544
------- -------- -------
Net Income $ 50,642 $ (6,276) $ 44,366
======= ======== =======
Earnings per share (iv) $ .43 $ .38
======= =======
<FN>
Introduction to Notes:
Notes (i), (ii) and (iii) reflect a summary of the adjustments in the pro forma statement of income.
Notes:
(i) To eliminate the historical income and expenses of Albemarle for the period presented.
(ii) To eliminate interest expense (net of capitalized interest) that would have been incurred by
Albemarle on debt transferred to Albemarle.
(iii) To record the estimated income tax for the pro forma adjustments.
(iv) Historical and pro forma earnings per share are computed after deducting applicable stock
dividends using the weighted-average number of shares of common stock and common stock
equivalents outstanding for the period presented.
</TABLE>
8<PAGE>
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following is management's discussion and analysis of certain significant
factors affecting the Company's results of operations during the periods
included in the accompanying consolidated statements of income and changes
in the Company's financial condition since year-end 1994.
At the close of business on February 28, 1994, the Company completed the
tax-free spin-off of its wholly owned subsidiary, Albemarle Corporation
(Albemarle). Consequently, Albemarle's results of operations are included
in the Consolidated Statements of Income and the Condensed Consolidated
Statements of Cash Flows for only the first two months of 1994. Due to the
significance of the spin-off of Albemarle, a pro forma statement of income is
provided for the six-month period ended June 30, 1994, in Note 4 of the Notes
to Financial Statements for informational purposes to illustrate the estimated
effects of the distribution of Albemarle stock assuming the distribution had
occurred as of January 1, 1994, which includes interest charges resulting from
an assumed debt structure. In the following review, in addition to the
consolidated information discussed for six months 1995 versus 1994, pro forma
comparisons are provided to illustrate the Company's 1994 results excluding
the Albemarle businesses spun off. The pro forma information presented is
not necessarily indicative of the future results of operations of the Company
or what the results of operations would have been had Albemarle operated as a
separate, independent company during the period presented.
On September 15, 1994, Ethyl sold its pharmaceutical subsidiary, Whitby, Inc.,
placing Ethyl solely in the petroleum additives business.
During the second quarter 1995, to more effectively respond to current market
opportunities, the Company aligned its operations into two strategic business
units--Petroleum Additives and Refinery Chemicals. Petroleum Additives
includes lubricant additives and certain fuel additives, while Refinery
Chemicals includes antiknocks and certain other refinery fuel additives.
Second Quarter 1995 Compared with Second Quarter 1994
Total net sales for the second quarter of 1995 amounted to $224.5 million,
down $51.6 million from $276.1 million in 1994. The reduction in aggregate
net sales reflected the absence of revenues from the pharmaceuticals business
in 1995 versus $16.2 million included in the 1994 quarter while the $35.4
million reduction in petroleum additives business sales reflected the effect
of lower shipments ($52.5 million) partly offset by the beneficial impact
from higher selling prices ($17.1 million).
The decreased shipments primarily reflected the forecasted lower shipments of
lead antiknocks compared to the unusually high levels in the second quarter
1994, resulting from normal fluctuations in order and shipping patterns, as
well as lower shipments of lubricant additives and other fuel additives.
These decreases were slightly offset by the higher revenues from other
refinery fuel additives, which reflected both higher shipments and higher
selling prices.
9<PAGE>
<PAGE> 10
Cost of goods sold in 1995 decreased $14.4 million from the 1994 period. The
decline in cost of goods sold occurred due to the absence of pharmaceuticals
costs in 1995 versus $6.2 million in the 1994 quarter, as well as $8.2
million lower cost of goods sold from the petroleum additives business. The
lower petroleum additives business cost of goods sold reflects the combined
impact of lower shipments in 1995 ($29.2 million) largely offset by higher
costs ($21.0 million), including expected capacity utilization costs
reflecting the second quarter 1995 shutdown of operations at a contract
manufacturing site, expected costs associated with starting up the recently
completed facilities at Houston, Texas, Sauget, Illinois, and Natchez,
Mississippi, and costs associated with the strike at Feluy, Belgium in April
1995, higher per unit raw material costs and an unfavorable foreign exchange
effect.
