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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): OCTOBER 21, 1998
GREAT LAKES CHEMICAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-6450 95-1765035
- ----------------------------- ------------------- ------------------
(STATE OR OTHER JURISDICTIONS (COMMISSION FILE NO.) (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
500 EAST 96TH STREET, SUITE 500
INDIANAPOLIS, IN 46240
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (317) 715-3000
The undersigned registrant hereby amends the following item of its current
report on Form 8-K dated October 21, 1998, as set forth in the pages attached
hereto.
ITEM 5. Other Events
On October 21, 1998, the Company announced a restructuring plan aimed at
reducing costs and strengthening its' competitive position. A copy of the
press release issued by the Corporation on October 21, 1998 describing the plan
is attached to this report as Exhibit 99.1
ITEM 7. Financial Statements, Pro Forma Information and Exhibits
(c) Exhibits.
99.1 Press Release, dated October 21, 1998
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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 hereunto duly authorized.
GREAT LAKES CHEMICAL CORPORATION
Date October 22, 1998 By: /s/ Robert J. Smith
--------------------------------
Name: Robert J. Smith
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Title: Vice President, Controller
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Exhibit 99.1
GREAT LAKES ANNOUNCES 3Q '98 QUARTERLY RESULTS
EPS from continuing operations up 17% before restructuring and special charges
Sales increase 10% versus prior year
WEST LAFAYETTE, Indiana--October 21, 1998--Great Lakes Chemical Corporation
(NYSE:GLK) today reported a 17 percent increase in earnings per share from
continuing operations for the 1998 third quarter before restructuring and other
special charges. Earnings from continuing operations rose to $33 million, or
$.56 per share, compared to the $29 million, or $.48 per share, reported in the
third quarter of a year ago. Including the restructuring and special charges,
earnings were $.02 per share. Sales grew 10 percent to $340 million. On the
strength of six percent volume growth, sales in the quarter grew five percent
from one year ago, excluding the effects of acquisitions.
Great Lakes also reported it will implement a series of manufacturing
consolidations, cost reductions and other restructuring steps to strengthen its
competitive position and enhance its long-term growth prospects. The
initiatives, to be implemented over the next 18 months, are expected to
generate annual pretax savings of approximately $40 million and will result in
a total pretax charge of $100 to $120 million. For those actions finalized in
the third quarter, the company recognized a pretax charge of $48 million, or
$.54 per share after taxes. The company is in the process of finalizing the
remaining actions which will be reflected as a charge in the fourth quarter.
The major components of the restructuring and special charge include:
- Consolidating manufacturing operations, primarily in the
company's Polymer Additives business unit.
- Eliminating approximately 600 jobs over the next 18 months
for a net reduction of 12 percent of the company's workforce.
- Writing down or disposing of underperforming and nonstrategic
assets and product lines.
- Realigning sales offices and R&D facilities to move the
company closer to its customers thereby enhancing customer
interaction and delivering better technical support. This action
leaves in tact the commercial and research teams necessary to
accelerate new product introductions.
- more -
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Mark Bulriss, CEO and President of Great Lakes, commented, "The new
management team is accelerating the pace of fundamentally altering how the
company conducts its business around the world. We have within our reach the
ability to attain greater cost efficiencies while driving growth by delivering
enhanced customer value and creating market synergies. The measures announced
today, when completed, will provide more efficient, low-cost production
facilities and more focused sales, marketing and technical support around
markets and customers."
Regarding the company's performance for the third quarter, Bulriss noted
that all groups within the Performance Chemicals business unit posted strong
revenue gains, particularly fluorine products and fine chemicals. BioLab, our
Water Treatment business unit, reported an eight percent revenue gain.
Revenues for the Polymer Additives business unit were essentially flat with a
year ago, excluding the effects of the Anzon acquisition, as volume gains were
offset by pricing pressures in polymer stabilizers.
The improved operating earnings in Performance Chemicals and Water
Treatment were more than offset by the Energy Services and Products (OSCA) and
Polymer Additives business units. Price erosion in polymer stabilizers and
lower earnings from OSCA were the chief factors. OSCA's performance was
inhibited due to several factors, including reduced drilling activity as a
result of lower crude oil prices, and unfavorable weather conditions in the
Gulf of Mexico, 19 days were lost due to hurricanes in the quarter.
