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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q/A
[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 March 31, 1999 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 23218-2189
(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 April 30,
1999: 83,465,460.
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ETHYL CORPORATION
PURPOSE OF AMENDMENT: The purpose of this Form 10-Q/A is to update the Year 2000
Readiness Disclosure included in Part I, Item 2 of the Form 10-Q for the quarter
ended March 31, 1999 which was filed on May 4, 1999.
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ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition
Update the Year 2000 Readiness Disclosure to read as follows:
Year 2000 Readiness Disclosure:
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The Year 2000 statement in this communication is being designated a Year 2000
Readiness Disclosure within the meaning of the United States Year 2000
Information and Readiness Disclosure Act of 1998.
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We continue aggressively addressing the Year 2000 problem. It is a global effort
covering information systems, process control systems, and embedded controllers.
Ethyl's senior management and board of directors place a high priority on and
have approved the necessary funding to complete the Year 2000 compliance effort.
Our Year 2000 manager coordinates this initiative and provides senior management
with regular status updates.
Our Year 2000 initiatives encompass both information technology (IT) and non-IT
systems, including manufacturing and R&D systems, testing equipment, desktop
computers, and technical infrastructure. The following phases are part of the
initiative:
1. Inventory - Identification of all hardware, software and processes
that are date-aware.
2. Assessment - Determination of Year 2000 compliance of all hardware,
software and processes.
3. Remediation - Correction of any areas which are not compliant.
4. Testing - Review of all hardware, software, and processes for
compliance.
5. Contingency - Development of a plan to address our worst case
scenarios and risk factors.
The inventory and assessment phases are 100% complete, while the remediation and
testing phases are approximately 95% complete. We expect remediation and testing
will be final in the third quarter 1999.
We enhanced our Year 2000 readiness when we converted all mainframe systems to
modern client server systems over the last several years. This included
implementation of SAP R/3, PeopleSoft, and other commercial and desktop
software, all of which are represented to be Year 2000 compliant.
During 1998, we also contracted with an independent third party, which provided
assistance with the review of manufacturing systems and embedded controllers. In
addition, Ethyl engaged another independent third party to perform a status
review of our company-wide Year 2000 program. We used the results to enhance and
focus our Year 2000 efforts, and are conducting a follow-up review in June 1999.
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Ethyl expects our facilities, equipment, and information systems will be fully
functional and will operate accurately and without interruption both before and
after January 1, 2000. We also expect that our products and services will be
available continuously. As part of our remediation and testing phases, we used
scheduled plant shutdowns to implement and test Year 2000 upgrades and
replacements. Our testing results have been satisfactory. We will continue
testing during the year.
Third Party Readiness
We have relationships with third parties, including customers and suppliers of
materials or services, whose non-compliance could have a material effect on our
business operations and financial condition. Therefore, our Year 2000 efforts
include reviewing the readiness efforts of our mission critical third parties.
We have contacted, either through a questionnaire or in person, all of our
mission critical third parties. Although this review is an ongoing process, we
have currently received no information that indicates any of our critical
business partners' Year 2000 results will have a negative impact on our
business.
Costs
Ethyl's costs associated with Year 2000 compliance in the first quarter of 1999
were $500 thousand bringing the total costs incurred since January 1, 1998 to
about $1 million. The costs are low because we completed the majority of our
compliance effort through systems implementation over the last several years. We
estimate remaining costs in 1999 to be around $2 million. Cash from operations
will cover these costs. Of the remaining estimated costs, all but $200 thousand
will be capitalized. The noncapitalized costs represent less than 5% of our
information technology operating budget. Our emphasis on Year 2000 readiness has
not seriously delayed any of Ethyl's other mission critical programs.
Risks
As part of the assessment phase, we rated the impact of a Year 2000 problem for
each mission critical system in terms of probable risk to the business and
successful resolution of the issue. Because we have completed most of our Year
2000 efforts and have plans in place for full compliance, Ethyl believes
sufficient time and resources are committed to resolve any remaining Year 2000
issues. We anticipate that internal risks are low and the overall risk of
business interruption is minimal.
Nonetheless, there is no guarantee that there will not be a material failure of
a critical system or those of a supplier or customer. A material failure could
have an adverse impact on our business, operations, or financial condition. In
consideration of these risks, we have determined that the most reasonably likely
worst case scenarios include the temporary shutdown of one or more significant
production units, delays in the distribution of products, and delays in the
receipt of materials. We are addressing these worst case scenarios through
contingency planning.
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Contingency Plan
We have developed a contingency plan to address noncompliance of a critical
system or those of a supplier or customer. This plan also addresses our worst
case scenarios and may include special staff training, stockpiling critical raw
materials and inventory, obtaining alternate sources of supply, and scheduling
production runs to minimize losses in the event of power outages. We expect the
plan will be essentially complete by the end of the third quarter. As additional
information becomes available, we will continually improve the plan throughout
the year.
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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 thereunto duly authorized.
ETHYL CORPORATION
(Registrant)
Date: May 17, 1999 By: s/ J. Robert Mooney
J. Robert Mooney
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 17, 1999 By: s/ Wayne C. Drinkwater
Wayne C. Drinkwater
Controller
(Principal Accounting Officer)
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