Gross profit margin decreased to 31.4% in the 1995 quarter from 39.0% in the
1994 quarter, representing the net result of a 19% decrease in net sales and
a nine percent decrease in cost of goods sold. Both the unusually low
margin in 1995 and the unusually high margin in 1994 reflect the fluctuating
level of antiknock shipments included in the product mix during these
quarters.
Selling, general and administrative expenses, combined with research,
development and testing expenses, amounted to $43.0 million in the second
quarter 1995, down $11.6 million from $54.6 million in the second quarter
of 1994. The decrease primarily represents the absence of pharmaceuticals
expenses in 1995 versus $10.5 million expenses in the 1994 period as well as
$1.1 million lower petroleum additives business expenses. The lower 1995
petroleum additives business expenses primarily reflected the nonrecurrence
of charges in 1994 related to closing certain research facilities as well as
organization expenses, partly offset by a $1.2 million increase in research,
development and testing expenses due to increased HiTEC 3000 performance
additive (MMT) approval activities and higher outside testing cost. As a
percentage of net sales, selling, general and administrative expenses,
including research, development and testing expenses, decreased to 19.1%
during the 1995 quarter from 19.8% during the 1994 quarter. Excluding the
impact of the pharmaceutical business that was sold in September 1994, the
expenses would have represented 17.0% of net sales in the 1994 quarter.
Operating profit in the 1995 quarter decreased to $27.6 million, down $25.5
million from $53.1 million in the 1994 quarter. Approximately $23.4 million
of the decrease resulted from the effect of lower shipments, including
significantly lower antiknock shipments due to normal fluctuations in order
and shipping patterns and somewhat lower lubricant additives shipments.
Interest and financing expense in 1995 increased 63% to $7.8 million from
$4.7 million in the 1994 period. The increase in interest expense was due
to about $2.9 million lower interest cost capitalized in 1995 than in 1994,
as well as a $0.9 million increase due to higher average interest rates,
partially reduced by the effect of lower average debt outstanding.
Other expense, net, increased to $152 thousand in second quarter 1995 from
$12 thousand in 1994 with no significant items included in either period.
10<PAGE>
<PAGE> 11
Income Taxes
Income taxes in second quarter 1995 decreased 63% from second quarter 1994,
primarily due to a 59% decrease in pretax income, and also reflecting a lower
effective rate (34.1% in the 1995 quarter versus 37.2% in the 1994 quarter).
The lower 1995 effective tax rate was primarily due to the benefit from a
redetermination of prior year research and development tax credits resulting
from a change in Federal tax regulations as well as the inclusion in 1994 of
non-deductible goodwill amortization associated with the pharmaceuticals
business sold in September 1994.
Six Months 1995 Compared with Six Months 1994
Total net sales for the six months of 1995 amounted to $458.8 million, down
$206.4 million from $665.2 million in 1994. The reduction in aggregate net
sales primarily reflected the absence of Albemarle net sales in the 1995
period versus the inclusion of two months of Albemarle net sales of $155.1
million in the 1994 period.
Net sales for the first six months of 1995 of $458.8 million decreased $51.3
million (10%) from pro forma net sales in the first six months of 1994 of
$510.1 million. The decrease primarily reflected the absence of
pharmaceutical sales ($34.7 million included in 1994) as well as $16.6
million lower petroleum additives business sales. The lower petroleum
additives business sales reflect lower shipments ($47.9 million) that were
largely offset by the impact of higher selling prices ($31.3 million). The
decrease in shipments primarily reflected lower lead antiknocks shipments,
resulting from expected fluctuations in order and shipping patterns compared
to the 1994 period, as well as lower shipments of lubricant additives and
other fuel additives. These decreases were slightly offset by higher
revenues from other refinery fuel additives, reflecting both higher shipments
and higher selling prices.
Cost of goods sold in six months 1995 decreased $135.8 million from the 1994
period. The decline in consolidated cost of goods sold occurred primarily
due to the absence of Albemarle costs in 1995 versus the inclusion of two
months of Albemarle cost of goods sold of $119.1 million in the 1994 period.