"Our plans for transforming Great Lakes, begun almost six months ago, are
well underway. The need for the company to enhance its ability to compete,
however, is even more compelling due to the realities of today's global
economy. Given the significant challenges ahead, namely, continued slowdown in
drilling activity, pricing pressure in polymer stabilizers and an acceleration
of Y2K and ERP (Enterprise Resource Planning) efforts, we anticipate that
fourth quarter earnings from continuing operations excluding restructuring and
special charges will be essentially flat to down slightly compared with the
prior year quarter.
I'm confident the company today will emerge leaner, faster and more
focused as a result of the restructuring activities announced today," Bulriss
concluded. "The savings we generate will provide earnings momentum in 1999
even if market conditions weaken. As a result of the steps announced today
Great Lakes is better positioned to meet its most important goal of delivering
superior shareholder returns, sustainable over the long-term."
For the nine months ended September 30, 1998, sales rose to $1,077
million, or 9 percent higher than the $986 million posted for the nine months
of 1997. Net income, from continuing operations, excluding the effects of
restructuring and special charges recorded in the first and third quarters
(management transition - $.19 per share and restructuring and special charges -
$.54 per share, respectively), amounted to $99 million, or $1.68 per share,
compared with $88 million, or $1.46 per share, earned in the corresponding
period last year. Including restructuring and special charges, net income from
continuing operations for the nine months was $56 million, or $.95 per share.
- more -
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This report contains forward-looking statements involving risks and
uncertainties that affect the company's operations as discussed in Great Lakes
Chemical Corporation's Annual Report on Form 10-K filed with the Securities and
Exchange Commission. Accordingly, there is no assurance the company's
expectations will be realized.
Great Lakes Chemical Corporation is the world's leading producer of
certain specialty chemicals for such applications as flame retardants, polymer
stabilizers, fire extinguishants, water treatment, as well as a growing line of
performance and fine chemicals for the life sciences industry. The stock of
the company is traded on the New York Stock Exchange.
# # #
FOR MORE INFORMATION: Jeff Potrzebowski - Analysts
Greg Griffith - Media
(765) 497-6218
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GREAT LAKES CHEMICAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
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(millions, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30 Ended September 30
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net Sales $ 340.5 $ 309.6 $1,077.1 $985.6
Operating Expenses
Cost of products sold 249.8 220.5 777.7 705.1
Selling, administrative and research expenses 48.2 42.2 149.1 132.5
Restructuring and special charges 48.3 - 63.8 -
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Total operating expenses 346.3 262.7 990.6 837.6
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Operating Income (5.8) 46.9 86.5 148.0
Interest and Other Income 12.3 8.4 28.5 20.8
Interest and Other Expenses 4.8 10.2 28.2 30.8
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Income from Continuing Operations before Income Taxes 1.7 45.1 86.8 138.0
Income Taxes 0.5 16.0 30.4 49.5
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Net Income from Continuing Operations 1.2 29.1 56.4 88.5
Net Income from Discontinued Operations - 29.7 32.6 85.6
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Total Net Income $ 1.2 $ 58.8 $ 89.0 $174.1
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Diluted Earnings per Share:
From Continuing Operations $ 0.02 $ 0.48 $ 0.95 $ 1.46
From Discontinued Operations - 0.50 0.55 1.42
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Total Earnings per Share $ 0.02 $ 0.98 $ 1.50 $ 2.88
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Average Shares Outstanding 59.2 60.1 59.3 60.4
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Business Unit Net Sales For the Three Months For the Nine Months
- ----------------------- Ended September 30 Ended September 30
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1998 1997 1998 1997
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Polymer Additives $ 139.2 $ 126.0 $ 437.6 $397.8
Performance Chemicals 83.6 68.4 232.6 204.5
Water Treatment 94.3 87.3 318.5 293.1
Energy Services and Products 24.3 26.1 90.8 83.0
Eliminations and Other (0.9) 1.8 (2.4) 7.2
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Net Sales of Continuing Operations $ 340.5 $ 309.6 $1,077.1 $985.6
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</TABLE>
