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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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For the Quarterly Period Ended April 30, 1994 Commission file number 0685
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PETROLITE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 43-0617572
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
369 Marshall Avenue, St. Louis, Missouri 63119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314) 961-3500
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Former name, former address and former fiscal year, if changed since last report
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
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On May 1, 1994, there were 11,308,526 outstanding shares of
capital stock, without par value.
No. of Pages 8
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<TABLE>
PART 1. ITEM 1. FINANCIAL STATEMENTS
PETROLITE CORPORATION
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(Unaudited)
April 30, 1994 Oct.31, 1993
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(Thousands of $)
<S> <C> <C>
ASSETS
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Current Assets
Cash and cash equivalents $ 5,364 $ 8,036
Securities 763 763
Accounts receivable, less estimated doubtful
accounts of $1,443,000 and $1,285,000, respectively 76,788 71,978
Inventories-
Raw materials, parts and supplies 26,399 26,731
Finished goods 32,590 34,435
Reserve for revaluation of inventories to LIFO cost (17,157) (17,017)
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41,832 44,149
Contracts in process 1,211 575
Less progress billings (1,204) (578)
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Net inventories 41,839 44,146
Other current assets 1,990 6,492
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Total Current Assets 126,744 131,415
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Patents and other intangibles 19,442 18,755
Investment in Affiliated Companies 9,620 9,309
Other Assets 19,242 17,565
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48,304 45,629
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Properties
Buildings 67,096 66,754
Machinery and equipment 208,024 205,703
Construction in progress 8,368 8,498
Accumulated depreciation (169,946) (164,266)
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113,542 116,689
Land 7,409 7,412
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120,951 124,101
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Total Assets $ 295,999 $ 301,145
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current Liabilities
Short-term borrowings $ 6,682 $ 9,920
Accounts payable 38,477 42,183
Income taxes payable 7,569 9,383
Accrued vacation pay 4,070 4,070
Other current liabilities 6,242 7,799
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Total Current Liabilities 63,040 73,355
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Other Liabilities
Long term debt 40,000 40,000
Retiree medical benefits 10,941 10,750
Other liabilities 2,358 2,341
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53,299 53,091
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Deferred Income Taxes, net 9,525 11,562
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Total Liabilities 125,864 138,008
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Stockholders' Equity
Capital stock, without par value-
Authorized - 35,000,000 shares
Issued - 12,215,697 and 12,196,497, respectively 9,337 8,694
Accumulated earnings retained for use in the business 186,553 181,101
Cumulative translation adjustment (6,506) (7,409)
Less treasury stock, at cost (907,326 shares) (19,249) (19,249)
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Total Stockholders' Equity 170,135 163,137
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Total Liabilities and Stockholders' Equity $ 295,999 $ 301,145
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</TABLE>
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<TABLE>
PETROLITE CORPORATION
CONSOLIDATED STATEMENTS OF CURRENT AND ACCUMULATED EARNINGS
FOR SIX MONTHS ENDED APRIL 30
<CAPTION>
3 Months to April 30 6 Months to April 30
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1994 1993 1994 1993
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(In thousands, except per share data)
<S> <C> <C> <C> <C>
Net revenues $ 90,556 $ 85,944 $ 182,352 $ 166,107
Cost of product sold and other direct costs 53,175 49,080 106,870 95,400
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Gross profit 37,381 36,864 75,482 70,707
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Expenses:
Selling 21,186 19,324 41,995 37,529
Research 3,269 3,359 6,363 6,249
General and administrative 5,674 6,462 11,457 11,861
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30,129 29,145 59,815 55,639
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Earnings from operations 7,252 7,719 15,667 15,068
Equity in earnings (loss) of affiliates (83) (20) 3 (143)
Other income (expense), net (483) 175 (622) 261
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Earnings before income taxes and effect of
change in accounting principles 6,686 7,874 15,048 15,186
U.S. and foreign income taxes 2,356 2,677 5,304 5,163
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Net earnings before effect of change
in accounting principles 4,330 5,197 9,744 10,023
Effect of changes in accounting for income taxes
(1994) and post-retirement medical benefits (1993) -- -- 2,037 (6,500)
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Net earnings $ 4,330 $ 5,197 $ 11,781 $ 3,523
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Earnings per share before effect of change in
accounting principles $ .38 $ .46 $ .86 $ .89
Effect of changes in accounting for income taxes
(1994) and post-retirement medical benefits (1993) -- -- .18 (.58)
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Earnings per share $ .38 $ .46 $ 1.04 $ .31
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Average shares outstanding 11,304 11,282 11,299 11,282
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Dividends per share $ .28 $ .28 $ .56 $ .56
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</TABLE>
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<TABLE>
PETROLITE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR SIX MONTHS ENDED APRIL 30
<CAPTION>
(Unaudited)
1994 1993
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(Thousands of $)
<S> <C> <C>
Cash Flows from Operating Activities:
Net earnings (loss) $ 11,781 $ 3,523
Adjustments to reconcile net earnings to net cash
provided by operations -
Depreciation 10,165 7,889
Changes in Accounting Principles (2,037) 6,500
Changes in assets and liabilities -
Accounts receivable (4,810) (9,949)
Inventories 2,307 (5,341)
Other current assets 4,502 (2,126)
Accounts payable and accrued liabilities (6,820) 8,345
Other (362) (5,249)
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Net cash provided by operating activities 14,726 3,592
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Cash flow from Investing Activities:
Capital expenditures, net (7,296) (11,267)
Acquisition of Welchem capital assets and intangibles (25,148)
Participation in Business Alliance (1,125) (1,350)
Other, net 1,931
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Net cash used in investing activities (8,421) (35,834)
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Cash Flows from Financing Activities:
Additional debt, (reduction of debt), net (3,291) 32,564
Dividends paid (6,329) (6,318)
Other 643 26
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Net cash used in financing activities (8,977) 26,272
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Decrease in Cash and Equivalents (2,672) (5,970)
Cash and Equivalents at Beginning of Period 8,036 8,812
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Cash and Equivalents at End of Period $ 5,364 $ 2,842
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</TABLE>
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PART 1. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The registrant's financial position at April 30, 1994 reflected a
strong current ratio of 2.0:1, a low debt to equity ratio of .3:1, and
cash and securities of $6.1 million.