Cost of goods sold of $306.0 million for six months 1995 was down about $16.7
million (5%) from six months 1994 pro forma cost of goods sold of $322.8
million. The decrease reflects the absence of pharmaceuticals cost of sales
in 1995 versus about $12.4 million in the 1994 period as well as $4.3 million
lower petroleum additives business cost of goods sold. The lower petroleum
additives business cost of goods sold is due to lower shipments ($27.8
million), largely offset by higher costs ($23.4 million) including expected
capacity utilization costs reflecting the second quarter 1995 shutdown of
operations at a contract manufacturing site, expected costs associated with
starting up the recently completed facilities at several plants (about $4.8
million in 1995 versus $1.0 million in 1994), costs associated with the
strike at Feluy, higher per unit raw material costs and an unfavorable
foreign exchange effect.
11<PAGE>
<PAGE> 12
Gross profit margin decreased to 33.3% in the 1995 period from 36.7% on a
pro forma basis in the 1994 period, resulting from the net effect of a 10%
decrease in net sales and a five percent decrease in cost of goods sold.
Selling, general and administrative expenses, combined with research,
development and testing expenses, amounted to $85.7 million in the first six
months of 1995 versus $129.2 million in the first six months of 1994. The
reduction in consolidated expenses occurred primarily because of the absence
of Albemarle expenses in 1995 versus the inclusion of two months of Albemarle
expenses of $23.1 million in the 1994 period.
Selling, general and administrative expenses of $85.7 million in the 1995
period were down $20.4 million (19%) from six month 1994 pro forma selling,
general and administrative expenses of $106.1 million. The decrease
represents the absence of expenses from Whitby, Inc. in 1995 versus $21.9
million expenses in the 1994 period, slightly offset by a $1.5 million
increase in petroleum additives business expenses primarily due to a $3.7
million increase in research, development and testing expenses primarily
related to MMT approval activities and higher outside testing cost partially
offset by the nonrecurring 1994 charges related to closing certain research
facilities and certain organization expenses. As a percentage of net sales,
selling, general and administrative expenses, including research, development
and testing expenses, decreased to 18.7% during the six months 1995 from 20.8%
on a pro forma basis for the six months 1994 (17.7% excluding the effects of
the pharmaceuticals business).
Operating profit in 1995 decreased 29% from the 1994 period, which included
two months' operating profit of Albemarle ($12.8 million) during the first
quarter 1994.
Operating profit in the first six months of 1995 decreased 17% to $67.1
million from pro forma operating profit of $81.3 million in the 1994 quarter.
Most of the decrease (approximately $20.1 million) resulted from lower
shipments, primarily of lead antiknocks (reflecting expected fluctuations in
order and shipping patterns) and lubricant additives, and somewhat lower
profit margins, as well as lower operating profit from other fuel additives
and the absence of pharmaceuticals profit in 1995 versus approximately $0.4
million in the 1994 period. These decreases were slightly offset by higher
profit from other refinery fuel additives.
In spite of quarterly variances in order and shipping patterns, operating
profits from the lead antiknock business in 1995 are expected to be about
even with 1994 while overall year-to-year growth is expected in other
petroleum additives operating profits due to cost improvements and stronger
lubricant additives earnings.
Consolidated interest and financing expenses in 1995 increased 10% to $14.0
million from the 1994 period. This increase more than offset the absence of
interest for Albemarle debt in 1995 versus the inclusion of $2.9 million
interest on Albemarle debt for two months 1994.
Interest and financing expenses for six months 1995 of $14.0 million increased
42% in the first six months of 1995 from pro forma interest and financing
12<PAGE>
<PAGE> 13
expenses of $9.9 million in the 1994 period, primarily reflecting increases
of about $3.2 million due to a lower amount of interest cost capitalized in
1995 than in 1994 and about $1.3 million due to a higher average interest
rate in 1995 slightly offset by the effect of lower average debt outstanding.
Other income, net, increased to $248 thousand in 1995 from $78 thousand in
1994, which included $543 thousand of income associated with Albemarle.
Other income, net, in 1995 increased $713 thousand from pro forma other
expense, net, of $465 thousand in 1994. The increase resulted from higher
interest income on amounts invested in short-term securities during the 1995
period.
Income Taxes
Income taxes for the six months 1995 decreased 39% compared to six months
1994, primarily due to a 34% decrease in pretax income in 1995. Some of
the decrease reflected the absence of Albemarle pretax income and income
taxes in the 1995 period versus two months pretax income and income taxes
included in the 1994 period.
Income taxes for the six months 1995 decreased 29% from pro forma income
taxes for six months 1994, primarily due to a 25% decrease in pretax income,
and also reflecting a lower effective income tax rate (35.3% in the 1995
period versus 37.4% in the 1994 period). The lower 1995 effective tax rate
was due to the benefit from a redetermination of prior year research and
development tax credits resulting from a change in federal tax regulations,
and the inclusion in 1994 of non-deductible goodwill associated with the
pharmaceuticals business sold in September 1994.
Financial Condition and Liquidity
Cash and cash equivalents at June 30, 1995, were about $39.1 million which
represents an increase of about $7.9 million from $31.2 million at year-end
1994. The increase primarily reflects reduced capital spending in 1995,
partly offset by repayment of $17.0 million of long-term debt.
Cash flows were more than sufficient to cover operating activities in the
six months of 1995. Cash flows from operating activities of $75.5 million
were sufficient to cover capital expenditures of $23.1 million, cash
dividends to shareholders of $29.6 million, $17.0 million in repayment of
long-term debt and contribute to an increase of approximately $7.9 million
in cash and cash equivalents. Management anticipates that cash provided
from operations in the future will be sufficient to cover the Company's
operating expenses and projected capital expenditures, service debt
obligations, including reducing long-term debt from the amount outstanding
at June 30, 1995, and make dividend payments to shareholders.
The non-current portion of the Company's long-term debt amounted to $332.9
million at June 30, 1995, compared to $349.8 million at the end of 1994.
The long-term debt to total capitalization ratio was 45.1% on June 30, 1995,
versus 47.2% at December 31, 1994.
13<PAGE>
<PAGE> 14
The Company's capital expenditures in 1995 are expected to be significantly
less than in 1994 as a result of the completion or substantial completion
in 1994 of major capital construction projects, which have since been
completed. The capital spending will be financed primarily from operations.
The amount and timing of repayment of borrowings will depend on the Company's
specific cash requirements.
Recent Developments
On July 27, the Board of Directors approved the proposed September 15, 1995,
redemption of the Company's $200 million 9.8% Notes. The redemption will be
financed under the Company's existing credit lines.
14<PAGE>
<PAGE> 15
PART II - Other Informaiton
ITEM 1. Legal Proceedings
On July 11, 1995, the Administrator of the United States Environmental
Protection Agency (EPA) granted the Company's application for a fuel
additive waiver under section 211(f)(4) of the Clean Air Act to permit the
sale of HiTEC 3000 performance additive (MMT) for use in unleaded gasoline
in the United States. The EPA was ordered to grant this waiver by the U.S.
Court of Appeals for the District of Columbia Circuit in a ruling issued
on April 14, 1995.
EPA continues to challenge the use of MMT in U.S. unleaded gasoline unless
the additive is "registered" or until a decision favorable to the Company
is reached in a lawsuit by the Company challenging the EPA's determination
that the Company must complete additional manganese health testing before
it can obtain a "registration" under the Clean Air Act. Based on the long
history of use of MMT in leaded and unleaded gasoline in the U.S., the
Company maintains that MMT is currently registered. Oral arguments in that
lawsuit are scheduled for September 11, 1995, and a decision is expected
before the end of the year.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
15<PAGE>
<PAGE> 16
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.
ETHYL CORPORATION
(Registrant)
Date: August 8, 1995 By: s/ Charles B. Walker
Vice Chairman of the Board,
Chief Financial Officer
and Treasurer
(Principal Financial Officer)
Date: August 8, 1995 By: s/ Wayne C. Drinkwater,
Controller
(Principal Accounting Officer)
16
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<NAME> ETHYL CORPORATION
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0
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