Capital expenditures (net) during the second quarter and the six
months ended April 30, 1994 were $3.8 million and $7.3 million,
respectively. Capital expenditures in fiscal 1994 are now projected to
be slightly greater than fiscal 1993 expenditures of almost $20 million.
Major expenditures for fiscal 1994 include a new semi-bulk distribution
facility at the Bayport chemical manufacturing plant, replacement of the
existing aircraft, and new laboratory and manufacturing office
facilities for Eurochem operations in Kirkby, England.
Second quarter revenues increased to $90.6 million from $85.9
million the year before. Six month revenues totalled $182.4 million
compared with $166.1 million the prior year. Revenues increased for all
businesses during both the second quarter and the six months except for
the Polymers business, which had decreased revenues due to the expected
loss of some commodity wax sales. For the six month period, growing
demand for chemical treatment programs overseas was particularly
gratifying, resulting in strong double digit increases in revenues in
most international locations.
Net earnings for the second quarter were $4.3 million compared to
$5.2 million the year before. Net earnings for the first half, before
adoption of accounting changes, were $9.8 million as compared to $10.0
million the prior year.
Earnings during the second quarter declined primarily as a result
of our U.S. and Canadian oil field businesses. Cost cutting moves by
major and independent producers in North America which were implemented
due to a steep decline in the price of crude oil early in the year
severely impacted the profitability of the North American oil field
business. In addition, certain areas of our international chemical
business declined in the second quarter due to political unrest and
currency devaluations, and certain areas of our domestic chemical
business declined due to less favorable product mix.
For the first half all businesses, both domestic and
international, showed an improvement in earnings over the comparable
prior-year period with the exception of the North American oil field
chemicals business.
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As previously reported, the registrant adopted FAS 109 (income
taxes) during the first quarter of 1994 and FAS 106 (post-retirement
medical benefits) during the first quarter of 1993. The aforementioned
accounting changes consisted of a one-time, non-cash tax credit of $2.0
million, or $.18 per share applicable to the adoption of FAS 109 in 1994
and a non-cash, after-tax charge of $6.5 million, or $.58 per share
applicable to the adoption of FAS 106 in 1993. Net earnings inclusive
of the above accounting changes for the six month period were $11.8
million, or $1.04 per share this year as compared to $3.5 million, or
$.31 per share last year.
Additional information pertaining to the six months ended April
30, 1994 can be found in the Quarterly Report to Shareholders dated May
27, 1994 which is hereby incorporated by reference.
PART II - OTHER INFORMATION
Part II. Item 1. Legal Proceedings
None
Part II. Item 2. Changes in Securities
On March 28, 1994 the registrant declared a dividend distribution
of one Right for each outstanding share of capital stock of the Company.
This event was reported previously on a Form 8-K filed April 6, 1994.
The report on Form 8-K included the form of Rights Agreement between
the Company and the Rights Agent specifying the terms of the Rights.
Part II. Item 3. Defaults upon senior securities
None
Part II, Item 4. Submission of Matters to a Vote of Security-Holders.
The registrant's annual meeting of stockholders was held March 7,
1994. Pursuant to the notice, the only matter submitted to a vote of
security-holders was the election of directors. There was no
solicitation in opposition to management's nominees as listed in the
proxy statement, and all of such nominees were elected. The number of
votes cast for, against or withheld with respect to each nominee for
office is as follows:
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Ten million, five hundred nine thousand, five hundred seventy six
(10,509,576) votes were cast in favor of the Directors, except for the
following votes, which were withheld, to wit:
<TABLE>
<CAPTION>
Directors Votes Withheld
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<S> <C>
Paul F. Cornelsen 33,470
Andrew B. Craig, III 31,228
Louis Fernandez 31,247
Paul H. Hatfield 30,528
William E. Maritz 31,247
James E. McCormick 32,828
William E. Nasser 33,605
Richard L. O'Shields 30,528
Thomas P. Reidy 29,928
</TABLE>
Ninety three .05 percent (93.05%) of eligible shares of stock
voted in favor of the nine candidates.
Part II, Item 5. Other information
None
Part II, Item 6. Exhibits and Reports on Form 8-K
The registrant filed a current report on Form 8-K dated March 7,
1994 announcing that at its Annual Meeting of Stockholders on March 7,
1994 two new directors were elected to its Board of Directors and that
Michael V. Janes, a Director since 1988, had resigned from its Board of
Directors.
The registrant filed a current report on Form 8-K dated March 28,
1994 announcing that the registrant declared a dividend distribution of
one Right for each outstanding share of capital stock of the Company on
March 28, 1994. The report on Form 8-K included the form of Rights
Agreement between the company and the Rights Agent specifying the terms
of the Rights and certain other information about the Rights Agreement
and its announcement.
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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 thereunto duly authorized.
PETROLITE CORPORATION
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(Registrant)
s/John M. Casper
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John M. Casper
Chief Financial Officer -
Authorized Officer and
Principal Financial Officer
DATE: June 10, 1994
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